Fees, Charges Influence Investor Satisfaction

September 30, 2010

This article is included in these additional categories:

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

The importance of trading fees and charges on overall investor satisfaction has increased from 2009, according to the J.D. Power and Associates 2010 U.S. Self-Directed Investor Satisfaction Study.

The study measures customer satisfaction with investment firms based on performance in six factors: interaction; trading charges and fees; account information; account offerings; information resources; and problem resolution.

Trading Charges and Fees Account for One-quarter of Satisfaction
The study finds that trading charges and fees account for 23% of overall investor satisfaction, up from 17% in 2009, after six years of decreasing importance. Trading charges and fees is the second-most-important factor driving overall satisfaction, following interaction.

Interactions are Key Differentiator
The study also finds that interactions, both in terms of transactions and customer service, as well as products, information resources and tools offered, continue to be the key differentiators among the highest-performing firms. Among investors with high levels of satisfaction (850 or higher on a 1,000-point scale), 75% say they “definitely will” recommend the firm.

In contrast, among investors with low levels of satisfaction (score of less than 700), only 12 percent say they “definitely will” recommend the firm. On average, highly satisfied investors also use more products and services from their firm (5.7), compared with investors with low satisfaction (3.6).

Vanguard Leads Self-directed Investor Satisfaction
Vanguard ranks highest in self-directed investor satisfaction with a score of 810 and 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.


Complete Belief in Financial Institutions Low
Very few Americans find statements by financial institutions completely believable, according to a recent Harris Poll. Accounting firms generated the highest percentage of Americans who find statements by their spokespeople completely believable, which was only 5%. A mere 2% of Americans find statements from investment firms, health insurance companies, mortgage companies and credit card companies completely believable.

About the Data: The 2010 U.S. Self-Directed Investor Satisfaction Study is based on responses from 4,150 investors who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in July 2010. J.D. Power and Associates is publisher of the enclosed chart, which is derived from the study.

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