Every Journey Begins with a Single Step
One of the greatest strengths of the JD Power discount brokerage ranking is that measures “investor satisfaction” across the following six criteria:
- Interaction
- Trading Charges and Fees
- Account Information
- Account Offerings
- Information Resources
- Problem Resolution
The breadth of this definition means that in order to achieve a higher ranking, strong scores in each of these categories need to be obtained. That said, not all of the categories are weighted equally in terms of importance, so firms that are stronger in the categories that have the higher weights will tend to do better on the rankings. For example the factor “interaction” relies heavily on the website and phone customer service and is weighted more heavily than trading charges/fees. Thus, a discount brokerage that has very inexpensive fees may not do as well another brokerage that investors feel has a better website experience (all other things being equal).
With those weightings in mind, NDBD’s performance can be put into context with their efforts. Specifically, according to Paquet, one of the contributing factors to this year’s victory was that “we’ve worked very, very hard with our team to improve how we respond to client’s demands.”
Indeed it seems to be the case. At about the midpoint of last year NBDB began to remove the time benchmarks client service agents were normally evaluated with. As a result, agents were better able to focus on answering questions fully and also able to proactively assist clients with features or requests a client may have had issues with.
Interestingly, although they have also recently improved their website and their mobile trading interface, it was their previous website and mobile platform that investors felt was effectively meeting their needs (the survey sampled investor opinion before the new website or mobile platform were launched). Whether the new features now included on the website make any difference in this category will definitely be interesting to watch out for, however making the site more user friendly certainly can’t hurt.
Defining Success
While acknowledging that receiving the J.D. Power Award is a ‘great recognition’ what drives her team, according to Paquet, is that NBDB clients positively experience the value of their choice of discount brokerage. “We work for our clients and we want them to say…I’m going to stay, I’m happy’” said Paquet when asked what the win means for NBDB. Even so, she said, “of course we’re happy, because no one works to be second best.”
To get a sense of how close “second best” really was in this year’s competition, the following table shows the power ratings (out of 5) for all but one category (resolution).
| Brokerage | Interaction | Trading Charges & Fees | Account Information | Account Offerings | Information Resources | 2013 Rank |
|---|---|---|---|---|---|---|
| National Bank Direct Brokerage | 5 | 4 | 5 | 5 | 4 | 1 |
| Disnat | 4 | 4 | 5 | 5 | 5 | 2 |
| BMO InvestorLine | 4 | 4 | 5 | 4 | 4 | 3 |
| TD Direct Investing | 4 | 3 | 5 | 3 | 4 | 4 |
| Qtrade | 3 | 4 | 2 | 2 | 2 | 5 |
| CIBC Investor’s Edge | 3 | 4 | 3 | 2 | 3 | 6 |
| HSBC InvestDirect | 2 | 4 | 2 | 4 | 3 | 7 |
| RBC Direct Investing | 3 | 2 | 3 | 3 | 3 | 8 |
| Questrade | 2 | 5 | 2 | 3 | 2 | 9 |
| Scotia iTrade | 2 | 2 | 2 | 3 | 3 | 10 |
Clearly what made the difference was NBDB’s interaction score as they were the only discount broker to earn a score of 5 in this area.
The take-home lesson for investors is that these scores reflect the average opinion of the clients of each discount brokerage. What is most important for “the average” investor from this survey may not be the same for particular individuals and so different investors may “weight” categories differently. Given that the race was as close as it was, the difference between “the best” and “close enough” may have more to do with other factors, such as convenience, pricing or incentives (such as deals/promotions) than anything else.