Just 14% of investors are receiving comprehensive financial planning advice or receiving a financial plan, according to the new 2022 Full-Service Investor Satisfaction Study from J.D. Power.
On a positive note, however, firms are getting much better at delivering meaningful digital offerings and digital investor experiences which increase full-service client satisfaction, according to the study which is based on responses from 4,396 investors who work directly with a dedicated financial advisor or advisor team.
The study found UBS ranks highest in overall investor satisfaction with a score of 777. Vanguard (759) ranks second, while Charles Schwab (753) and Northwestern Mutual (753) are tied for third.
“Firms have rightly increased their investment in client-facing technology in recent years, and we see that beginning to pay off in terms of higher engagement and satisfaction with digital channels,” Mike Foy, senior director of wealth intelligence at J.D. Power, said in a statement.
“However, we don’t see similar progress being made with truly delivering on comprehensive advice. Very few investors—even those with high net worth—are getting an optimum level of value from their advisors,” Foy said.
Comprehensive advice from a primary financial advisor includes making recommendations in a client’s best interest; understanding their goals and needs and having a documented financial plan, according to J.D. Power’s definition.
Advisors who aren’t consistently providing such client-centric advice may not currently be experiencing high attrition, “in part because many clients simply don’t know what comprehensive advice looks like. But those advisors who do deliver it receive significantly more referrals and are far better positioned to continue to grow their practices,” he added.
Without delivering comprehensive advice, the industry “continues to make little or no progress” on its core value proposition of delivering comprehensive advice based on a deep understanding of individual clients, the study found.
Some 49% of clients said they do not receive communications from their advisor at least quarterly, 46% have not received a documented financial plan and 46% don’t believe the products and services provided by their advisor address all their wealth management needs, the study found.
All of these factors make up client trust. Those with low trust are twice as likely to fire their advisor. Eighteen percent of investors who have lower trust of their advisor said they will “definitely or probably switch investment firms in the next year” because they experienced one or more problems with the firm in the past 12 months, compared to nine percent of clients who have higher trust for their advisor.