There’s a looming bump in the road for broker-dealers who benefited from investors flocking to do-it-yourself retail platforms during the past few years, according to J.D. Power’s 2022 U.S. Self-Directed Investor Satisfaction Study.

That’s because a significant percentage of the 25 million investors who opened accounts during the past three years are experiencing significantly more problems with their accounts and lower levels of customer satisfaction, resulting in brand loyalty scores that are less than half those of more tenured clients, according to the annual study of 4,888 investors released today.

“Pandemic-era investors who entered the financial markets during a real gold rush period of heightened expectations, significant disruption and extreme volatility represent a unique set of challenges for retail brokerage firms,” said Michael Foy, senior director and head of wealth intelligence at J.D. Power.

Pandemic-era investors are more than twice as likely to switch brokerage firms than those who have had their accounts for three or more years, the study found.

Just 24% of pandemic-era investors say they definitely will not switch providers, which is down 11% from a year ago. Among investors who have had accounts for three or more years, 50% say they definitely will not switch providers. Primary drivers of attrition risk include lack of satisfaction with products, services and tools and recommendations from friends and relatives to switch providers, J.D. Power said.

T. Rowe Price ranked highest in self-directed investor satisfaction among investors also seeking guidance, the survey said. Vanguard ranked second and Charles Schwab ranked third.

Vanguard ranked highest among purely self-directed investors’ satisfaction, Charles Schwab ranked second and Fidelity ranked third.

With trading fees no longer a significant revenue driver “the big opportunity for retail brokerage firms is creating loyal clients who will deepen their relationships to include revenue-generating services that address their broader financial needs for things such as advice, cash management and lending,” Foy said.

“Right now, that’s precisely where many firms are dropping the ball," he continued. "They are struggling to meet their clients where they are at this point in their lives and deliver the type of personalized advice, educational tools and problem-free experiences they need to grow with their firms."

So far, advice offerings for do-it-yourselvers that provide the option of interacting with a financial professional from a firm’s call center pool are not resonating with investors, J.D. Power said.

“While the industry has been focused on how to make this scalable advice model work for the very large mass affluent market—which is often not an ideal fit for full-service advisors—average satisfaction among this segment currently is lower than either full DIY investors or full-service investors,” the study said.

The promise of the hybrid DIY-advice model has not yet been widely realized, Foy said.

What can broker-dealers do to beef up brand loyalty and satisfaction among hybrid clients? “Provide flexible options on how they can receive advice and guidance, and then provide them help in deciding what model is best for them based on their current needs, preferences, interest level, and time,” Foy told Financial Advisor magazine.

“Should they work with an advisor, use digital or robo-advice, or be more self-directed? There are lots of options out there, but many investors don’t understand what’s best for them. For example, 81% of U.S. millennial DIY investors say they would be interested in digital or robo advice if they knew their firm offered it. This is a potential win-win for clients and firms as there’s more value being delivered and more potential for monetizing relationships,” he said.

As market volatility and losses persist, lack of brand loyalty and attrition are likely to get worse before they get better. “Over time we’ve seen that client satisfaction generally declines as market conditions worsen. This study was fielded in Q4 when markets were setting new highs, so things have already gotten more challenging,” Foy said.

For investors who remain completely self-directed, firms should develop and provide intuitive tools and educational content to help them “develop confidence and make better decisions about investing in light of their overall financial circumstances and well-being,” he said.

“Investing isn’t something clients can or should do in isolation from broader concerns about things like debt and budgeting,” Foy added.