In tight race, Fidelity and Edward Jones tie for top honors in J.D. Power survey as spiky markets drive down satisfaction scores across the board

Brooke’s Note: It’s hard to know how much stock to place in a rating firm, JD Power, that is perhaps best known for what it says about automobiles. But it’s a third party and it has a process. The Los Angeles-based rater seems to have some good instincts about ferreting out who provides personal care, transparency and the like. It also seems — like Barron’s with its “top advisors,” for example — to err on the side of rewarding biggies for being big. See: Barron’s offers insight but declines interview about Top 100 study.

Edward Jones and Fidelity Investments tied for first place in the category of investor satisfaction in the J.D. Power and Associates 2015 study released today, a study that points to investors’ growing uneasiness with volatile markets and that contains a counterintuitive finding about women investors.

St. Louis-based Edward Jones and Boston-based Fidelity tied with scores of 812. Each scored well in different categories. Edward Jones earned high points in the investment advisor and investment performance categories and Fidelity excelled in areas centered on account information and account offerings.

“I think the recipe for success at each firm is different,” says Mike Foy, director of wealth management at J.D. Power. “Edward Jones is about the advisor and the face time and personal attention and that’s the key to their success. If you look at individual factors, they do well with individual advisors and investment performance and a lot of that is related to the advisor.”

The Westlake Village, Calif.-based accolade-bestowing firm is in the 13th year of its full service investor satisfaction study, which measures overall investor satisfaction, account information, account offerings and problem resolution. The firm ranks overall satisfaction on a 1,000-point scale with scores closer to 1,000 being top scores and anything closer to zero indicating poor performance. See: What’s up with J.D. Power naming Commonwealth top IBD for the fourth straight year.

Differing strengths

One reason for the uptick in investment performance may be a shift in how Edward Jones equips its advisors to invest away from such a an American Funds-centric process to one that loops in more ETFs. See: An outflow-plagued American Funds holds its ETF fire until it can resolve the vehicle’s front-running exposure, which defies a resolution.

Fidelity, on the other hand, excelled at making clients understand what they are getting.

“Fidelity does really well at everything else like things such as the competencies and they’re really good at delivering account information, raising awareness on products and commissions and fees,” he says. See: Fidelity Investments wins huge in the 'biggest 401(k) case in decades’ — but bearing battle scars.

Responding to the study results, Fidelity spokeswoman Nicole Abbott says: “In 2014, investors opened more than 11,000 new brokerage accounts each day showing that Fidelity is providing them with the tools, information and products they want.” See: Grand thoughts at the NYC Grand Central Hyatt from Fidelity Investments and RIAs.

Neck and neck

In a tight race, Charles Schwab & Co. Inc. of San Francisco and St. Louis-based Wells Fargo Advisors LLC tied for third place, just missing the top score with 810 points each. Raymond James & Assoc. Inc. came in fourth with a score of 809. See: A few things I learned about the Raymond James RIA effort in an NYC sit-down with Bill Van Law.

“It’s a very tight field. There’s not a clear and away market leader that has differentiated themselves,” Foy says. “It’s an open field for firms. There’s an opportunity for someone to jump from the middle of the pack to the top considering how close the pack is to one another.”

More than 5,300 investors were surveyed online in January and February.

What women want

With more firms focusing on recruiting women advisors, J.D. Power asked for the first time how important it is to women investors to work with women advisors.

“We were wondering if hiring more women is a good strategy for making women investors happy and we found out it isn’t. The gender of an advisor isn’t important,” Foy says. See: How to market to women: Don’t.

But women do respond to advisors who are willing to connect with them beyond simply picking investments.

“Women have a higher expectation of having an advisor who has relationship skills. They want to be able to trust the advisor, too,” Foy says.

And it seems women are looking for advisors — of either gender — who possess skills traditionally attributed to women. According to the study, the satisfaction quotient rises when firms recruit, train and retain advisors of either gender with the skills needed to build trust-based collaborative relationships.

Not so much with men. Women investors who say they “work with their advisor as a team” register higher satisfaction than among men who say the same. See: A Harvard MBA takes her team from a $3-billion Boston RIA to join a $29-billion RIA based in Baltimore.

Rollercoaster-weary

James Weddle: We believe that our
strong performance is driven primarily by
the relationship our financial advisors have
established with clients.

The scores of all of the firms were down from last year. Fidelity’s score, for instance, dropped from 842 a year ago and Edward Jones’ score was down from 835. Charles Schwab’s score dropped from 825 in 2014.

The lower ratings were due, in large part, to volatile markets.

“Last year, every firm was up significantly because the S&P was up 30%. But this year, returns have been lower and there are increases in volatility and that’s why there is a decline in the scores,” Foy says. See: 5 ways for incumbent advisors to get — and keep — their clients’ vote of confidence.

Top nod

Edward Jones ranked highest in investor satisfaction by J.D. Power in 2012, 2010 and 2009, from 2005 through 2007, and in a tie, in 2002, the year the study began. See: J.D. Power and Associates hints strongly at wirehouse deficiencies as it puts Commonwealth Financial and Raymond James on a pedestal.

“We believe that our strong performance is driven primarily by the relationship our financial advisors have established with clients,” said Edward Jones managing partner James Weddle, in an e-mail.

“Our financial advisors strive to understand investors’ needs and goals, focus on the long-term relationships, and create a partnership. Across our firm, everything we do is focused on serving our clients. Our success is built upon trusted relationships with clients that are the basis for offering them tailored guidance to help reach their long-term financial goals. We strive to deliver it all with exceptional service.”