Not quite satisfied with your big wirehouse? Neither are a lot of clients.
According to J.D. Power & Associates’ “Full-Service Investor Satisfaction Study,” regional firms, through more “proactive contact in managing customer accounts,” receive higher satisfaction ratings than some of the major national brokerage houses.
Ellen Guion, senior research manager of financial services at the California-based research firm says regionals appear more adept at “hand holding” tasks, such as reporting on portfolio performance, contacting clients about trends and issuing warnings regarding market developments.
“This is really what people gravitate too now after the bottom fell out of the market,” she says. “They want to know the advisor is awake at the wheel.”
In the survey, which garnered 6,100 responses, investors were asked to use a one-to-five scale to rate their firm’s performance in six categories: account management, integrity, cost, information resources, customer service and the advisor.
Legg Mason Wood Walker, the subsidiary of Legg Mason, took top honors, receiving 778 out of a possible 800 points. Rounding out the top five were Raymond James (743), Edward Jones (736), A.G. Edwards (730) and American Express and UBS Financial Services (which tied for fifth with 707 points).
Of the national wirehouses, only UBS Financial Services (707), Smith Barney (697), and Morgan Stanley (687) scored above the industry average of 686 points. Falling just short of the average was Merrill Lynch with 677 points, Charles Schwab with 650, and Wachovia/Prudential with 649.
In other findings, the study showed investors to be very comfortable turning to their firm for financial planning as well as for objective advice. Fewer than half of those surveyed said their firm was clear about broker compensation, and on the subject of fund fees, even fewer customers felt fund costs had been sufficiently explained.
“Portfolio losses over the past couple of years have sensitized investors to cost issues, and satisfaction is strongly impacted by the reasonableness of account and maintenance fees as well as commissions, particularly among more active traders,” said Guion.
According to Guion, the firms achieving above-average ratings in the survey tend to handle two-thirds of their clients’ assets, while those below average handle 50 percent or less. Trading transaction volume also correlated with the survey results.