Scottrade edges out Schwab among do-it-yourselfers in J.D. Power ranks

Overall satisfaction slips as investors suffer from information overload

Jun 17, 2013 @ 1:37 pm

By Dan Jamieson

self directed, do-it-yourself, discount
+ Zoom
Scottrade took the top spot in this year's J.D. Power ranking from Charles Schwab. (Photo: Dwight Burdette)

Do-it-yourself online investors may be succumbing to a bit of information overload from discount brokers.

In the latest J.D. Power & Associates ranking of discounters, released today, overall satisfaction averaged 752 on a 1,000-point scale among self-directed investors, down from 768 in 2012.

The study measured investor satisfaction with the interaction, account information, fees, account offerings, information resources and problem resolution they experience from their brokerage firms.

The drop in satisfaction comes as “investment firms struggle to find the right method and frequency of communicating with investors,” J.D. Power said in a news release.

Scottrade Inc. edged out Charles Schwab & Co. Inc. as the highest-ranked firm, scoring 810 this year versus 798 last year. Schwab scored 797, down from 801. The Vanguard Group Inc. was right behind Schwab at 795.

"There's not a massive gap" among the top firms, said Craig Martin, director of the wealth management practice at J.D. Power.

Scottrade did better on its fees-and-commissions ranking as well as the interaction it offers on its website and through mobile devices, he said.

Like last year, the Merrill Edge and Wells Trade online platforms came in last out of 11 firms, with scores of 730 and 722, respectively.

Both Merrill Lynch Pierce Fenner & Smith Inc. and Wells Fargo Advisors LLC, which support the platforms, could be more focused on the full service side, Mr. Martin said. But both firms have seen improved results from J.D. Power's survey of full-service firms, he added, “so they're not standing still.”

Top-rated discounters have a more personalized approach and are better at targeting their offerings to specific types of investors, Mr. Martin added. “That includes explaining fees and commissions so [investors] know what they're paying for, and making sure they understand what clients are looking for.”

J.D. Power said online brokers overall are offering more tools and information, but the additional capabilities “may actually make it more difficult to access the functions investors are seeking if a website is not easy to navigate and communication is not clear.”

Fewer investors this year said they had been contacted by their firm two or more times in the last year, or “completely” understood the fees they paid. Use or awareness of at least one financial planning tool also dropped.

Mr. Martin said the average self-directed investor, who may not trade much, seems confused by the wealth of trading tools and other services the discount firms provide for their most active traders.

"The top trading tier is very satisfied," he said. But "while making trades is one part of it, total assets is another component" discounters have to focus on.

The study was conducted in January and February, and was based on responses from 3,619 investors who make all of their own investment decisions.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

3 tips when hiring millennials

Advisers want to add young talent, but ask if they want to add millennials and most will begin to squirm. Hunter Hart, and Marc Schliefer of Equity Planning Inc. disspell some myths and misconceptions of hiring millennials.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

T. Rowe Price steps up its game to serve financial advisers

The Baltimore-based mutual fund giant is more aggressively targeting financial advisers with a beefed-up wholesale crew and placement on custodial platforms.

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

Shift to Roth 401(k)s 'highly likely' part of tax reform: former Treasury official Mark Iwry

Mandated contributions to Roth accounts would likely only be partial, as opposed to having a full repeal of pre-tax accounts.

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print