Full-service firms fall short on holistic advice: J.D. Power

An often-touted differentiator of full-service brokerages, holistic advice may not be so holistic after all, according to an annual report from a prominent market research company.

Only 7% of full-service investors receive all the elements of comprehensive advice, says the J.D. Power 2022 Canada Full-Service Investor Satisfaction Study, released Thursday.

The study, conducted between November and January, was based on responses from more than 4,000 advised Canadian investors. J.D. Power’s criteria for comprehensive advice included making recommendations in a client’s best interests, understanding a client’s goals and needs, and having a documented financial plan.

Outside the criteria, four in 10 respondents thought their financial advisors provided them with comprehensive advice, the study found.

Making advice more comprehensive is a must if advisors want to boost their businesses by truly differentiating themselves in a competitive market, as well as stand out with existing clients, J.D. Power suggested.

While many investors may be willing to settle for less than holistic advice, “it’s the investors who do receive comprehensive advice that consistently provide the referrals that drive growth,” said Mike Foy, senior director of wealth intelligence with J.D. Power, in a release.

Overall, investor satisfaction with full-service firms increased slightly to 669 from 666 last year (on a 1,000-point scale). Scores were based on seven factors measured by the study: trust; people; products and services; value for fees; ability to manage wealth how and when the client wants; problem resolution; and digital channels.

The highest ranking firm in 2022 was Raymond James Ltd., with a score of 709, followed by Edward Jones (699) CI Assante (691) and National Bank Financial (683).

Firms that ranked below the industry average of 669 included CIBC Wood Gundy (668), ScotiaMcLeod (662), TD Wealth Private Investment Advice (655) and Sun Life Financial (637 — the lowest score in the study).

Full results are provided in the release.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.