New Study on Advisor Satisfaction Invokes Chickens, Eggs

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

In the case of broker and customer satisfaction, which comes first, the chicken or the egg?

Do satisfied customers lead to satisfied brokers? Or are customers satisfied when their brokers are?

It's a question I asked Craig Martin, director of investment services at J.D. Power and Associates and the lead on the new 2013 U.S. Financial Advisor Satisfaction study. The study measures satisfaction among advisors who are employed directly with an investment services firm, as well as those who are affiliated with, but independently operated from, a broker-dealer. Among the findings: Overall satisfaction among advisors is up since 2010; advisors want their firms to focus more on customers than on profits, and nearly a third of all advisors are ambivalent about their firm, which could ultimately cause them to change firms.

The top firms in the employee segment were Edward Jones, Raymond James and Associates, UBS (NYSE: UBS  ) Financial Services, Merrill Lynch Financial Management , Wells Fargo (NYSE: WFC  ) , and Chase. In the independent-advisor segment, the highest-ranked firms were Commonwealth Financial Network, Cambridge Investment Research, Raymond James Financial Services, Northwestern Mutual, and LPL Financial. J.D. Power looked at factors including compensation, contact, people, job duties, work environment, products and offerings to clients, technology, and services and support offered to financial advisors.

The results of the 2013 Customer Satisfaction Survey will be released in May, but if last year's dual studies are any indication, the results of the two will dovetail very closely. That's what I found in covering last year's studies, and Martin says it's likely to be similar this year. And, he says, that's to be expected year after year. "People are generally happier when they're successful," he told me, "and for an advisor to be successful, he or she has to be able to serve their clients. The question is, how do you create a level of engagement you want with a customer, one that not just satisfies them, but truly makes them an advocate of your firm, one who tells their friends and is loyal?"

That, Martin says, only comes when advisors are supported by their firm. With 40% of advisors saying they experienced a technological or paperwork issue in the past year, how those issues are handled makes a difference in advisor satisfaction, and ultimately, customer satisfaction. "The higher-services firms prevent the challenges that prevent advisors from being in front of the client," Martin says. "Those at the top eliminate issues and limit the impact to the advisor on a daily basis."

But what does all this happiness mean for investors? Ultimately, very little. Martin says that although J.D. Power hasn't done any studies on the impacts of their reports on share prices, he suspects there aren't any dramatic changes. "This [report] isn't a surprise. It's a validation," he says. "If you're losing customers and losing advisors, that's going to have a bottom-line impact, and will show up long before our review."

So, which comes first? A happy customer or a happy advisor? Martin has the formula: "The advisor must like their firm. The customer must like the advisor. The customer then is an advocate for the firm."

More from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2358553, ~/Articles/ArticleHandler.aspx, 9/27/2016 10:13:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 57 minutes ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
UBS $13.43 Down -0.02 -0.15%
UBS AG (USA) CAPS Rating: **
WFC $45.09 Up +0.21 +0.47%
Wells Fargo CAPS Rating: ****