JD Power announces the best financial advisory firms of 2022

According to JD Power’s annual study, wealth management giants that market their comprehensive financial advice actually provide this service to only 14% of their clients.

More than 4,000 investors who work with a financial advisor spoke to the research firm as part of its 2022 full-service U.S. investor satisfaction survey, which acts as a client report card for an industry fueled by recurring revenue from long-term advisory accounts. and relationships. UBS, Vanguard, Charles Schwab and Northwestern Mutual finished at the top of this year’s ranking of 18 companies, while TIAA, Prudential and LPL Financial came in at the bottom.

Regardless of specific positions on the list, however, each of the wealth managers can find areas for improvement in the comprehensive guidance, according to JD Power. Only around half (51%) of clients said they strongly agreed that their advisor provides comprehensive advice that meets all of their wealth management needs. However, only 26% of these customers receive a level of service that JD Power defines as comprehensive based on criteria including a documented financial plan, recommendations in the best interest of the customer, an understanding of their goals, and frequent communication. In the survey as a whole, 86% of customers do not receive this level of service.

“When we actually look at the experiences and perceptions they have, they don’t really get comprehensive advice as we understand it,” said Mike Foy, senior director of wealth intelligence at JD Power. “It really signals a great opportunity for the industry to deliver on what I think is its implicit or explicit promise, in terms of adding value for investors.”

The results have a direct impact on business activity, potential regulatory issues under the SEC’s Best Interests Rule for Customer Retention and Growth. Of those currently receiving comprehensive advice, 76% of clients said they would definitely not switch companies next year and the group gave their wealth manager a net promoter score of 93. This means that they feel a high degree of loyalty to the company and are very likely to recommend it to a friend.

According to industry consultant Gavin Spitzner of Wealth Consulting Partners, about half of the average consulting firm’s new clients come from these referrals. Their “level of satisfaction absolutely matters,” but, as the survey shows, most customers “don’t know what ‘good’ looks like,” he said in an email.

“Customer retention rates have been high and the bar has been low, with the long-term bull market lifting all ships and masking poor customer experiences and digital capabilities,” Spitzner said. “Companies that demonstrate what good actually looks and feels like, from holistic, personalized advice to the marriage of great advisors and great technology, will not only retain existing customers, but generate more quality referrals and convert more customers. – both advised and not advised today – to the detriment of those who are complacent.

JD Power spoke to 4,396 investors between November and January to compile satisfaction scores and company rankings. Each of the investors declared being a client of a financial adviser or a team of advisers.

Only companies with at least 100 customers in the sample end up in the public ranking of the survey, which is in its 20th year. To obtain a “satisfaction index” for each wealth manager on a scale of 1,000 points, JD Power used seven weighted factors: “confidence; people; products and services; fee value; ability to manage my assets as and when I want; problem resolution; and digital channels.

For results from previous years, see our slideshows of 2021, 2020, 2019 and 2018. To see this year’s rankings, scroll through our slideshow.