President's Letter: Satisfaction Levels Are Plunging


After holding relatively steady during the beginning of the Covid-19 pandemic, the satisfaction levels investors have with their financial advisors are beginning to fall despite the recovering market.  The satisfaction levels vary by provider type with some providers falling much more dramatically than others.

According to research conducted with investors at the end of December 2019, investors who rated their financial advisor as excellent averaged 51%.  Satisfaction levels varied by provider type with 59% of investors using RIAs rating their advisor as excellent compared to only 41% of those using a Banker/Bank Trust Officer/Private Banker scoring their advisor as excellent.* These satisfaction levels have changed, however, as the pandemic continues to impact the economy.  As of May, only 50% of investors using an RIA rate their advisor as excellent and only 32% of investors relying upon a Banker/Bank Trust Officer/Private Banker are rating their advisor as excellent.  The overall rating of “Excellent” has fallen to 48%.  Note, however, that the rating of financial planners has increased from 54% to 58%.*


What are the implications of these ratings? 

Not surprisingly, investors are beginning to lose their sense of optimism regarding the economy despite the recovering market.  Spectrem’s monthly Affluent Investor Confidence Index was at -10 in July and the Millionaire Confidence Index was at -6 compared to levels of 8 and 15 respectively in January of 2020.* Similarly, the Outlook for the Economy was at -37.6 compared to 9.2 in January.   When asked about the most serious threat to achieving their household financial goals, 24% of investors said the Coronavirus and 15% said the Economy.*

So why are their variations in the ratings by provider type?  One of the logical conclusions is that as investors become nervous regarding their financial futures, they appreciate the ability to see the current market challenges in relationship to their long-term goals.  Often a financial plan is able to show the impact of any existing losses on their overall plan.  Those providers who have discussed these issues with investors may have retained the confidence of investors as well as their satisfaction.

Another issue is the perception of various providers as investment experts.  Spectrem’s research has often shown that investor’s do not perceive Bankers/Private Bankers/Bank Trust Officers as strong investment managers and that may be influencing the opinions of investors.  Bank providers should be aggressively reaching out and showing investors that their performance is similar to other providers.

This is a critical time to make sure that investors are not losing confidence.  After the Great Recession, investors did not immediately change advisors but waited 1-2 years.  It might be a good time to test your investor’s satisfaction with our Spectrem Gauge.

Regardless of the type of provider, all financial firms need to be closely monitoring their client satisfaction levels.  Investors do not make big changes during volatile times.  They wait until the volatility has subsided.  Make sure you avoid surprises in the future by communicating with your investors on a regular basis.



*Research is included in Spectrem’s research subscriptions.