A Review of J. D. Power’s Investor Advisor Rating (2008)
J. D. Power and Associates is a firm that measure customer satisfaction ratings on various consumer goods and services, ranging from automotive quality to pharmacy ratings. J. D. Power and Associates also has an investor advisor rating that it gives to each surveyed investor advisor company. The company with the best investor advisor rating receives the prestigious J. D. Power and Associates Financial Advisor Satisfaction Award. This award is based on surveys done of financial advisors rating their investment firms in various categories from 1-5. The individual ratings are then averaged for an overall rating, the highest of which gets the award.
The following is a breakdown of the firms that were surveyed and how they scored in each category (Work Environment, Job Duties, Products and Offerings, Internal Operational Support/People, Administrative and Compliance Support, Compensation, Firm Performance, and Conflict Resolution):
Edward Jones – Edward Jones was the top rated company, along with Raymond James and Associates, both of which received the award due to a tie in the overall satisfaction category. Edward Jones received the maximum amount of satisfaction in all categories surveyed except products and offerings, which it received a 4/5.
Raymond James and Associates – Raymond James also received J. D. Power’s award, tying with Edward Jones. Raymond James received full satisfaction in all categories except work conditions, which it received a 4/5.
Merrill Lynch – Merrill Lynch received a 4/5 rating in overall satisfaction, as well as in the rest of the categories, except work environment and problem resolution (problem resolution is the firm’s ability to handle a recent problem), which it received a 3/5 in. This means that Merrill Lynch was rated at a “better than most” investment advisor rating.
Wachovia Securities – Wachovia Securities was rated at 3/5 in general satisfaction, as well as in the other categories, meaning Wachovia was rated an “about average” investment advisor rating.
Citigroup Global Markets Inc. – Citigroup also received and overall rating of 3/5, but received a 2/5 in firm performance, putting it slightly behind Wachovia in the standings, but still rated as an “about average” investment company.
UBS Financial Services – UBS scored the lowest in the surveys conducted by J. D. Power, receiving an overall satisfaction rating of 2/5. It received a 3/5 in work environment, job duties, product offerings, IOS/P, and problem resolution, but got a 2/5 in administrative and compliance support, compensation, and firm performance.
The J. D. Power and Associates ratings are based on the answers of employees to the surveys. Because the employees are an instrumental part of the company’s operations, they have an intimate knowledge of the workings of the company, as well as a feel for how the company does internally as well as externally. This gives them the unique advantage of being able to rank the company’s various performances where a consumer may have had one bad experience and written the company off. Although the surveys do suggest some companies operate better than others, and investor advisor rating is certainly important, it should be taken as just another bit of information in the research of the correct investment firm for you, and not as a written-in-stone suggestion.