Edward Jones is tops and Morgan Stanley Smith Barney LLC the worst in terms of financial adviser satisfaction at six national broker-dealers, according to a J.D. Power and Associates Survey released last Friday.
Among independent broker-dealers, Commonwealth Financial Network ranked highest of 12 firms in employee satisfaction, while MetLife Broker Dealer Group ranked lowest.
Jones scored 876 points on a 1,000-point scale, beating out Raymond James & Associates Inc., which was second with 857 and had tied for first place in 2008, the last time J.D. Power conducted the survey.
Morgan Stanley scored 626, just behind Wells Fargo Advisors LLC, which was second-to-last with 665.
Meanwhile, Commonwealth had a score of 898, edging out
Cambridge Investment Research Advisors, with 848 and Raymond James Financial Services with 845.
MetLife had a score of 648, and Securities America Inc., which was second-to-last, received 709.
The 2010 U.S. Financial Advisor Satisfaction Study was based on responses from 2,863 advisers who hold a Series 7 license. Survey sample and industry weighting was provided by Qualified Media and
InvestmentNews.
The study was conducted in February and March, and again between July and September.
It covered key areas of adviser satisfaction, including compensation, firm performance, technology and work environment.
Morgan Stanley is critical of the survey.
“The validity of this poll is highly questionable, given the fact that it's a sample of only 134 financial advisers [from Morgan Stanley] and there is no confirmation or validation that these people are employed by the firm,” said company spokeswoman Christine Pollak.
J.D. Power did verify where people work, and as for the sample size, the firm's minimum threshold was 100, said David Lo, director of investment services at the research firm.
“From a sampling standpoint, 134 is enough to have,” he said.
Wells Fargo Advisors is encouraged by the survey results, which showed that independent and employee advisers' perception of stability have improved, said Rachelle Rowe, a spokeswoman for the firm. (Wells Fargo Advisors Financial Network ranked sixth among independent broker-dealers.)
“However, we aspire to improve. Our employee and independent [advisers] are important to us, and we're working hard to improve,” Ms. Rowe said.
“Our firm and the industry have been through a lot over the last few years, but we believe that most of our independent and employee [advisers] — as well as our clients — recognize the advantages of being affiliated with a company as respected and admired as Wells Fargo,” she said.
MetLife executives were excited to see that the firm was ranked for the first time by J.D. Power, said spokeswoman Jessica Ongg.
“We see this as an opportunity to improve in our rankings,” she said.
“Our recent adviser survey indicated that approximately 80% of our advisers would recommend us to a colleague,” Janine Wertheim, president of Securities America Advisors Inc., wrote in an e-mail. “We have seen this validated in our growth, with our success in recruiting advisers to Securities America the past couple of years and the recent acquisition of several large practices who chose to join us after extensive review of other independent options.”
NEW FOCUS
This is the first time that J.D. Power has ranked independent broker-dealers. The past two studies, which were published in 2007 and 2008, focused on wirehouses and regional firms.
“This is a very important element in the industry and needs to be examined separately because there are differences between the experience of an independent adviser and one that is employed by the firm,” Mr. Lo said.
Overall, adviser satisfaction is lower at the wirehouses than at the regional and independent firms, according to the survey. For example wirehouses received a 3.85 rating out of 7 on the criterion “cares more about the customer,” down from a rating of 5 in 2007.
Similarly, wirehouses received a 5.36 rating in “financial security,” down from 6.78. Advisers gave wirehouses a 4.71 rating on “good reputation,” down from 5.89.
Non-wirehouses, conversely, saw their brand image become more positive or stay level among advisers in every category, according to the survey.
On financial security, they scored 6.47, up slightly from 6.45 in 2008.
On “cares more about the customer,” non-wirehouses scored 5.44, up from 4.82. On “good reputation,” they scored 6.2, up from 6.
“A lot of the wirehouse brands have been hammered in the press, and some wirehouse advisers are saying "I have had to defend the brand much more than I have in the past,'” Mr. Lo said. “Wirehouses have always been the bedrock of financial stability pre-2008, but now it seems that it is the non-wirehouses that are carrying that out.”
E-mail Jessica Toonkel at [email protected].
