Vanguard Scores Highest For Online Customer Satisfaction

by Judy Warner, Nov 24, 2006, 5:00 AM

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Vanguard Group earned the highest marks for online investor satisfaction, J.D. Power and Associates reported this week.

Scottrade, Fidelity Investments and Charles Schwab & Co. also earned high marks for their online trading and investment offerings.

However, J.D. Power cautions, the percentage of customers saying they've encountered problems on financial sites across the category is climbing. Some 41 percent of investors participating in the nationwide survey reported glitches with mutual-fund and online trading Web sites--up from 37 percent a year ago, and 27 percent two years ago.

Online investors with access to a local branch office are more satisfied, on average, than those who do not have access, the study found.

The 41 percent of online investors who indicate they have access to a local branch office for support provide scores 22 points higher on average than investors who do not have access to a branch office. Investors primarily use branches to deposit funds into their accounts and to receive in-person investment assistance or guidance.

"Although online investment firms are designed to allow their clients to do their trading remotely, there is a large proportion of investors who seek the personal attention they can receive at a branch office," said James Lohmann, senior director of investment services research at J.D. Power. "Furthermore, these investors are also more tolerant of commissions and fees."

According to the study, the online investment industry has a much higher percentage of highly committed clients (41 percent) than other industries measured by the researcher, including full-service investment (36 percent) and retail banking (28 percent).

This is based on responses from 5,070 online investors who invest with one of 18 firms included in the study. The survey was conducted in August and September 2006.

Financial services marketers were the leading online advertising category in the U.S. last month, according to Nielsen//NetRatings AdRelevance.

Vanguard values the Web for its ability to measure response and conversion and the "higher level of engagement" enabled by rich media advertising that allows interactive tools and other rich content to be embedded right in the ad, a spokesperson said.

Banks, brokerages and insurance firms created 30 percent of all image-based impressions for the month, Nielsen//NetRatings reported--nearly double the next-highest category, Web media at 17 percent.

Top advertisers within the category, according to Nielsen//NetRatings, ranked by share of image-based impressions, were British banker GUS, Plc. (which owns lowermybills.com and Experian, among others), Low Rate Source, Bank of America, HSBC Holdings, InterActive Corp., E*Trade Financial, and CitiGroup.

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