Financial Advisor Sentiment Stabilizes

October 25, 2010

This article is included in these additional categories:

Analytics, Automated & MarTech | Data-driven | Financial Services

Financial advisor sentiment regarding their firms has stabilized in 2010 after declining the previous two years, according to a new study from J.D. Power & Associates.

The study measures the satisfaction of both employee advisors (those who are employed by their investment services firm) and independent advisors (those who are affiliated with a broker-dealer but operate independently). The study examines eight key drivers of employee advisor satisfaction: firm performance; compensation; work environment; products/offerings; technology; job duties; contact; and people. The study also examines eight key drivers of satisfaction among independent advisors: firm performance; people; technology; compensation; contact; job duties; products for clients; and offerings for advisor.

Edward Jones, Commonwealth Financial Come Out on Top
Edward Jones ranks highest in overall satisfaction among employee advisors with a score of 876 on a 1,000-point scale and performs particularly well in the work environment and job duties factors. Raymond James and Associates follows with a score of 857 and performs particularly well in compensation and perceptions of firm performance. Merrill Lynch ranks third in the segment with 710 points and performs well in the technology and products/offerings provided to its advisors.

Commonwealth Financial Network ranks highest in overall satisfaction among independent advisors with a score of 898. Commonwealth Financial Network performs particularly well in perceptions of financial stability and operational and compliance support. Cambridge Research Advisors (848) follows in the ranking and performs particularly well in products for clients and job duties as it relates to flexibility in choosing products and services to recommend. Raymond James Financial Services ranks third with a score of 845 and performs well in firm performance, products for clients and the usefulness of the firm’s investment research.

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Wirehouse Firms Seen as Most Financially Stable
The study finds that advisor perceptions of their firm’s financial stability have improved, most notably among employees of wirehouse firms (established global firms such as Merrill Lynch and Wells Fargo) and independent advisors.

Perceptions of financial stability of wirehouses have improved to 5.4 (on a seven-point scale) in 2010 from 4.6 in 2008. While advisors’ perceptions of the financial stability of independent firms have improved to 6.3 in 2010 from 6.0 in 2008, they still trail those of advisors of non-wirehouse firms (6.5 in 2010).

Best Practices Center on Time
The study also finds that a majority of the best practices that drive advisor satisfaction center on maximizing the time advisors can spend with their clients and minimizing the time spent on administrative activities. For example, among employee advisors, best practices include providing dedicated compliance support; software programs that are aligned with daily workflow processes; and same-day contact from IT support.

Likewise, for independent advisors, best practices include adjusting the workload so that only 15% or less of a typical week is spent on compliance-related tasks such as paperwork, and providing completely integrated software programs.

Vanguard Leads Self-directed Investor Satisfaction
Looking at investment services from the client end, Vanguard ranks highest in self-directed investor satisfaction with a score of 810, according to other recent J.D. Power & Associates data. Vanguard performs particularly well in account offerings and account information. Charles Schwab & Co. follows closely in the rankings with a score of 807, performing particularly well in interaction and information resources. Scottrade ranks third with 799 and performs well in trading charges and fees.

About the Data: The 2010 U.S. Financial Advisor Satisfaction Study is based on responses from more than 2,800 financial advisors who hold a Series 7 license. Survey sample and industry weighting was provided by Qualified Media and Investment News. The study was conducted in two waves between February and March 2010 and July and September 2010.
J.D. Power & Associates is publisher of the study, which is the source of the enclosed charts.

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