Large Brokers Continue to Dominate Market for Serving Affluent,

Press Release:

Large Brokers Continue to Dominate Market for Serving Affluent, Despite Poor Client Satisfaction

Press Release
News Article February 2005

RHINEBECK, N.Y., Feb. 22 /PRNewswire/ -- Phoenix Marketing International, a market research and advanced analytical modeling firm, announced today its latest rankings of top providers that service the affluent and high net worth consumer market. The Phoenix research found that while large brokers continue to dominate the market, their satisfaction scores have not improved.

In the latest Phoenix Marketing rankings, brokerage firms held eight of the top ten positions in terms of market share for providers that serve the affluent market, a finding consistent with last year's results. The top ten firms ranked by affluent market share are: Fidelity Investments, Charles Schwab, Merrill Lynch, Vanguard, Morgan Stanley, Smith Barney, Edward Jones, Wachovia, American Express, and A.G. Edwards.

"I am not surprised that there are so many brokers on the top ten list, as nearly half of affluent investors use a broker as their primary investment provider" said David Thompson, vice president of the Affluent Practice at Phoenix Marketing International. "What continues to be striking, however, is that while these same affluent clients are not very satisfied with most of these brokerage firms, they seem to be reluctant to move elsewhere," noted Thompson. The Phoenix research numbers bear this out: the average satisfaction scores for eight out of ten of these brokers is a mediocre 56%, but their affluent clients have been with them for an average of nearly ten years. To explain this seeming incongruity, Thompson points to the marketing and product expertise of these brokers. "Most of these companies have excelled at promoting their brands, and they have developed the product platforms that provide the scope and variety of offerings demanded by affluent investors," said Thompson.

Three firms in the top ten stand out from the rest, however, in their ability to satisfy their affluent clients. A.G. Edwards ranked highest in affluent client satisfaction with a score of 75%. Vanguard and Edward Jones' affluent clients gave them a 70% satisfaction score. The Phoenix Marketing data provides some clues as to why they stand out. One of the key drivers of affluent customer satisfaction with their primary investment provider is the percent of assets they have with the firm. Both A.G. Edwards and Edward Jones excel at asset gathering, with their average affluent client having 70% or more of their assets with the firm. This is five to ten percentage points higher than the other leading providers on the list. In the case of Vanguard, its consistently high satisfaction scores is a testament to its broad product platform and very competitive fee structure.

The Phoenix Affluent Marketing Service (AMS) program is a continuously fielded survey of affluent and high net worth households throughout the U.S., and provides a twice-yearly summary of affluent and high net worth household investment, financial and affluent lifestyle behaviors and attitudes. The data in this article is drawn from its surveys fielded in July to December 2004, and is weighted to be representative of affluent households nationally.

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