Investor satisfaction with advisers fell with market: study

As investments have declined, so has investor satisfaction with advisers, suggests a survey released Wednesday.

Investor satisfaction fell nearly 30 points to 693 on a 1,000-point scale in 2009, compared with 2008, the J.D. Power and Associates 2009 Canadian full service investor satisfaction study reported.

"Poor investment performance primarily drives the decline," J.D. Power said in a news release.

The study, based on responses from 6,183 investors who use investment services with financial institutions in Canada, was done in May.

The market was in the middle of an upswing then, but the memory of the crash was still fresh — the S&P/TSX composite index fell from a high of 15,073 on June 18, 2008, to a low of 7,567 on March 9.

Other study results backed the idea that investors are increasingly dissatisfied with their advisers.

Ten per cent of respondents indicated they are likely to switch firms in the next year, up from six per cent in 2008. Moreover, only 24 per cent said they "definitely will" recommend their adviser to others, compared with 32 per cent in 2008. 

The 'new frugality'

The report also said investors are saving money by using online or discount brokerage trading. The proportion of investors with an online or discount brokerage account jumped to 36 per cent this year from 25 per cent in 2008.

At the full service brokers affiliated with one of the five major banks, nearly 50 per cent of investors use an online or discount brokerage.

"The new frugality has arrived," said Lubo Li, J.D. Power's senior director and financial services practice leader in Toronto.

"Firms will benefit from providing clients with investment information online and secure online trading that is cost effective and easy to use."   

Now in its fourth year, the study provides benchmarks for investor satisfaction that allow individual investment institutions in Canada to evaluate how they compare with competitive firms. 

The study, now in its fourth year, uses six factors to evaluate investor satisfaction:

• Account set-up and offerings.
• Account statements.
• Convenience.
• Cost.
• Investment adviser.
• Investment performance.

It ranked Raymond James Ltd. first this year, with a score of 747 out of 1,000. Edward Jones was a close second at 742, and Dundee Wealth Management Inc. third at 725.

J.D. Power and Associates, based in California, is a marketing information company and a unit of McGraw-Hill Cos.