J.D. Power has published its annual advisor satisfaction survey – and the results aren’t pretty.
This year’s study focused on three broad stages of goals-based investing: setting personal goals, implementing a strategy to achieve those goals, and monitoring progress.
A full 46% of the respondents said their advisor did not help them set goals or discuss risk, while 76% said their advisor failed to effectively deliver on all three stages.
Read: Goals-based investing can calm clients
“These results don’t speak well for the industry as a whole,” said Mike Foy, director of the wealth management practice at J.D. Power. “Investors have some newer, more compelling lower-cost alternatives available to them, including robo-advisor[s]. In addition, with CRM2-mandated fee disclosures beginning to roll out, many investors will be learning for the first time exactly what they have been paying for. Advisors who aren’t adding value for their clients beyond asset allocation may be in real trouble.”
Which full-service firms are meeting investor needs? Of the 19 firms ranked, Edward Jones is highest in investor satisfaction for a fourth consecutive year, with a score of 802 on a 1,000-point scale. Following are Raymond James Ltd. (779) and HollisWealth (776).
Read: Bank reps seen as “pushy”, sales focused
Conseiller.ca staff dug into the results, and here’s what they found.
Questioning the methodology
The study measured investor satisfaction across seven factors: financial advisor (34% weight), account information (19% weight), investment performance (18% weight), product offerings (14% weight), commissions and fees (10% weight), website (4% weight) and problem resolution (2% weight).
The study was conducted online between May and June 2016, and was based on responses from 5,159 investors who use advice-based investment services from Canadian financial institutions. The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.
J.D. Power declined to provide its proprietary questionnaire, but told Conseiller the questions pertained to the products and services offered by firms, as well as to advisors themselves — specifically their performance, their support for establishing goals, and their openness to discussing fees, among other topics.
Read: CRM2 is here. Are you ready?
The methodology makes Mario Grégoire, president and managing director of Conseil des professionnels en services financiers, skeptical about the results. “The survey uses a non-probability methodology,” he says. “According to Statistics Canada, the reliability of such surveys cannot be established.”
(Indeed, a Statistics Canada reference page says, “Reliability cannot be measured in non-probability sampling; the only way to address data quality is to compare some of the survey results with available information about the population.”)
As a result, says Grégoire, “It would be a misnomer to say that J.D. Power has demonstrated anything with this online survey. […] With the increasing complexity of products and markets, I am convinced that Quebec savers are shrewd enough to realize that advice from professional financial services is worth its weight in gold.”
Jocelyne Houle-LeSarge, CEO and secretary of the Institut québécois de planification financière, Quebec’s sole financial planning authority, says the survey brings to light issues with advisor titles.
“Once again, we are blithely confusing the title ‘financial planner’ with the vague term ‘advisor,’ which covers many specialties,” she says. “This gives our profession a very negative image. Our role remains poorly understood.”
A market in evolution
The survey also looked how attitudes toward financial advisors changed based on age. Among Millennials, 42% responded that they want to play a more active role in managing their wealth than previous generations.
J.D. Power calls these types of investors “validators”: they want to make their own decisions but still have access to an advisor for guidance and to act as a sounding board.
Older generations such as Boomers are more likely to describe themselves as “collaborators” or “delegators,” who defer to their advisor’s judgments and decisions.
The survey also found that nearly one-third of all investors (30%) would be interested if their firm offered robo-advice, with 45% of Millennials saying they’d be game.
Read: Why you may need a robo-advisor
J.D. Power also noted that independent wealth management providers included in the study tended to outperform the big banks as a group. Here are the full results of the J.D. Power Canadian Full Service Investor Satisfaction Index Ranking (scores out of 1,000):
- Edward Jones – 802
- Raymond James Ltd. – 779
- HollisWealth – 776
- RBC Dominion Securities Inc. – 774
- Assante Wealth Management – 771
- ATB Financial – 766 (Industry average – 764)
- National Bank Financial – 763
- TD Wealth – 763
- Investors Group Securities Inc. – 761
- Manulife Securities – 759
- CIBC Wood Gundy – 758
- Desjardins Securities – 754
- Scotia Wealth Management (ScotiaMcLeod) – 754
- BMO Nesbitt Burns – 752
- Credential Securities – 738
Also surveyed, but not ranked due to sample size, were Laurentian Bank Securities, MD Financial Management, Phillips, Hager & North and Richardson GMP Ltd.