There very well may be a significant difference in how financial providers serve their clients. There may be differences in customer service, in cyber-security maintenance, or in performance numbers. But it is also possible that all providers provide similar levels of service, and the differences between those providers is minor.
What matters is the perception wealthy investors have of the providers they use and their perceptions of the providers they DO NOT use to handle their investments.
Spectrem annually asks investors to rate approximately 25 of the top financial providers in the country on a variety of performance matters. The perceptions matter, especially in light of continued governmental attention to regulation violations among financial providers. Any news story about issues related to regulation abuse or data breaches can impact investor perceptions.
The latest iteration of the providers list is in Spectrem’s study Asset Allocation, Portfolios and Primary Providers, which asks thousands of investors to approve or disapprove of providers in five categories. As has been the case for a number of years, Fidelity and Vanguard split the top spot for each category, which includes “Most Expertise in Managing Money” and “Most Talented Advisors and Staff”.
In the 2018 study, Charles Schwab finished third in four of the five categories, surpassed by Chase for the third spot in “Most Likely to Increase Usage Of”. T.RowePrice and Capital Group/American Funds were also often mentioned among the top five providers in the five categories (also including “Most Innovative Products and Services”, and “Most Trustworthy and Transparent”).
To get an idea how investors perceive these providers, when asked a yes-no question on whether a company “Offers Expertise In Managing Money”, 84 percent approved of Fidelity and Vanguard, and 11 of the 27 companies got approval by at least 70 percent of investors.
The interesting perception differences show up when the study is segmented by age, wealth and advisor dependency. For example, Chase beat out Fidelity and Vanguard among Millennials for “Most Innovative Products and Services” and “Most Likely to Increase Usage of”. Among World War II investors, Capital Group/American Funds found its way into the top three for “Most Expertise in Managing Money”, “Most Talented Advisors and Staff” and “Most Trustworthy and Transparent”.
When wealth breaks are considered, Capital Group/American Funds got the top nod from those with a net worth between $10 million and $15 million for “Expertise in Managing Money”. Among investors with a net worth between $15 million and $25 million, TD Ameritrade broke into the top three in the same category.
The full report indicates the breadth of differences in perceptions of providers, and can detail for providers just where they fall short in terms of how investors look at them and the services they provide.
©2019 Spectrem Group