TORONTO - Poor investment performance in a tumultuous financial market has caused overall satisfaction among full-service investors in Canada to decline considerably in 2009 when compared with 2008, according to the J.D. Power and Associates 2009 Canadian Full Service Investor Satisfaction Study(SM) released yesterday.

Now in its fourth year, the study provides benchmarks for investor satisfaction that allow individual investment institutions in Canada to evaluate how they compare to competitive firms.

The study finds that overall investor satisfaction in Canada has declined to 693 on a 1,000-point scale, marking a drop of nearly 30 points, compared with 2008. Poor investment performance primarily drives the decline, as satisfaction with this factor has dropped by 50 points from 2008. The rate of switching investment firms has also increased in 2009, with 10 percent of investors indicating they will likely switch firms in the next 12 months, compared with only 6 percent saying the same in 2008. Additionally, investors are less likely to recommend their investment firm to others, with only 24 percent of investors indicating they "definitely will" recommend their primary firm in 2009, compared with 32 percent in 2008.

"One way to help alleviate the negative market impact is to offer stellar advice and proactive and timely communication to clients," said Lubo Li, senior director and financial services practice leader at J.D. Power and Associates, Toronto. "By offering investors a little soothing touch of support in these tumultuous times, advisors and investment firms may differentiate their services from the competition and increase client loyalty." The study also finds that investors are increasingly using diverse channels to receive expert advice from full-service advisors and take advantage of the lower costs associated with self-directing and trading online. For instance, only 25 percent of full-service investors had an online or discount brokerage account in 2008 compared with 36 percent this year.

"Investors are becoming more sophisticated in understanding the value of each channel and maximizing their investments by diversifying their portfolio and trading channels," said Li. "As investment vehicles become more complex, firms will benefit from providing clients with investment information online and secure online trading that is cost effective and easy to use. The new frugality has arrived."

Additionally, among those full service brokerage firms that are affiliated with one of the five major banks in Canada, nearly 50 percent of their investors use an online or discount brokerage.

"Financial institutions that offer integrated channel options to investors are better positioned to benefit from this changing trend," said Li. "This will likely accelerate as the younger generation - which is growing up with online games, Facebook and smart phones - matures and joins the investor ranks in the coming years."

2009 Canadian Full Service Investor Award Recipients

Six factors are used to evaluate overall investor satisfaction with full-service investment firms and financial institutions that offer wealth management and private banking services: account set-up and offerings; account statements; convenience; cost; investment advisor; and investment performance. Raymond James Ltd. ranks highest among full-service investment firms with a score of 747 on a 1,000-point scale and performs particularly well in the advisor; investment performance; account statement; and account set-up and offerings factors. Edward Jones closely follows Raymond James Ltd. at 742, performing particularly well in the convenience factor. Dundee Wealth Management Inc. ranks third overall at 725.

The 2009 Canadian Full Service Investor Satisfaction Study is based on responses from 6,183 investors who use investment services with financial institutions in Canada. The study was fielded in May 2009.