TORONTO — Global economic headwinds are putting an increasing strain on the relationship between Canadian investors and their full-service financial advisers, according to J.D. Power and Associates.
The marketing information services company said in its annual survey Thursday that investor satisfaction with full-service firms in Canada has declined for two years in a row.
Full-service investment firms provide advice and analysis to clients but tend to charge higher fees than discount brokers that mainly provide basic buy-and-sell services.
According to J.D. Power, overall satisfaction with full-service investment firms in Canada averaged 720 on a 1,000-point scale in 2011, down 13 points compared with a year earlier.
In contrast, the latest survey found satisfaction among U.S. full-service investors has risen for two consecutive years to 775 in a 2012-dated survey.
The Canadian Full Service Investor Satisfaction Study is based on responses from more than 5,200 investors who use advice-based investment services with financial institutions in Canada. The study was fielded in June and July 2012.
“The difference between U.S. and Canada full-service investors is due to the relationship with their investment firm,” said Lubo Li, senior director of the financial services practice at J.D. Power and Associates, Toronto.
“Investors in Canada are less satisfied with their firm in large part because their advisers is not keeping them up to date with market trends as much as during the past two years and isn’t demonstrating as much concern for their needs.”
For example, the survey showed investors in Canada rate their adviser 7.8 on a 10-point scale for showing concern for their needs, compared with an average 8.4 reading i the United States.
Meanwhile, investors in Canada rate their adviser 7.4 on average for promptness in keeping them up to date with market trends, compared with an average 8.1 reading south of the border.
“Certainly, external factors such as global financial market fluctuations play a role in overall satisfaction, but also present an opportunity for advisers to deepen the relationship with their investors by managing expectations and providing timely advice to navigate the tenuous market,” Li said.
“Investors need reassurance regarding the current risk exposure of their portfolio and to believe they are well positioned when the market comes back.”
Among other things, key best practices identified include a recommendation to build or enhance tools that minimizes the amount of time advisers spend on administrative tasks in order to free them up to spend more time with clients.
Among the various firms in Canada, Raymond James Ltd. ranked highest in investor satisfaction with a score of 745. MDC Physician Services, open only to members of the Canadian Medical Association, was also just what the doctor ordered, coming in a close second at 744.
Others listed in the survey were: Edward Jones 735, TD Waterhouse Private Investment Advice 731, Dundee Wealth 729, ScotiaMcLeod 728, RBC Dominion Securities Inc. 726, CIBC Wood Gundy 723, Investors Group Securities, Inc. 722, Desjardins Securities 721, National Bank Financial 710, Manulife Securities 708, BMO Nesbitt Burns 702, Canaccord Wealth Management 698, Credential Securities 698 and Assante Wealth Management 696.
Iinvestor satisfaction was measured on seven factors in order of importance: investment adviser, investment performance, account information, account offerings, commissions and fees, website and problem resolution.