DIY investors have an emerging demand: They no longer want to do it themselves.
J.D. Power's annual survey of self-directed investors showed that DIY investor satisfaction remained flat the past three years — despite the double-digit average returns in the stock market last year. Released April 4 and based on data gathered from January 2023 through January 2024, the study showed a shake-up in the rankings of customer satisfaction with brokers: TD Ameritrade catapulted to the top, knocking last year's leader, Vanguard, to No. 3, and Charles Schwab took second, replacing T. Rowe Price, which fell to 11th place.
The results indicate the coveted younger generation of DIY investors now wants more personalized service — something large brokerages are struggling with, having built systems to take a hands-off, no-fee approach with green investors.
"Retail brokerages need to rethink their role in their clients' lives and start to deliver clear, quantifiable value, particularly to younger investors," said Craig Martin, J.D. Power's executive managing director and head of wealth and lending, in a statement. "Right now, that personal connection is really missing at many firms."
Part of the issue is that young investors have tapped a bullish market and are growing into high net-worth individuals, but brokers have struggled to transition them over to personalized services that cost more.
"The do-it-yourself investors are looking for more personalized help because they are not getting it, and achieving their financial goals goes well beyond their investment portfolio," said Andrew Altfest, founder of Altfest Personal Wealth Management and CEO of FP Alpha. "The huge firms are trying to meet different needs for different people,[but] there hasn't been a way to actually provide the advice at scale."
READ MORE:
Martin told Financial Planning that most DIY investors are choosing this route because of the cost of personalized services at large brokerages.
"In many cases, the choice to use a DIY investment firm is a result of the consumer believing they can't afford the more personalized human experience delivered by an advisor," he said. "The consumers see value in receiving help and guidance, it's just outside of the financial means of some to work with a professional."
J.D. Power also surveyed self-directed investors who "occasionally" seek guidance from a firm. The results showed they seemed more satisfied than the DIY investors, with a 15 point-higher satisfaction rate in 2024 compared to 2023.
However, customer satisfaction of those investors with brokerage firms shifted slightly this year. While Fidelity held its No. 1 ranking from last year, Charles Schwab bumped E-Trade for the No. 2 position.
For its 2024 survey, J.D. Power spoke with 9,875 investors who made decisions without seeking a full-service brokerage. The research firm measured "self-directed investors' satisfaction with their investment firm based on performance in seven factors (in order of importance): trust; digital channels; the ability to manage wealth how and when I want; products and services; value for fees; people; and problem resolution" and presented scores on a 1,000 point scale. Overall DIY investor satisfaction in 2024 was just one point higher from 2023, totaling 708 points, and flat to 2021.
To see the 2024 J.D. Power investor satisfaction rankings for both DIY investors and for investors seeking guidance, scroll down our slideshows.
