COSTA MESA, Calif.: 18 May 2017 — The latest round of trading fee cuts announced in recent months by self-directed investment firms may help drive new customer acquisition in the short term but it won’t be enough to keep clients loyal over time. According to the J.D. Power 2017 U.S. Self-Directed Investor Study,SM released today, a firm’s reputation and low trading fees are the two most critical drivers of initial firm selection among self-directed investors, but firms need to deliver value or clients will defect to lower, or in some cases no-cost, options elsewhere.
“A confluence of factors including changes to technology, industry regulation, investor preferences and the competitive landscape is disrupting the industry and has created the conditions for a ‘money in motion’ event for self-directed investment providers,” said Mike Foy, senior director of the wealth management practice at J.D. Power. “As transaction fees continue to approach zero, it’s more critical than ever that firms differentiate by delivering a superior client experience, and that starts with successful onboarding.”
Following are the key findings of the 2017 study:
- Onboarding as a “moment of truth”: The critical elements of an effective onboarding experience include providing transparency around fees, educating clients on how to use available resources including digital and mobile channels, and delivering help with setting personal goals. When firms deliver on these key experiences, new clients are significantly more satisfied than when they do not (822 vs. 773).
- Affluent Millennials represent largest opportunity and risk: Nearly one-fourth (24%) of self-directed Affluent Millennials1 ($100,000 or more in investable assets) say they either “probably will” or “definitely will” leave their current firm in the next 12 months vs. just 10% of non-Millennials. The Affluent Millennial segment controls 68% of all “at-risk” assets among surveyed investors.
- Share of mobile trading volume up 152% in past seven years: Overall use of mobile among self-directed investors has nearly doubled during the past seven years and among mobile traders, 63% of trades were conducted via mobile, up from just 25% in 2011.
- Banks show growth potential in self-directed investor space: Citigroup is included in the rankings in 2017 for the first time in this study, further increasing the representation of banks in the self-service investment marketplace. Despite lower overall satisfaction scores, banks are poised for growth in this space, especially with Millennials, who indicate a greater openness to consolidate financial products and services with a single institution.
Vanguard ranks highest in self-directed investor satisfaction with a score of 813 (on a 1,000-point scale). E*TRADE Financial ranks second with a score of 809, followed by TD Ameritrade at 804.
The U.S. Self-Directed Investor Satisfaction Study, now in its 16th 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; product offerings; information resources; and problem resolution. Overall satisfaction in 2017 averages 779, up 4 points from 2016.
The 2017 study is based on responses from more than 4,600 investors who make all of their investment decisions without the counsel of a personal investment advisor. The study was fielded in January 2017.
For more information about the J.D. Power U.S. Self-Directed Investor StudySM visit
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe.
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1 J.D. Power defines the generations as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); Gen Z (1995-2004). Millennials are defined as those born between 1982-1994.