RBC wealth unit gets thumbs-up in U.S. investor survey

RBC Wealth Management, the financial advisory arm of the Royal Bank of Canada, scored high marks in a U.S. investor satisfaction survey conducted by J.D. Power and Associates, finishing a close second place behind Edward Jones & Co.

RBC scored 793 on a 1,000-point scale, one point less than first place, and its marks were on par with Edward Jones in most categories measured, even beating the St. Louis broker in access-to-account information. However, RBC's website fared poorly, ultimately placing it in second.

Both companies earned perfect scores for overall investor satisfaction and the strength of their financial advisers.

RBC stole the second spot from Boston's LPL Financial Corp, which placed third. (RBC wasn't included in the rankings last year because it didn't have enough survey respondents.) Charles Schwab & Co. Inc. finished fourth and Florida-based Raymond James rounded out the top five with a score of 778. The industry average was 769.

David Lo, director of investment services at J.D. Power and Associates, said interactions between clients and advisers were paramount to a good ranking. "Expectations and the importance of the adviser relationship continue to increase," Mr. Lo said in a statement. "These best practices are what highly satisfied investors are getting, and what all investors should expect, whether or not they are shopping for a new firm."

Letting these relationships deteriorate has led to a rise in the proportion of investors who believe their brokerage is driven by profits, rather than being focused on customers.

"During the past year, most investors have enjoyed positive short-term gains in their portfolio as a result of the market recovery, but this has not translated into an improvement in investor sentiment toward their firm," Mr. Lo noted. Firms that focused on strong relationships earned higher rankings.

Suggestions given to improve adviser-client relations include periodic reviews of investment objectives, a clear explanation of fees and commissions, working together to develop strategy, and communicating the reasons for investment performance.

The latter can be particularly effective. Customers who receive this information boast a satisfaction level almost 25 per cent higher than those who feel they do not.

The survey also found that firms with high investor satisfaction (scores of 900 or higher) experience an average incremental increase in assets under management of $125,216 per investor. Conversely, unsatisfied investors (at firms with scores of less than 700) are likely to move their money out, resulting in a loss of $5,929 per investor.