Investors' relationships with their advisers deteriorated in 2009, and they are expressing their frustration by withholding recommendations to friends and family members.
Twenty-four per cent of Canadian investors surveyed by J.D. Power and Associates said they would “definitely” recommend their primary investment firm, down from 32 per cent in 2008. Ten per cent of investors said they were likely to switch advisers later this year, compared to six per cent last year.
Customers are also turning to lower-priced discount brokerages to make trades, although they are holding on to their full-service brokers as well. Thirty-six per cent of investors use both at the same time, compared to 25 per cent last year. The number jumps to 50 per cent for those who invest through their banks.
“This has created a new frugality, a situation in which an investor might call their adviser to get recommendations on portfolio mix and stock selection, but then turn around and place their order online for $9 or $7 per trade rather than spending $250 by trading through an adviser,” said Lubo Li, J.D. Power's senior director.
Brian E. Jackson, a financial planner at Ottawa's Independent Planning Group Inc., said many of his clients make their own trades based on his advice. It's in their best interest to keep him informed of other investments, he said, so he can help manage their asset mix, regardless of where their money is invested.
“If I'm really going to give the best advice, I need to know what they are doing and make sure it fits with what I'm doing,” he said. “I can't give them overall advice if I have blinders on.”
The Canadian Full Service Investor Satisfaction Study – in its fourth year – rates investor satisfaction on a 1,000-point scale. The reading slipped 30 points since the beginning of the year to 693.
The study is based on responses from 6,183 investors who use investment services with financial institutions in Canada. The survey was conducted in May 2009.
More to come
