Canadians unsatisfied with DIY investing options: survey

Despite a rise in do-it-yourself investing, most Canadian investors appear to be unsatisfied with the options in the market. (Getty Images) (d3sign via Getty Images)

Despite a rise in do-it-yourself investing, most Canadian investors appear to be unsatisfied with the options in the market.

According to J.D. Power’s 2023 Self-Directed Investor Satisfaction Study, overall satisfaction with DIY investing options in Canada came in at an average of 598 out of 1,000 points, with three of the eight companies scoring above that average. While that overall score was a five point increase from last year, the study found that “the experience is a drag on customer loyalty and advocacy for most brands.”

The study also found that Canadians are less likely to recommend DIY investing services than other banking services to friends and family, with the average net promoter score (NPS) – an industry measurement that reflects customer loyalty and willingness to recommend a brand – coming in at 7 out of 100. That’s less than the average satisfaction score for full-service investing (31 out of 100), credit cards (28 out of 100) and banking (23 out of 100).

Craig Martin, head of wealth and lending intelligence at J.D. Power, said the study shows that many customers are having experiences that are “ambivalent or negative” about brands offering DIY investing services, including major Canadian banks.

“The numbers are very low,” Martin said in an interview.

“Consumers are almost begrudgingly having this relationship with brands. It’s not creating the experience that really stands out in a way that they would come back.”

The report found that 40 per cent of the 2,243 Canadian investors surveyed said they have had a less-than-seamless experience with their investing brokerages, pushing customers to shop around for investing options. Still, the top reason why Canadians switch firms is the high cost of fees, with 30 per cent citing it as the main reason consumers ditch existing firms. Poor service was cited by 13 per cent of respondents.

The three brokerages that topped J.D. Power’s ranking in terms of customer service each provide zero-fee trading. Desjardins Online Brokerage came in the top spot with a score of 692, followed by National Bank Direct Brokerage (645) and Questrade (626). RBC Direct was the only of Canada's five largest bank brands that scored above the industry average with a score of 601.

In fact, the J.D. Power survey said the low NPS score was prevalent among Canada's largest five banks, while pure DIY companies had an average NPS score four to five times higher than the banks.

"Many DIY investors in Canada initially turn to their banks for their investing needs because of the perceived ease of adding on to their existing relationship," Martin said.

“However, a lot of these customers are having an experience that leaves them ambivalent or negative about the brand... This less-than-optimal experience greatly increases the odds of customers being open to starting a relationship with another provider, especially if there is an obvious benefit like reduced or no fees."

In order for companies to succeed in customer satisfaction and retention, Martin says companies need to provide seamless digital capabilities, as well as educational tools that will allow DIY investors feel more confident in their choices.

“The companies that are going to start demonstrating real value and importance in people’s lives beyond just the product, those are the ones that are going to win over customers,” Martin said.

The J.D. Power study is based on responses from 2,243 investors between Oct. 2022 and January 2023. The report measured satisfaction in seven categories, including trust; digital channels; ability to manage wealth how and when I want; products and services; value for fees; people; and problem resolution.

Here is the ranking of self-directed investor companies in terms of overall customer satisfaction, along with the scores out of 1,000. The industry average was 598. The companies included in the study were selected based on market share.

1. Desjardins Online Brokerage (692)

2. National Bank Direct Brokerage (645)

3. Questrade (626)

4. RBC Direct (601)

5. CIBC Investor's Edge (587)

6. TD Direct (586)

7. Scotia iTrade (584)

8. BMO InvestorLine (581)

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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