JD Power and Associates have just released the results of the 2012 survey of Investor Satisfaction℠ with Canadian discount brokerages.
Between June and July of 2012, 2900 Canadian retail investors were surveyed about their level of satisfaction with their discount brokerages. Data was obtained for 12 Canadian discount brokerages, although results for Credential Direct were not reported due to insufficient sample size. “Investor Satisfaction” was measured on a 1000 point scale, and covered areas such as trading charges and fees, interaction, problem resolution, financial planning tools, website accessibility and services and seminars.
In terms of scoring, the Canadian discount brokerage industry average score of investor satisfaction in Canada was about 700, with the highest score of the group (768) going to Disnat and the lowest score (656) going to Scotia iTrade. To put those numbers into context, US investors found their discount brokerage experience far more satisfying with an industry average of 768. To put that into perspective, the best scoring Canadian discount brokerage on this scale would be considered just average south of the border.
So where are Canadian discount brokerages falling short? It seems that there are some perceived gaps in problem resolution, trading charges and ‘interaction’. One very noteworthy statistic has to do with loyalty of Canadian investors to their investment firm. This survey found that only 19% (or 1 out 5) of Canadian investors strongly agreed to being loyal to their primary investment firm with 23% of respondents saying they “definitely will” recommend their primary investment firm. Put another way, it seems that 4 out 5 Canadian investors won’t be strongly loyal to their primary investment firm, a situation that will certainly cause Canadian discount brokerages to sit up and take notice.
The implications of this survey point to a real upshot for consumers. Canadian investors will likely benefit from the fierce competition from the crowded market that is the Canadian discount brokerage landscape. In order to get new clients or keep their existing clients from jumping ship, expect discount brokerages to start offering more incentives and promotions (such as the deals listed here), lowered commissions & fees, new services and tools and educational seminars (which you can find listed here) to earn new business and capture the turnover of those “not-so-loyal” customers.