Whose Investors are Better Off?
Welcome to WIBO! WIBO stands for, “Whose Investors are Better Off?”
A Credo WIBO report is a comparison of two groups of investors:
- Investors whose money is managed by one company; compared to,
- Investors whose money is managed by another company.
Credo surveys 1,000 investors each month as a part of the Financial Comfort Zone (FCZ) Study. (Our current sample of investors includes more than 30,000 responses.) With one set of questions, we ask these investors to indicate what investment companies they use to manage their money. In a separate part of the study, we ask the same investors numerous questions about their sentiment and feelings of financial well-being.
What’s the result? Below is an example of a Credo WIBO Report. It compares two prominent fund companies that operate in Canada. One we’ve named because they are among the best in the industry. The other… a little less so.
Credo WIBO Report: Fidelity vs Company X
This quarterly Credo WIBO Report is based on a subset of investors who participated in the monthly Financial Comfort Zone study. It includes:
- 1,529 users of Fidelity funds; and
- 1,064 users of Company X mutual funds
These investors were asked a host of questions. One question that produced compelling results was this:
“Which of the following best characterizes how you feel?
|1. I am far behind where I expected to be financially.|
|2. I am behind where I expected to be financially.|
|3. I am about where I expected to be financially.|
|4. I am ahead of where I expected to be financially.|
|5. I am well ahead of where I expected to be financially.”|
Exhibit 1 below shows the high-level results.
On first blush, and by reviewing this graphical analysis alone, it may appear that the financial well-being distributions that were discovered are similar. Statistical testing, however, shows that they are not. In fact there are significant differences in the degree to which each company’s investors feel either ahead or behind, financially.
Exhibit 1. Comparing Investors’ Feelings of Financial Well-being: Company X investors vs Fidelity investors
The fact of the matter
Investors who elected to invest in Fidelity funds are significantly more likely to feel that they are either ahead or well ahead of their financial expectations than are investors who elected to have Company X manage their money. Further, Fidelity clients are significantly less likely to feel either behind or far behind Company X users. The probability that the difference between Company X and Fidelity results happened by chance alone is p=0.0000. Tiny. Credo infers the difference is real.
Highlights from the research:
- Fidelity investors were 36% more likely to feel well ahead of their expectations and 20% more likely to feel ahead of their expectations than investors who had opted for Company X.
- Company X investors were 32% more likely than Fidelity investors to feel far behind their expectations and 27% more likely than Fidelity investors to feel behind their expectations.
This research offers compelling evidence that, given the choice of recommending Fidelity funds rather than Company X, a financial advisor may be serving his clients more appropriately by recommending Fidelity rather than Company X. We note, however, that each company has a unique product offering. Further, experienced financial advisors assess their clients’ needs and recommend investments that suit their clients’ unique needs.
Note: This research was NOT funded by either Company X or Fidelity. It was conducted independently and objectively by Credo Consulting Inc. without prejudice.
If you have questions about this or other Credo research, your welcome to call us. To request another WIBO report that compares any two companies, contact Credo.
How to Get WIBO Reports
Credo’s WIBO Reports are available to financial advisors:
- through wholesalers of participating firms
- who are participants in Credo research
If you are not a subscriber to Credo research, call us to arrange access. If you are a subscriber and want a customized comparative analysis between two companies… use the request form below or send us a note asking for a Credo WIBO report…and be sure to identify the two companies you want to have us compare.