Why does this matter?
For consumers, the bottom line here is not whether a discount brokerage is doing anything or not, but rather whether or not they are doing the right things to keep their clients feeling satisfied – a key difference. It is important to stress that there is no one definition of “investor satisfaction” and that the definition we’re using is that put together by J.D. Power and Associates for the purposes of this survey. Because we know how “investor satisfaction” is defined and measured by J.D. Power’s survey, we can decide whether this is a reasonable definition or not. Also, different discount brokerages might use different benchmarks when looking at whether or not their customers are actually satisfied.
This brief look into the historical data shows that the industry as a whole is responding to investors’ needs unevenly. In spite of competitive forces, it is difficult to envision discount brokerages working harder than they have to in order to keep their clients sufficiently satisfied – after all as a business there has to be something in it for them. The data from the investor satisfaction surveys suggests that the ‘experience’ is more or less the same at most discount brokerages. Going with the “best of breed” is one strategy but certainly the smartest choice is to go with the brand that offers you the best fit of products and incentives for your needs. The evidence clearly shows that certain discount brokerages need to work not only harder but also smarter at delivering on things that matter to investor satisfaction. If not, there are certainly discount brokerages out there that can.
Sources:
- J.D. Power and Associates 2012 Discount Brokerage Investor Satisfaction Study
- J.D. Power and Associates 2011 Discount Brokerage Investor Satisfaction Study
- J.D. Power and Associates 2010 Discount Brokerage Investor Satisfaction Study
- J.D. Power and Associates 2009 Discount Brokerage Investor Satisfaction Study