Financial and investment advisers have their work cut out for them in B.C.
According to J.D. Power and Associates' latest survey of full-service investment firms released in late August, for the second year in a row, investors in B.C. and across English Canada are increasingly dissatisfied with their financial advisers.
The finding contrasts with the increasing satisfaction U.S. investors have in their financial advisers and has widened the gap between full-service investors in Canada and the U.S.
Lubo Li, a senior director at J.D. Power and Associates, told Business in Vancouver that Canadian investors have shown less satisfaction in many key areas they measure, including:
•the ease with which investors can contact their advisers;
•timeliness of an adviser's response;
•an adviser's concern for an investor's needs; and
•helpfulness of an adviser's office staff.
"We use a 10-point scale, and in most of these attributes there is a gap of half a point on the Canadian side in satisfaction of about 8.1 to 8.2 compared to 8.6 to 8.7 points for U.S investors," said Li. "Clearly the widening gap can't be explained purely by the performance of the market."
The survey found that fewer Canadian clients said they were well informed about their portfolio. When asked if an adviser clearly explained the reason for their investment performance, 69% of Canadian investors said yes, compared with 73% of U.S. investors.
When asked if their adviser clearly explained the firm's fee structure, only 63% in Canada said yes, compared with 70% in the U.S. "These are small differences, but you add up all of them and that's when you see the gap between Canada and the U.S. at the industry level."
According to Li, advisers in Canada and the U.S. have a similar amount of contact with their clients, but U.S. advisers appear to be servicing their clients' needs better than their Canadian counterparts. Li suggested that a higher client-to-adviser ratio in this country is part of the challenge.
But he added that U.S firms have been investing in new technology faster than Canadian firms to improve back-office processes and provide better tools to help advisers become more effective in reaching out to their clients.
Since the financial crisis, most U.S. firms have improved the quality of their advice and increasingly get paid for that advice rather than on the commissions they earn from investment trades.
Despite declining investor satisfaction, it's not all bad news for advisers. Li said some firms have improved their rankings in the past few years. For example, Scotia McLeod rose from 10th on last year's ranking to fifth this year. Vancouver-based Raymond James topped the list in investor satisfaction, up from third last year.
Firms operating in B.C. appear to be dealing with their investor issues better than their counterparts in other provinces. The survey found that clients in B.C. are much happier in how brokerages resolve problems.
"The average index is 582 nationally. In B.C., it's 653," said Li. "That's way above all the other markets and has significantly improved year over year." •
Firms with highest investor satisfaction ranking (based on a 1,000-point scale)
Raymond James Ltd. 745
Edward Jones 735
TD Waterhouse Private Investment Advice 731
Dundee Wealth 729
ScotiaMcLeod 728
RBC Dominion Securities Inc. 726
CIBC Wood Gundy 723
Investors Group Securities, Inc. 722
Desjardins Securities 721
Industry Average 720
National Bank Financial 710
Manulife Securities 708
BMO Nesbitt Burns 702
Canaccord WealthManagement 698
Credential Securities 698
Assante Wealth Management 696
