Morgan Stanley and Citigroup Take Beating in Investor Survey

J.D. Power released its 2014 U.S. Full Service Full Service Investor Satisfaction Study. Citigroup Inc.’s (NYSE: C) CitiCorp and Morgan Stanley’s (NYSE: MS) Asset Management took terrible beatings from respondents while Fidelity Investments and Edward Jones did particularly well.

Firms that have been considered discount brokers — Fidelity and Charles Schwab Corp. (NASDAQ: SCHW) — did particularly well. And Edward Jones is known for the fact that it has more offices than any other financial firm in the United States, which it uses to serve about 7 million customers.

The average rating in the J.D. Power study is 807. CitiCorp’s score is 742 and Morgan Stanley Asset Management’s is 760. J.P. Morgan Chase & Co.’s (NYSE: JPM) Chase Investment Services did nearly as badly with a score of 768. The research was done on a scale on which a company can earn a maximum of 1,000 points.

Fidelity scored 842 and Edward Jones 835. Each is listed by Power as “among the best.” Schwab is on the tier just lower with a score of 825.

Power pointed out that younger investors view full-service brokers differently than older Americans do:

Overall investor satisfaction with full service investment firms improves to 807 (on a 1,000-point scale) in 2014, satisfied with their full service investment firm than their older investor counterparts, averaging 791 compared with 806 for investors nearing retirement and 827 for retirement investors.

“Advisors tend to focus their attention on older, more affluent investors with whom they have more experience,” said Craig Martin, director of investment services at J.D. Power. “They are comfortable with this group and their preferences, but when they interact with younger investors they have challenges connecting. They often try to use the same approach that has been successful with their older clients, but it often misses the mark.”

Although J.D. Power does not mention it, younger investors may have a greater comfort handling transactions online, which would make them more likely to use discount brokers. It is not clear whether investors use the sort of research conducted by J.D. Power to make future choices about their use of brokers.

Methodology:

The study, now in its 12th year, measures overall investor satisfaction with full service investment firms in seven factors (in order of importance): investment advisor; investment performance; account information; account offerings; commissions and fees; website; and problem resolution. The 2014 U.S. Full Service Investor Satisfaction Study was fielded in January and February 2014 and is based on responses from more than 4,400 investors who make some or all of their investment decisions with an investment advisor.

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