Self-Directed Investors Crave More Personalized Guidance, Proactive Contact from Investment Firms, J.D. Power Finds

COSTA MESA, Calif., April 26, 2018 /PRNewswire/ -- A significant number of self-directed investors seeking guidance from their firm are getting neither the frequency nor the quality of proactive contact they want. According to the J.D. Power 2018 U.S. Self-Directed Investor Satisfaction Study,^SM released today, proactive, client-centric contact from an advisor is the key driver of customer satisfaction among self-directed investors.

"As traditional full-service financial advisor businesses have increasingly set their sights on the high-net-worth investor, many firms are deploying centralized advisor call centers to serve the needs of mass affluent investors who are looking for professional guidance," said Mike Foy, Senior Director of the Wealth Management Practice at J.D. Power. "But this is often limited to infrequent, reactive communication that fails to address an investor's personal needs and goals. While firms cannot expect to deliver the level of personalized attention investors would receive from a higher-cost dedicated financial advisor, they can close the gap between the two, in part by effectively using technology to empower more frequent and meaningful human interaction."

Following are key findings of the 2018 study:

• Proactive, client-centric contact drives satisfaction: Among investors who seek guidance from their brokerage firms, overall satisfaction is 758 (on a 1,000-point scale) when investors receive no contact from an advisor. That number jumps to 810 when investors receive only reactive contact, and to 850 when an advisor makes at least one proactive outreach to the investor. Additionally, satisfaction among investors who had only investment-centric discussions (e.g., performance, asset allocation and market trends) with an advisor is 799, compared with 878 among those whose discussions included multiple client-centric topics (i.e., personal needs, goals and life changes).
• Reduced trading fees drive advocacy: With the benchmark for low-cost trading fees reaching a historic low, 24% of investors seeking guidance indicate being aware of a decrease in their trading fees and 34% say they are now paying below $5 per trade. Satisfaction is significantly higher among investors who have recognized a reduction in trading fees than among those who have not recognized such a reduction. Reduced fees also have a notable effect on advocacy. Seeking guidance investors identifying as NPS Promoters¹ who experience reduced fees have NPS scores of 65 vs. just 43 for those who do not experience a reduction in trading fees.
• Mobile grows but struggles to impress: Mobile usage has grown considerably, especially amongst Millennials², with 70% of all self-directed investors indicating the use of mobile for investment activity. When it comes to interacting with investment firms, however, the mobile channel earns significantly lower marks for customer satisfaction than phone and web. Mobile satisfaction is 51 points lower than online satisfaction among DIY investors and 45 points lower among advice-seeking investors.

Study Rankings

For the first time since the study launched 16 years ago, the U.S. Self-Directed Investor Satisfaction Study independently evaluates key satisfaction drivers and firm performance for those seeking guidance (i.e., investors who don't have a dedicated financial advisor but do have access to interact with a registered investment professional) and true DIY investors (those who do not interact with professional advisors).

Vanguard ranks highest in self-directed investor satisfaction among both those seeking guidance (830) and DIY investors (802).

The U.S. Self-Directed Investor Satisfaction Study measures self-directed investors' satisfaction with their investment firm based on performance in several factors. The seeking guidance segment has eight factors (in order of importance): firm interaction; account information; investment performance; information resources; financial advisor; commissions and fees; product offerings; and problem resolution. The DIY segment has seven factors (in order of importance): interaction; account information; commissions and fees; product offerings; information resources; investment performance; and problem resolution.

The 2018 study is based on responses from 5,504 investors who make all their investment decisions without the counsel of a personal financial advisor. The study was fielded in December 2017.

For more information about the 2018 U.S. Self-Directed Investor Satisfaction Study, visit
http://www.jdpower.com/resource/us-self-directed-investor-satisfaction-study.

See the online press release at http://www.jdpower.com/pr-id/2018054.

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. J.D. Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.

NOTE: Two charts follow.

*TIAA-CREF is profiled, but not rank-eligible, because it does not meet the study awards criteria.

**USAA is profiled, but not rank-eligible, because it does not meet the study award criteria.

Media Relations Contacts
Geno Effler; Costa Mesa, Calif.; 714-621-6224; [email protected]
John Roderick; St. James, N.Y.; 631-584-2200; [email protected]

About J.D. Power and Advertising/Promotional Rules www.jdpower.com/about-us/press-release-info

¹ Net Promoter,® Net Promoter System,® Net Promoter Score,® NPS® and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

² J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946 to 1964); Gen X (1965-1976); and Gen Y (1977-1994). Xennials (1978-1982) and Millennials (1982-1994) are subsets of Gen Y.

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SOURCE J.D. Power