Investing

JD Power Survey Finds Charles Schwab Best in Investor Satisfaction

Chris Lange

Published: April 7, 2016 11:25 am

Last Updated: January 13, 2020 11:02 am

According to J.D. Power, the full-service investment advisory industry is undergoing a historic shift, driven by an actively engaged investor population that is demanding a more hands-on approach from their advisors. J.D. Power’s Full Service Investor Satisfaction Study highlighted how a steadily increasing number of investment advisory customers have disrupted conventional thinking about full-service and self-directed advisory services, favoring a hybrid approach in which advisors become validators, or sounding boards, but not final decision makers.

The top performers in the study were Charles Schwab Corp. (NYSE: SCHW), followed by Edward Jones and Fidelity Investments, in a tie, and then UBS Financial Services.

The percentage of full-service investment advisory customers who are validators has increased steadily since 2013 and now accounts for 36% of all full-service investors. Comparatively, the percentage of collaborators has been on a steady decline during the same period, representing 51% in 2016 down from 59% in 2013. At the same time, the number of delegators has remained flat. The trend is even more pronounced among millennials, with 64% falling within the validator segment this year.

The study also found that overall investor satisfaction remains essentially flat year over year, despite the worst markets since the 2009 study. Over twice the number of investors indicated their own financial situation is better than it was a year ago. Most investors indicate their financial situation is about the same.

Roughly four out of 10 investors noted that their advisor did not help them set goals or discuss risk tolerance, and only 42% indicate their advisor met key performance indicators related to setting goals, implementing strategy and ongoing tracking.

Mike Foy, director of the wealth management practice at J.D. Power, commented:

The current evolution we’re seeing in investor preferences will likely be accelerated by the further development of new technologies, such as robo-advisors, and by regulatory changes, such as those just issued by the Department of Labor concerning fiduciary standards. Full service firms will need to adapt to these changes by providing more value and transparency to investors, making a clear case for the value they provide vs. lower-cost alternatives.