Consumer researcher puts Edward Jones on top in investor-satisfaction study. Rather than turning away when investment performance is down sharply, it seems that brokerage clients may in fact put increased reliance on relationships with their advisors when times are tough. That's one of the main findings of a new survey by JD Power and Associates.

The financial advisor is the most important aspect of overall investor satisfaction for 30% of the consumers JD Power surveyed this year -- up from 22% in 2008 -- while investment performance rates as most important for just 15% of consumers this year versus 24% in 2008.

In fact, investment performance took third place this year, coming in after convenience.

Hoops of steel

"As investors become increasingly uneasy amid current market conditions, they're more often looking to their financial advisors for reassurance and guidance," says David Lo, head of JD Power's investment-service practice. "As investment performance tends to be a relative and subjective measure, it's more important that the financial advisor manages investors' expectations of investment performance."

Advisor-to-client communication is another driver of investor satisfaction. In particular, contacting investors to establish or renew financial plans, thoroughly explaining fees and providing clear explanations regarding the reasons for investment performance may have a substantial positive impact on satisfaction.

"Financial advisors need to address uncertainty and apprehension by proactively reaching out to their clients," says Lo. "In 2009, 20% of investors say they haven't been contacted enough to review their investment performance, up from 15% in 2008."

Names named

With a score of 784 on a 1,000-point scale, Edward Jones took first place among the 14 full-service brokerages rated in the JD Powers survey. The St. Louis, Mo.-based brokerage, which has ranked highest in four of the past five years, scored especially high in terms of convenience and account statements. Boston-, Charlotte, N.C.-, and San Diego-based LPL Financial came in second with a score of 773, doing well in the financial advisor category. Schwab came in third with a score of 771.

Among the dogs of the list are names closely associated with recent financial-sector turmoil: Merrill Lynch which became part of Bank of America early this year; Morgan Stanley, which just entered into a retail-brokerage joint venture with middle-ranked Smith Barney; Wells Fargo Investments, which just combined with fellow laggard Wachovia Securities to form Wells Fargo Advisors.

Interestingly enough, UBS' U.S. brokerage came out on the high end of the middle rankers.

"It's no coincidence that firms with lower levels of satisfaction have experienced a decline in their average assets under management," says Lo. "[This] further highlights the relationship between delivering a superior experience for investors and improving the bottom line."

Westlake Village, Calif.-based JD Power's latest U.S. Full Service Investor Satisfaction Study is based on responses from nearly 4,500 investors who make some or all of their investment decisions with a broker. It was conducted in March and April 2009. -FWR

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