TORONTO (Reuters) - Canadian full-service investment firms have a lot of room for improvement when it comes to communicating with their clients, who are, on average, less satisfied with their firms than they were a year ago, according to a study released on Thursday.
Loyalty to and confidence in full-service investment firms also came in lower in the J.D. Power and Associates study, which was based on responses from more than 5,600 investors who use advice-based investment services provided by financial institutions in Canada.
The average ranking for firms on overall client satisfaction was 733 on a 1,000-point scale. That was down 2 points from a year ago, and down 30 points from 2007.
Investor satisfaction levels hit a low of 693 during the worst of the economic downturn in 2007 and 2008, as the value of many investments dropped.
Concerns about global markets, along with high investor expectations coming out of the recession, have led to lower satisfaction levels in 2011, the study said.
“Market volatility in 2008 and 2009 yielded some very important lessons about the necessity of reassuring and communicating with investors during turbulent times,” Lubo Li, senior director of the financial services practice at J.D. Power and Associates in Toronto, said in a statement.
“These lessons remain relevant, as the recent downturns in financial markets across the globe have set investors on edge.”
During the recession, the highest ranking firms were those that reached out to their clients and suggested adjustments to their financial plans as necessary, keeping in mind their short- and long-term goals.
In the 2011 study, 65 percent of full service investors had not been contacted by their firm during the past 12 months about product or service offerings.
Four in 10 investors said they have not had a risk tolerance discussion with their adviser that was appropriately incorporated into their portfolio.
Nearly 30 percent of investors said that their adviser did not effectively communicate the reasons for their investment portfolio performance during the past year.
“Communication is key in fostering a healthy adviser-client relationship,” Li said, adding that advisers who actively reached out to their clients and had discussions on risk tolerance, investment performance, and a strategic plan, ranked the highest in client satisfaction and loyalty.
Investment firms need to pull provide technology solutions that help those discussions and limit the time advisers spend on administrative duties, Li said.
The rankings of the individual firms, based on a 1,000 point scale, are below:
Wellington West Capital Inc. 777
RBC Dominion Securities Inc. 755
Raymond James Ltd. 745
TD Waterhouse Private Investment Advice 742
Investors Group Securities Inc. 737
DundeeWealth Inc. 736
Assante Wealth Management 735
Industry Average 733
Edward Jones 731
BMO Nesbitt Burns 729
CIBC Wood Gundy 728
Credential Securities 726
National Bank Financial 723
Desjardins Securities 712
Canaccord Capital 702
Manulife Securities 695
The study was fielded in May and June.
Reporting by John McCrank; editing by Peter Galloway