Canadian Investors Are Increasingly Satisfied When Discount Brokerage Firms Communicate Regularly and Tailor Investment Advice
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Disnat Ranks Highest in Investor Satisfaction with Discount Brokerage Firms in Canada
TORONTO: 22 September 2014 — Investors are increasingly satisfied when discount brokerage firms go beyond providing a robust technology platform and low transaction fees by communicating regularly and providing tailored financial guidance and useful investment tools to help them achieve their goals, according to the J.D. Power 2014 Canadian Discount Brokerage Investor Satisfaction StudySM released today.
The study, now in its sixth year, measures investor satisfaction with their primary discount brokerage firm across six key factors (in order of importance): interaction; trading charges and fees; account information; account offerings; information resources; and problem resolution. Scores for each factor are reflected in an index based on a 1,000-point scale.
Interaction, particularly with the website, is the highest-weighted factor in determining overall satisfaction. Gen X and Y, considered technology-savvy investors, have the highest expectations and are the least satisfied groups with their firm’s website (756 and 776, respectively). Satisfaction with ease and speed of making trades, appearance, and ease of navigating the website are particularly low among these younger investors. Additionally, fewer Gen Y investors than those from other age groups perceive the financial guidance and information provided by their firm is tailored to meet their goals.
“Advice and guidance are not only for full-service firms. Discount brokerage investors are not just traders focused exclusively on speed and low transaction fees; they really do want a relationship with their firm and access to tools and guidance that help them achieve their financial goals,” said Mike Foy, director of the wealth management practice at J.D. Power. “Discount brokerage investors may not have a dedicated financial advisor, but they do want help in making investment decisions, whether that’s through using financial planning or investment tools, or participating in educational seminars. When firms leverage what they know about their clients to deliver information and tools that are tailored to their specific needs, satisfaction improves significantly, along with loyalty and the amount of assets invested.”
- Overall investor satisfaction with discount brokerage firms in Canada increases significantly to 736, up by 12 points from 2013.
- Highly satisfied investors rely on the tools and seminars offered by their firm. When firms meet the three key performance indicators (KPIs) related to those resources—offering investment seminars; investors are aware of and use at least one investment tool; and are aware/use a financial planning tool—satisfaction is 819, compared with 671 when these KPIs are not met.
- In addition to offering multiple investment tools, firms must provide advice tailored to investors’ goals. When firms offered financial advice and guidance through “very useful” investment tools, satisfaction is 868, compared with 753 when not offered. Further, satisfaction is 782 when financial advice and guidance are tailored to investors’ goals, compared with 679 when it is not.
- Nearly one-third (31%) of highly satisfied discount brokerage investors (overall satisfaction scores of 900 or above) intend to increase the amount invested with the firm vs. 20 percent of less satisfied investors (scores of 699 or lower). Nearly three-fourths (73%) of highly satisfied investors say they “definitely will” recommend their firm vs. 7 percent of less satisfied investors who say the same.
- Frequent client communication is a key driver of satisfaction as well as awareness of tools and resources. Overall satisfaction is 777 among investors whose firm contacted them two or more times during the past 12 months about products, services and seminars vs. 721 among those whose firm did not.
- Lower trading charges and fees do not guarantee investor satisfaction. However, when investors “completely” understand their fee structure, satisfaction is higher (787) than when they do not “completely” understand (699).
Discount Brokerage Investment Firm Rankings
Disnat ranks highest in discount brokerage investor satisfaction with a score of 772, and performs particularly well in the interaction, information resources, account information and account offerings factors. Following in the rankings are National Bank Direct Brokerage (757); RBC Direct Investing (751); and TD Direct Investing (744).
The 2014 Canadian Discount Brokerage Investor Satisfaction Study includes responses from more than 2,500 investors who use investment services with discount brokerage firms in Canada. The study was fielded from May 16, 2014 through June 16, 2014.
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 J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994).