J.D. Power and Associates Reports:
As Financial Markets Recover, Understanding Trading Fees and Charges
Becomes Increasingly Important to Overall Self-Directed Investor Satisfaction
Vanguard Ranks Highest in Satisfying Self-Directed Investors
WESTLAKE VILLAGE, Calif.: 30 September 2010 — After declining steadily for six years, the importance of trading fees and charges on overall investor satisfaction has increased from 2009, according to the J.D. Power and Associates 2010 U.S. Self-Directed Investor Satisfaction StudySM released today.
The study, now in its ninth year, measures customer satisfaction with investment firms based on performance in six factors: interaction; trading charges and fees; account information; account offerings; information resources; and problem resolution.
The study finds that trading charges and fees account for 23 percent of overall investor satisfaction, up from 17 percent in 2009, after six years of decreasing importance. Trading charges and fees is the second-most-important factor driving overall satisfaction, following interaction.
“While the average per-trade commission continues to drop, investors have become more sensitive about understanding non-trading charges, which have become more common,” said David Lo, director of investment services at J.D. Power and Associates. “Awareness created by the government and the media have consumers paying more attention to the fine print on their statements, which is a good thing.”
The study also finds that interactions, both in terms of transactions and customer service—as well as products, information resources and tools offered—continue to be the key differentiators among the highest-performing firms. Among investors with high levels of satisfaction (850 or higher on a 1,000-point scale), 75 percent say they “definitely will” recommend the firm. In contrast, among investors with low levels of satisfaction (score of less than 700), only 12 percent say they “definitely will” recommend the firm. On average, highly satisfied investors also use more products and services from their firm (5.7), compared with investors with low satisfaction (3.6).
“While it’s important that customers clearly understand how they are charged, highly satisfied self-directed investors are also much more likely to experience flawless interactions in terms of transactions and customer service and to more often utilize the tools and information resources made available to them by their investment firm,” said Lo. “Online investment firms used to differentiate themselves with pricing. Now that most are in the same per-transaction fee range, they are focusing their attention on other benefits, such as their customer service and the tools available on their websites, to set themselves apart and engender customer loyalty.”
Vanguard ranks highest in self-directed investor satisfaction with a score of 810 and performs particularly well in account offerings and account information. Charles Schwab & Co. follows closely in the rankings with a score of 807, performing particularly well in interaction and information resources. Scottrade ranks third with 799 and performs well in trading charges and fees.
The 2010 U.S. Self-Directed Investor Satisfaction Study is based on responses from 4,150 investors who make all of their investment decisions without the counsel of an investment advisor. The study was fielded in July 2010.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on ratings for financial services firms, please visit JDPower.com. Also available are car reviews and ratings, car insurance, health insurance, cell phone ratings, and more. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About The McGraw-Hill Companies
Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poor’s, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2009 were $5.95 billion. Additional information is available at http://www.mcgraw-hill.com/.
 Prior to 2007, the title of the U.S. Self-Directed Investor Satisfaction Study was the Online Investor Satisfaction Study.