Disnat Ranks Highest in Investor Satisfaction among Discount Brokerage Firms in Canada for A Second Consecutive Year
TORONTO: 23 June 2010 – Online interactions between investors and their primary discount brokerage firms have increased in both frequency and importance as more Generation X and Y consumers become self-directed investors, according to the J.D. Power and Associates 2010 Canadian Discount Brokerage Investor Satisfaction StudySM released today.
In 2010, the average age of investors who use discount brokerage firms is 45 years old, compared to an average of 50 years old in 2009. In addition, 40 percent of self-directed investors in 2010 fall within Generations X and Y (ages 18 to 39), compared with 26 percent in 2009.
“This change in discount brokerage investor demographic profile coincides with an increase in the proportion of online interactions between self-directed investors and their primary firms in 2010, as well as an increase in the importance of the online channel as a driver of overall satisfaction,” said Lubo Li, senior director and financial services practice leader at J.D. Power and Associates in Canada. “Online and mobile transaction options are likely to become an increasingly important component of investors’ overall experience, since discount brokerage investors will become even more technology-savvy in the future.”
The study, now in its second year, examines investor satisfaction with their primary discount brokerage firm by measuring six key factors. In order of importance, they are: interaction; account information/statements; trading charges and fees; account offerings; information resources; and problem resolution. Overall satisfaction averages 707 on a 1,000-point scale in 2010, improving by 10 points from 2009.
Disnat ranks highest in discount brokerage investor satisfaction for a second consecutive year with a score of 725. Disnat performs particularly well in three of six factors: interaction, account information/statements, and account offering. BMO Investorline improves more than any other firm in 2010, compared with 2009, to rank second with a score of 720. BMO Investorline performs particularly well in the information resources factor. National Bank Direct Brokerage ranks third with a score of 716.
While Gen X and Y investors are increasing their online trading volumes, overall new account growth in the discount brokerage investor market has slowed considerably in 2010 following rapid growth the year before. In 2010, only 14 percent of discount brokerage investors report opening a new account within the past two years, compared with 31 percent in the 2009.
“As market growth slows and acquisition of new investors becomes more challenging, focusing on providing a highly satisfying investor experience is critical for discount brokerage firms,” said Li. “Although costs and fees are key to client acquisition and retention, we have yet to see the industry take major action to simplify fee structures and lower trading charges, similar to what has happened in the U.S. discount brokerage market during the past two years. Firms that break the mold with innovative offerings and competitive rates may be able to differentiate themselves from the competition and build stronger momentum for future growth.”
The study findings include the following key trends:
- The proportion of active traders-those who execute 13 or more trades per year with their primary discount brokerage firm-has increased to 26 percent in 2010 from 19 percent in 2009.
- The percentage of investors who hold investment accounts with both a full-service investment firm and a discount brokerage increased by two percentage points from 2009 to 35 percent in 2010. However, this growth is substantially slower than the rate between 2008 and 2009 (from 25% to 33%).
- While 13 percent of discount brokerage investors report having access to mobile investing, only 4 percent use these features. Another 13 percent of investors express interest in having mobile access to their investment accounts, with the proportion being particularly high among Generation X and Y investors (22%).
- The proportion of discount brokerage investors who own a Tax Free Savings Account (TFSA) grew from 25 percent to 33 percent.
The 2010 Canadian Discount Brokerage Investor Satisfaction Study includes responses from 2,835 investors who use investment services with discount brokerage firms in Canada. The study was fielded in May 2010.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poor’s, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2009 were $5.95 billion. Additional information is available at http://www.mcgraw-hill.com/.