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Investment firms see decline in client satisfaction

par The IJ Staff | April 16 2019 11:30AM

Canadian investors who are edgy about their financial holdings have less satisfaction with their investment firm, found the J.D. Power 2019 Canada Full Service Investor Satisfaction Study, released April 15.

For the first time since the 2008 financial crisis, the study found a decline in customer satisfaction, dropping to 778 (on a 1,000-point scale) from 785 in 2018.

Managing expectations

“There’s a belief in the industry that challenging market conditions are when financial advisors most demonstrate their value to clients,” said Mike Foy, Senior Director of Wealth Intelligence at J.D. Power. “But what we see is that many advisors are not consistently having the sometimes difficult conversations necessary to manage client expectations and navigate through market volatility and downturns.”

Thirty-two per cent of investors surveyed said their advisor did not take the time to explain their portfolio performance during the past year. Investors not receiving an advisor explanation are almost twice as likely as those who receive an explanation (36% vs. 19%, respectively) to indicate their financial performance was “worse than expected” and were significantly less satisfied with both that performance and their advisor.

The largest declines in performance satisfaction are among those investors with assets greater than $500,000, dropping 38 points year over year. Twenty-eight per cent of affluent investors indicated performance was “worse than expected” and, among that group, 16 per cent intend to decrease their investments during the next 12 months vs. just four per cent among affluent investors who say performance was “as expected” or “better than expected.”

Staying focused on long-term goals

“Market conditions may be outside the control of investment firms and advisors, but they do have a significant ability to control how investors react to those conditions, and they need to be providing that transparency to help clients stay focused on long-term goals,” Foy said.

Edward Jones ranked highest in overall investor satisfaction for a seventh consecutive year with Assante second. BMO Nesbitt Burns, CIBC Wood Gundy and Raymond James ranked third in a tie.

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