Aspiring advisors set on joining traditional brokerages may want to recalibrate their thinking. When it comes to investor satisfaction, smaller brokerages are beating their bigger counterparts, and investor satisfaction often correlates with advisor satisfaction.
According to a recent J.D. Power & Associates survey, Edward Jones, RBC Wealth Management, and Raymond James all ranked higher in investor satisfaction than Merrill Lynch, Morgan Stanley Smith Barney, and Wells Fargo. The first three ranked "among the best" and "better than most," while the last three only scored "about average" and "the rest."
Smaller brokerages have topped the survey for the past few years. Investor satisfaction, which predicates on an advisor maintaining good communication with the investor, seems to be the foremost area at which smaller houses excel.
"At larger firms, there's more emphasis on fluid portfolios, and less attention paid to those with lower-worth portfolios," said David Lo, director of investment services practice at J.D. Power.
As every good advisor knows, whether your client is happy or not is a big part of the job. According to Lo, J.D. Power found in a 2008 study that there's a close correlation between highly-satisfied investors and highly-satisfied advisors. As such, heading to firms that pride themselves on investor satisfaction could be a good career move in the long run.
Lo said that companies that have either merged or acquired another tend to perform poorly in the survey. He noted that smaller brokerages have come out on top over the past few years, and that he didn't know of anything that would "dramatically change" the trend.
Still, he acknowledged that as time goes on from the acquisition or merger, the more likely it is to see a comeback from larger firms at the bottom.
Here's how the ranking played out:
2.RBC Wealth Management
4.Charles Schwab & Co.
8.UBS Financial Services
9.Wells Fargo Advisors/Wachovia Securities
10.Morgan Stanley Smith Barney
11.Merrill Lynch/Banc of America Investment Services
12.Chase Investment Services/WaMu Investments