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How does a firm get top marks in customer satisfaction? Here’s how J.D. Power drew up its latest list—and in what way 12 big industry names stack up

From Standard & Poor’s Equity Research

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From Standard & Poor’s weekly investing newsletter The Outlook

While the relationship between investors and financial advisors and brokers remains a key factor in investor satisfaction, changes in the economy have investors looking more closely at investment performance, now the most crucial driver of investor comfort according to the J.D. Power & Associates 2008 Full Service Investor Satisfaction Study (J.D. Power, like S&P and BusinessWeek.com, is a unit of The McGraw-Hill Companies (MHP).

Now in its sixth year, the inquiry measures overall investor satisfaction with full service investment firms, based in continuance six factors (in order of importance): investment doing; financial advisor/broker; commissions and fees; account setup/account offerings; convenience; and account statements. The study also measures investor satisfaction inside of three investor portfolio types: plenteous investors (those who be in actual possession of $1 million or more in investable assets); dimension wealthy investors (betwixt $100,000 and $999,999 in investable assets); and mass market investors (less than $100,000 in investable assets).

Raymond James (RJF) ranks highest in investor satisfaction by a bill of 831 onward a 1,000-point scale, receiving high ratings from investors in all six factors and performing particularly well in proactively contacting investors. Edward Jones follows in the rankings with a score of 806, and UBS Financial Services (UBS) ranks third overall, through 798.

Investment exhibition of character on the stage surpasses financial advisor/go-between considered in the state of the most important factor in satisfaction in 2008, accounting on this account that 24% of overall satisfaction, compared with 19% in 2007. Financial advisor/agent accounts for 22% of overall satisfaction—down from 24% in 2007. "Current household conditions, as reflected in declines in stock market indices, have heightened investor awareness of portfolio exhibition of character in continuance the stage," said David Lo, director of investing. services at J.D. Power.

"Regardless of market conditions, advisors who have the game in one’s hands at managing the expectations of their investors can help to allay more of the negative effects. For instance, keeping investors informed by conducting orderly portfolio reviews and including portfolio performance information on account statements can have a considerable impact on satisfaction."

A solution to managing the relationship is assigning investors to a dedicated financial advisor or team. Among the 12% of investors who explosion they do not have a financial advisor or team assigned to them, overall satisfaction is substantially lessen compared with investors in other types of investment relationships.

Additionally, advisors can pick up satisfaction by maintaining periodic proactive contact with investors. Mass affluent and mass market investors understand that varying levels of investable assets style for differences in the commonness of contact. The study finds that to achieve similar levels of high satisfaction among the three investor segments, investment firms need to proactively contact affluent investors every medium of 4.2 general condition of affairs by means of year, mass affluent 2.8 times, and mass market 1.7 times.

"Our advice to investors is that while portfolio performance is of primary importance, it is only one of several dimensions that drive investor satisfaction," said Lo. "When shopping for every investment advisor, discussing the following key issues can help determine a cheering fit: whether the investor be disposed be assigned to a limited advisor or team; the frequent occurrence of communication in regard to investment performance and the investor’s changing needs; how the advisor measures investing. performance; what the investor’s expectations are; the ease of use of account statements; fees; and other types of products and services useful from the investment firm."

The 2008 Full Service Investor Satisfaction Study is based on responses from 4,528 investors who primarily invest with one of the 19 firms included in the study. The study was fielded from April to May 2008.

Below are the 12 brokerage firms listed in J.D. Power’s July 30 release, in descending rank order.

Raymond James (RJF)

Edward Jones

UBS Financial Services (UBS)

LPL Financial Services

Merrill Lynch (MER)

Ameriprise Financial Services (AMP)

Wachovia Securities (WB)

Smith Barney (C)

Charles Schwab & Co. (SCHW)

Morgan Stanley (MS)

Chase Investment Services (JPM)

Fidelity Investments