Getting started

Whether you’re a seasoned investor, a newbie, or someone retesting the waters after a scary loss, financial-services companies want your business. But aside from potential incentives, what will you get for moving your accounts? Is the service up to par? Is even free advice worth your time?

In late 2011 Consumer Reports investigated what financial-services companies were really providing to their customers. We surveyed our online subscribers about their experiences with their brokers. We sent staff members into brokerage offices in New York and Washington state to experience how clients seeking advice are served. And we asked major financial-services companies to prepare investment plans based on the profiles of five of those staff members. Two independent financial planners and their teams evaluated the appropriateness of the advice in the companies’ plans.

Our results revealed good news and cautionary notes. If you’re an active investor, like most of the subscribers who responded to our survey, you can feel good about the level of service and help you’ll get at major U.S. brokerages, we found. We also discovered that investors of all stripes can get free, basic investment plans from several financial companies. But to make the most of that advice, you’ll need to understand the process and be aware of the plans’ limitations.

Highlights of our three-pronged investigation include the following.

• Our readers were very satisfied with 10 of 13 major brokerages. USAA’s brokerage arm led in overall satisfaction. Scottrade, an online broker, and Vanguard, the mutual-fund giant, also scored very highly overall.
• In our field test, participants encountered some questionable sales tactics. One staff member was shown a chart on a portfolio’s performance that omitted the significant impact of fees. Another tester was pitched a complicated annuity product though the adviser knew little about her.
• Plans prepared for us by Citibank and T. Rowe Price had somewhat more appropriate advice. Two expert financial planners analyzed 20 investment plans created for us by Citibank, Fidelity, Schwab, and T. Rowe Price, and judged them about equally good. Citi and T. Rowe Price earned somewhat higher marks for the appropriateness of investment recommendations. Citibank’s approach toward planning was deemed more comprehensive than the others’.

Still, our judges found inappropriate advice in several plans. They also found most of the documents to be filled with boilerplate language and short on real, actionable advice.

Our readers rate brokerage firms

All the brokerages in our survey of online subscribers earned high marks for customer service, and for helpfulness, specificity, and clarity of the financial advice provided. The higher the respondents’ balances, the more satisfied they tended to be, therefore the Reader score was adjusted for account size. The strongest predictor of satisfaction was how much their accounts had grown.