While a new study finds that satisfaction among clients using financial advisors has risen over the past year, it also finds, however, a growing lack of loyalty among more affluent Millennials.
According to J.D. Power's 2024 U.S. Full-Service Investor Satisfaction Study, overall investor satisfaction with full-service investment advisors is up eight points from a year ago, registering at 735 on a 1,000-point scale.
J.D. Power notes that this performance is consistent with the long-term trend of investor satisfaction moving in concert with stock market performance, but it also illustrates a potential risk factor for advisors whose perceived value is dependent on market forces.
And younger affluent clients present the greatest flight risk, according to the study. Intended attrition rates tend to be very low among clients with advisors, especially among Gen X and older clients. Millennials—particularly more affluent Millennials—are a different story, however.
More than a third (36%) of Millennials[1] with more than $1 million in investable assets say they “probably will” or “definitely will” change firms in the next year. A potential factor behind this lack of loyalty is that 70% of affluent Millennials have a secondary investment firm. This number is significantly lower among older affluent cohorts, the study notes.
“It is conventional wisdom that investor satisfaction tracks closely with stock market performance, but for advisors who want to build long-term, sustainable relationships that can weather good markets and bad, they will need to build a deeper level of engagement with clients,” says Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power.
Martin notes that this is especially true among the younger investors who show lower levels of client loyalty than investors in other generational groups. “Advisors will need to adjust their approach to meaningfully connect with younger investors or risk a major outflow of assets in coming years,” he adds.
Technology’s Importance
Technology and digital solutions, meanwhile, have become increasingly critical to enabling advisor efficiency and empowering more proactive client engagement, the study further emphasizes.
A majority (86%) of advised clients logged into their account on their firm’s site in the past 12 months and 60% logged onto the mobile app. Moreover, advisors who take the time to help clients understand and engage with digital channels are consistently driving higher levels of investor satisfaction.
In contrast, advisors who fail to clearly explain digital options are perceived more negatively and get half the number of referrals as their more digitally supportive peers.
The rapid growth of AI is another area that is increasingly putting the spotlight on advisor relationships. To that end, as AI-enabled investment advisory solutions gain traction in the marketplace, advisors need to be clear on what differentiates them, J.D. Power suggests.
In 2024, 41% of advised clients’ experiences fall into the transactional category on the J.D. Power advice continuum. The continuum measures the efficacy of advice delivery on a scale extending from transactional to comprehensive. It categorizes performance into three tiers—transactional, client-centric and comprehensive—thereby indicating a progression from basic to exceptional service.
According to the study, this group is put at the greatest risk by technology-enabled solutions that can effectively compete on price and efficiency. “Delivering personalized guidance that addresses a client’s unique goals and challenges, major life changes and investment strategies that transcend returns are keys to insulating the business from future competitive threats,” the study submits.
Study Rankings
As to those rankings, the study shows that U.S. Bank ranked highest in overall investor satisfaction with a score of 761. Edward Jones (749) ranked second, followed by Vanguard (748) and UBS (745). Raymond James and Stifel tied for fifth at 741; they were followed by Ameriprise and Northwestern Mutual (740). Rounding out the top 10 firms were Morgan Stanley (738) and J.P. Morgan Private Client Advisors (737).
Now in its 22nd year, the study measures overall investor satisfaction with full-service investment firms in seven factors (in order of importance): trust; people; products and services; value for fees; ability to manage wealth how and when I want; problem resolution; and digital channels.
The 2024 study is based on responses from 9,951 investors who work directly with a dedicated financial advisor or team of advisors. The study was fielded from January 2023 through January 2024.
For more information about J.D. Power’s study, visit
https://www.jdpower.com/business/wealth-management-platform.
[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 (1995-2006). Millennials (1982-1994) are a subset of Gen Y.
