When markets turn rocky, as they have this year, investing with a trusted ETF/fund firm, online broker or wealth manager pays big dividends. Nest eggs, college savings and retirement funds are at stake.
It's easier to sleep at night knowing a trusted partner is guiding your wealth management.
In IBD's 2022 Most Trusted Financial Companies survey, which is co-branded this year with our sister company MarketWatch, Vanguard captured the most trusted in investing in two categories: ETF/fund companies, as well as online brokers. For online brokers, it nabbed the No. 1 trust ranking in six of the seven trust attributes IBD polled, including quality of the product, ethics, data privacy, customer service, pricing, and sensitivity to customers' trading needs during a volatile period for stocks.
Fidelity earned the No. 1 trust rating for wealth managers.
In each business, we recognize the three companies with the highest overall trust rating as the most trusted in that category. Vanguard's ETF and fund business earned an overall trust rating of 83.6. That rating also put it second on IBD's overall top 25 list of Most Trusted Financial Companies.
The company is best known for its low fees and index funds that track broad stock indexes like the S&P 500. Vanguard's fund company espouses time-tested investing principles, such as buy-and-hold and broad diversification.
Vanguard coaches its clients to "save more, trade less and take a disciplined long-term view," said Andrew Kadjeski, Vanguard's head of retail brokerage and education savings.
Client trust? "It's the core of everything we do," said Kadjeski.
ETF/Fund Companies
Vanguard charges low expense ratios and provides unbiased investment advice. It also offers more than 200 of its own funds that have gone through a stringent product development review.
"You're not going to see Vanguard offering trendy funds," such as a Bitcoin or cryptocurrency ETF, Kadjeski said. "We want to make sure we're offering clients products with an enduring investment case that meet their long-term needs."
3 Most Trusted ETF/Fund Managers
| Company | Category | Overall Rating | Quality | Ethics | Privacy | Customer Service | Price | Sensitivity To Customer Needs | Innovation |
|---|---|---|---|---|---|---|---|---|---|
| Vanguard | ETF/Fund Companies | 83.6 | 86.9 | 84.5 | 88.5 | 80.5 | 85.5 | 76.6 | 74.2 |
| Fidelity Investments | ETF/Fund Companies | 79.5 | 80.1 | 80.6 | 86.9 | 82.9 | 72.6 | 73.5 | 73.1 |
| AllianceBernstein | ETF/Fund Companies | 77.9 | 75.4 | 76.9 | 79.3 | 82.8 | 76.0 | 77.5 | 76.9 |
Jeffrey Wood, an investment advisor and partner at Lift Financial in South Jordan, Utah, is comfortable investing his clients' money in Vanguard ETFs. "They're highly rated and no clients have ever had anything bad to say about Vanguard," he said.
Fidelity earned the second-highest trust rating (79.5) among ETF and mutual fund companies. "It's all about the customer," said Ram Subramaniam, Fidelity's head of wealth management and digital advice.
Customers need to feel that "their money is in good hands, it's safe and the company truly cares about them," he said.
Online Brokers
Vanguard also earned the top trust rating (78.6) for online brokers. Vanguard's brokerage business has a wide assortment of funds, ETFs and stocks to trade, including non-Vanguard products.
In a world rife with financial fraud, Vanguard protects its clients. It invests heavily in systems to deter hackers.
"Data security is a huge part of gaining, maintaining and building trust with clients," said Kadjeski. Vanguard protects client data by sending digital activity alerts when trades are placed and using voice biometrics to keep intruders out. It also requires two-factor authentication before clients can conduct business digitally.
Fidelity, which has 33.5 million retail brokerage accounts, earned the second-highest overall trust rating (75.2) for online brokers. "We put ourselves in the shoes of the customer," says Fidelity's Subramaniam. When making decisions, he said executives always ask, "What would the customer think about it?"
3 Most Trusted Online Brokers
| Company | Category | Overall Rating | Quality | Ethics | Privacy | Customer Service | Price | Sensitivity To Customer Needs | Innovation |
|---|---|---|---|---|---|---|---|---|---|
| Vanguard Brokerage | Online Broker | 78.6 | 81.4 | 79.8 | 82.7 | 78.5 | 77.9 | 72.4 | 67.5 |
| Fidelity | Online Broker | 75.2 | 76.9 | 77.2 | 80.8 | 76.2 | 70.9 | 68.4 | 68.6 |
| Charles Schwab | Online Broker | 74.5 | 75.0 | 76.6 | 77.5 | 76.8 | 71.6 | 67.5 | 73.2 |
One way Fidelity builds trust is by sweeping brokerage clients' cash into a high-yielding money market account that currently yields 1.71%. That's much higher than the 0.12% average, according to the FDIC.
Wealth Management Companies
Boston-based Fidelity earned the No. 1 trust rating (76.0) for wealth management companies. Fidelity's advisors build relationships with clients and help them create a financial plan.
The one-on-one time, especially when markets turn volatile, helps cement client trust. "Clients feel like they are in a secure place," Subramaniam said.
"Fidelity is our favorite money management firm for our clients," said Steve Azoury, owner of Azoury Financial in Troy, Mich. "I always tell my clients they never seem to do anything silly, like take big chances on unproven investments."
Charles Schwab received the second-highest trust rating (75.1) in the wealth management category. Since the firm's founding in 1971, Schwab has earned a reputation as a champion of individual investors.
3 Most Trusted Wealth Management Companies
| Company | Category | Overall Rating | Quality | Ethics | Privacy | Customer Service | Price | Sensitivity To Customer Needs | Innovation |
|---|---|---|---|---|---|---|---|---|---|
| Fidelity Wealth Management | Wealth Management | 76.0 | 76.1 | 78.8 | 80.4 | 80.3 | 69.1 | 70.1 | 71.8 |
| Schwab Wealth Advisory | Wealth Management | 75.1 | 76.9 | 76.3 | 79.6 | 76.8 | 70.6 | 69.1 | 71.6 |
| Ameriprise Financial | Wealth Management | 74.9 | 75.9 | 75.4 | 81.9 | 73.2 | 69.2 | 72.2 | 74.9 |
Schwab's secret to success? "Seeing through our clients' eyes," said Schwab president Rick Wurster. "It is our North Star. We put the client first and do right by them."
That means being there for investors when they need help. According to Wurster: "In the second quarter (when markets were volatile), we answered (client incoming) calls in 17 seconds."
Great client service also means not selling investment products for the sake of generating fees. "One thing that really builds trust at Schwab is we are completely product agnostic," said Wurster. (All our 2022 Most Trusted Financial Companies content can be found here.)
