Is another low-cost brokerage eating financial advisors’ lunch?
The annual J.D. Power and Associates survey of satisfaction among self-directed investors is out today, and the big names in the on-line trading field were left in the dust by a new player on Power’s list—a privately-held Texas insurer that chiefly serves families of the U.S. military.
San Antonio-based USAA took the top ranking on the survey, well ahead of Charles Schwab, Vanguard, TD Ameritrade, and even Scottrade. Power decided to add USAA to its survey when the name kept coming up in its preliminary polls of do-it-yourself investors, says David Lo, Power’s director of investment services. Although its insurance products are sold to members only—a practice that normally would disqualify a company from Power’s survey—anyone can sign up for the self-directed investment products available on-line.
In addition to its broker/dealer, USAA has its own RIA and does financial planning for its members. Its website says that its USAA Investment Management Co. had $42.1 billion in brokerage assets on March 31, of which $13.6 billion were in USAA mutual funds.
“The customer service they have is impeccable,” Lo says. The company promotes on-line trades of $5.95 for investors with $50,000 in invested assets and who make a minimum of 16 trades each quarter. (Other restrictions may apply, USAA warns in the small-print footnotes.) More than 4,000 investors, including 300 who use USAA, were surveyed by Power in March.
Investors appear more disgruntled with pricing in this year’s survey results; satisfaction with trading charges and fees averaged 703 out of a scale of 1,000, down 30 points from last year. Just 36 percent of investors said they “completely” understood the rules around commissions and fees they were paying, down from 52 percent a year ago.
Here is how the players shaped up this year: