Investors have grown increasingly dissatisfied with their self-directed investment firms, according to a new J.D. Power & Associates 2013 U.S. Self-Directed Investor Satisfaction Study.

The study measures investor satisfaction based on six factors: interaction, account information, trading charges and fees, account offerings, information resources and problem resolution. Overall satisfaction dropped to a rating of 752 (on a 1,000 point scale), down from 768 last year.

“We’ve been seeing general declines in the websites and phone interaction,” says Craig Martin, Director of the Wealth Management Practice at J.D. Power. “These are not huge declines but as more people are interacting and exposed to a number of different sites beyond financial services, that influences your perception of what a website and website interaction should be like,” he says.

Breaking down the numbers, the survey shows that overall satisfaction declines by 72 points when website functions are difficult to locate, for example.

Martin says investment firms really need to look at tailoring their message to investors and provide tools that speak to those investors needs. “Targeting the message to individuals is ideal and the online channel makes that easier,” he adds.

Trading charges and fees are also an area that investment firms need to educate their customers on. The report says that the percentage of investors who say they completely understand their fee structure has dropped to 35% in 2013 from 39% in 2012. “This goes back to understanding who is your target audience,” says Martin. He adds that firms need to understand the trading practice of clients and ensure the information suits that person – either the buy and hold retirement investors or active traders. Martin suggests some buy and hold investors, although wanting to understand their fees, may need or want to know less, for example, than active traders whose fees are more visible.

“The more transparent and clear you are with a customer, no matter what the [financial services] relationship, the more satisfaction increases.”

Martin says that investment firms still have a problem getting clients to use financial planning or investment tools. Investor awareness or use of at least one financial planning tool has declined to 28% from 31% according to the report. Usage, according to Martin, helps increase satisfaction. “While many of these tools sound great and can be very effective, getting people to use them remains a challenge for investment firms.”

As assets grow, there tends to be an increase in the number of trades but often they are spread across a greater number of investment firms, notes Martin. Overall, he adds, firms need to ensure best practices and deliver a great experience for customers (especially in higher investment brackets) if they want to “keep share of wallet.”

Joel Kranc is Director of Kranc Communications, focusing on business communications, content delivery and marketing strategies. He has written and worked in the retirement and institutional investment space for 17 years covering North American markets, large institutional pensions and the adviser community.


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