Do-it-yourself investors in B.C. are the least satisfied in the country with their online investment brokerage.
According to J.D. Power and Associates' fourth annual online investment brokerage satisfaction study, the industry received a score of 669 on a 1,000-point scale in B.C. compared with the national average score of 700.
While B.C. investors were slightly less happy than other Canadians about trading charges and fees, their biggest issue revolved around how a broker dealt with a problem with a service. Firms received a score of 494 in B.C. compared with the industry average of 568 in Canada.
This is in sharp contrast to problem resolution satisfaction rates among B.C. investors with their full-service investment firms. A previous J.D. Power study found that although B.C. investors were increasingly dissatisfied with their financial adviser, they were the happiest in the country with how issues were dealt with by their adviser. (See "Investors dissatisfied with financial advisers" – BIV issue 1193, September 4-10.)
David Lo, director of financial services at J.D. Power and Associates, suggested the higher concentration of lower-scoring online brokerages used by investors in B.C. is one of the key reasons for the significantly lower satisfaction scores in the province.
"As an online brokerage, it's not likely the experience for the customer is going to be dramatically different [between brokerages]."
According to the survey, Quebec-based firms scored the highest this year, including Disnat, a division of Desjardins, BMO InvestorLine and National Bank Direct Brokerage. The higher firm scores are also reflected in the overall Quebec investor satisfaction rates, which are the highest in the country at 740, followed by those in Ontario (702), the Prairies (699) and Atlantic Canada (682).
Overall, the study noted Canadians have grown more satisfied with their online investment brokerages over time, but investors remain less happy than their counterparts in the U.S., who gave their industry a score of 768.
Lo noted more competition among discount brokerages is one of the key reasons for the better performance of U.S. firms. For example, whereas trading fees across most Canadian brokerages are virtually the same, especially among the larger firms, fees vary widely in the U.S.
But aside from price, U.S. discount brokerages are also offering more tools to provide additional value for customers, like asset allocation calculators and online financial planning tools.
Because Canadians might not receive the same level or depth of service as Americans do because of the more limited options, Lo noted, investors would benefit from shopping around.
"Maybe another firm will have less aggressive limits on assets to qualify for a lower commission. Maybe the tools and services are better," said Lo. "It's worthwhile to see what else is out there."
