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Charles Schwab & Co., Inc. Ranks Highest in Self-Directed Investor Satisfaction

WESTLAKE VILLAGE, Calif.: 21 May 2015 — Being a self-directed investor doesn’t mean going it alone when it comes to achieving financial goals; self-directed investors really do want a guidance-based relationship with their firm, according to the J.D. Power 2015 U.S. Self-Directed Investor Satisfaction StudySM released today.

The study, now in its 14th year, measures self-directed investors’ satisfaction with their investment firm based on performance in six factors (in order of importance): interaction; account information; trading charges and fees; account offerings; information resources; and problem resolution. Overall satisfaction in 2015 averages 763 (on a 1,000-point scale), unchanged since 2014.

Self-directed investors want and expect more from their firm than just low-cost trades, fast and reliable trade execution and access to research. While they may not be looking for a full time one-on-one advisor relationship, they are increasingly looking for a guidance-based relationship to help them establish and track performance against their personal financial goals. Investors with guidance-based relationships are much more likely to recommend their firm to friends and family as well as increase their investment levels with the firm.

Successful guidance-based relationships are based on three pillars: effective communications; relevant educational resources; and a robust and intuitive suite of digital tools that help investors with financial planning and portfolio management as well as tracking and monitoring investments. Firms that can effectively cultivate those relationships can satisfy clients and potentially retain them over the long term, which is especially important with respect to younger clients such as Gen Y[1] and Gen Z as their assets grow and financial needs become more complex over time.

With respect to investment style, 66 percent of self-directed investors describe themselves as true do-it-yourself investors seeking no advisor input, while 21 percent consider themselves “validators” who prefer to have a professional act as a sounding board for their ideas. The remaining 13 percent consider themselves “collaborators” who largely make decisions collectively with help from some sort of advisor. The number of validators and collaborators is even higher among Gen Y and Gen Z (38%) and women investors (38%), two critical and fast-growing segments of the investor market.    

“Self-directed investors may not be looking to delegate managing their money to an advisor, but they do value access to guidance when they are ready for it, whether that means a financial planning tool they can use on their tablet, a webinar about saving for their children’s education or an actual human being who serves as a sounding board for ideas by phone or in a local branch,” said Mike Foy, director of the wealth management practice at J.D. Power. “Firms need to make sure that their clients understand what’s available to them and how the overall value proposition relates to what they pay. In most cases, clients are getting a lot more value from their firm than just the ability to trade.”

2015 Self-Directed Investor Satisfaction Rankings

Charles Schwab & Co., Inc. ranks highest in self-directed investor satisfaction, with a score of 801. Charles Schwab & Co., Inc. performs well across all factors, particularly in interaction and account offerings. Vanguard ranks second with a score of 794, followed by Fidelity Investments at 791.

KEY FINDINGS

  • ŸOverall, satisfaction is higher among self-directed investors who have a guidance-based relationship (828) than among those who do not (656).
  • ŸWhen considering the three pillars of guidance-based relationships, each has a significant   impact on satisfaction: effective communication of products/services/seminars (+58 points), offering investment educational resources (+86) and providing digital tools (+114) for asset allocation, financial planning, and tracking/monitoring portfolio performance.
  • ŸAmong self-directed investors with a guidance-based relationship, 64 percent say they “definitely will” recommend the firm, compared with 26 percent among those who do not have this type of relationship.
  • With respect to share of wallet, 45 percent of investors who have a guidance-based relationship with their firm increased their investment levels, compared with only 29 percent of those whose relationship is not guidance-based.
  • ŸOnly 40 percent of investors indicate they completely understand the fees they pay. However, investors who indicate they received an explanation of fees from their firm are over three times more likely to indicate they completely understand the fees, compared with those who did not receive such an explanation (50% vs. 16%).

The 2015 U.S. Self-Directed Investor Satisfaction Study is based on responses from more than 3,700 investors who make all of their investment decisions without the counsel of a personal investment advisor. The study was fielded in January and February 2015.

Media Relations Contacts

Jeff Perlman; Brandware Public Relations; Woodland Hills, Calif.; 818-317-3070; jperlman@brandwarepr.com

Anthony Popiel; Brandware Public Relations; Atlanta, Ga.; 770-649-0880; apopiel@brandwarepr.com

John Tews; J.D. Power; Troy, Mich.; 248-680-6218; media.relations@jdpa.com

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[1] J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (born after 1995).

Media Contacts:

John Tews

Troy, Michigan

(248) 680-6218

media.relations@jdpa.com