Falling Investor Satisfaction Points to a ‘Systemic Problem’ in Wealth Management

“Few advisors are delivering on their core value proposition,” according to a new study by J.D. Power.


Getty Images

As markets have dipped over the past year, so too has investor satisfaction with advisors.

According to J.D Power’s annual investor satisfaction study released on Wednesday, investor satisfaction with full-service investment advisors plunged 17 points year-over-year, with the average sitting at 727 on a 1,000-point scale.

The survey — which J.D. Power has been conducting for 21 years — measures overall investor satisfaction with full-service investment firms across seven factors: trust, people, products and services, value for fees, ability to manage wealth how and when the client wants, problem resolution, and digital channels. The 2023 study included a survey of 6,168 investors who worked directly with a dedicated financial advisor or team of advisors and was conducted between October 2022 and January 2023.

With this year’s results tying advisor satisfaction to the overall market performance, they may highlight deeper problems within wealth management, according to the study.

“Advisor satisfaction continues to track overall market performance, and this points to a systemic problem in our industry: advisor value propositions grounded in investment performance,” Tom Rieman, head of wealth solutions at J.D. Power, said in a statement.

Up until last year, the U.S. was in its longest-running bull market, and advisors didn’t need to try very hard to grow their clients’ assets. As a result, “few advisors are delivering on their core value proposition, which will not bode well for the future of an industry that’s already struggling under the weight of digital transformation and changing patterns of investor behavior,” the authors of the study wrote.

John Furey, founder and managing partner of Advisor Growth Strategies, echoed this sentiment in an interview with RIA Intel last month.

[Like this article? Subscribe to RIA Intel’s thrice-weekly newsletter.]

“You can make an argument that RIAs and really any advisor had it easy the last decade, because the market essentially just went one way,” he said. “And now here we are, 18 months into a sideways market. So, what do you do in that environment?”

According to J.D. Power, advisors need to offer more comprehensive advice, which the company defines as personalized guidance from an advisor that addresses all financial and wealth management needs, demonstrates an intimate understanding of the client’s lifestyle and goals, puts the client’s best interest first, includes a financial plan, ensures clients understand the fees they pay, and is an integral part of the client’s life.

Right now, 42 percent of advisors deliver transactional advice, 47 percent deliver goals-based advice, and just 11 percent deliver comprehensive advice, according to J.D. Power.

Only 57 percent of full-service wealth management clients report having a financial plan. Of those, 56 percent say they are receiving comprehensive advice from their advisors, while 32 percent do not believe their advisors are making recommendations in their best interest and 29 percent say they do not feel their advisors understand their financial goals and needs.

J.D. Power also surveyed investors’ overall satisfaction with full-service firms. Schwab topped the list with a score of 752. UBS, Fidelity, Lincoln Financial Group, Ameriprise, and Edwards Jones followed Schwab, with scores ranging between 741 and 735. Most firms, however, fell below the industry average of 727.

“Advisors cannot control the ebbs and flows of the market, but the good ones help their clients plan for their best futures and deliver value in the form of comprehensive advice that should shine through in all market conditions.” Rieman said.

Subscribe to RIA Intel’s thrice-weekly newsletter and follow the publication on Twitter and LinkedIn.

Related Articles