Data & Research November 8, 2010

Customer Service Critical to Asset Manager Success

A study found that institutional investors’ satisfaction with their investment managers is greatly influenced by client service and can be managed regardless of the economic climate or investment performance.
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According to the study, jointly conducted by Chatham Partners and Investment Metrics, 60% of overall satisfaction can be attributed to investment performance, but this can often be cyclical and unpredictable. In contrast, 40% of client satisfaction is attributable to service-related factors that can be delivered consistently.   

In addition, the research suggests that managing customer service is not a singular act, but rather a broad collection of activities that combine to create high overall satisfaction levels.   

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According to a press release, the top five factors, in order of importance, attributable to client service include:  

  • Market/investment knowledge of portfolio team
     
  • Clarity of investment reports 
  • Problem resolution skills of client service representative
     
  • Frequency of contact of client service representative 
  • Timeliness of investment reports 

The study also found clients tended to be highly satisfied with their investment managers and client servicing teams overall during long periods of high performance (68%) and short periods of under-performance (58%). Most clients (83%) were dissatisfied with their client service contact during long periods of low performance, while the majority of clients (66%) felt like they were treated as an “important client of the firm” during long periods of high performance.  

The majority of clients who were the most satisfied with their fee arrangements had either high performance rankings over longer periods (69%) or low performance rankings over shorter periods (61%). In contrast, less than 40% of clients were highly satisfied with their fee arrangements during short periods of high performance or long periods of under-performance, while nearly half of all clients were dissatisfied with their fee arrangements regardless of their performance rankings over a short period. 
Data & Research November 8, 2010

Retirement Planning is Still Key for Investors

Retirement planning is the most difficult financial task for those participating in a recent study of retirement and savings trends by Hearts & Wallets.
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According to Hearts & Wallets, more than 4,000 U.S. households said many of them are taking over the responsibility for their own financial planning, but many don’t know enough to make informed choices.

Only 42% of Americans rate their providers a nine or 10 on a 10-point trust scale, according to the announcement. In focus groups, investors say they evaluate whether providers are “knowledgeable” and “tactical” to determine trustworthiness.  Through regression analysis, researchers said they discovered the key trust driver is “Has Made me money.”

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“Advice is important since only 60% of Americans in or approaching retirement have a solid or written income plan,” said Chris Brown, one of the study authors. “Of those, 57% developed their own plan, and plans have on average only 4.1 of the 8 components that we view as important for a robust retirement income plan. Retirees are struggling to make informed income drawdown choices. Thirty percent of those without pensions are drawing down income at unsustainable rates of 7% or more.”

The news release said the poll confirmed an anticipated ramp-up in savings by a major, emerging group of American investors, which it said was a demographic often overlooked in the focus on the Baby Boomer bump: Accumulators (investors ages 28 to 64 who are at least five years away from retirement) had assets of more than $12.9 trillion at the end of Q2 2010. Accumulator investable assets are projected to reach nearly $14.3 trillion by 2012 with most growth coming in younger market segments of savers in their 40s and younger, the announcement said.

Overall, investable assets of U.S. households stood at $27.1 trillion as of Q2 2010, down $1.3 trillion from Dec. 2009. Of 116 million households, Emerging/Early Career investors (beginning savers in their late 20s through 30s) are the largest lifestage with about 44 million households.

In overall market share, the study found Fidelity Investments and Bank of America led, having relationships with 16% and 15% of respondents respectively. Bank of America Merrill Lynch has the highest share of wallet. USAA leads all firms by a wide margin in the Hearts & Wallet Score, a measure of intent to recommend and intent to invest more, the news release said

Discount brokers lead with High Net-Worth investors, Pre-/Post-Retirees and young investors. Full-service firms lead only with retirees and those having more than $500,000 in assets. 

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