Newly revised criteria for evaluating investment account statements have resulted in sharply lower ratings for many Canadian investment dealers, financial services research firm Dalbar, Inc. said Wednesday.

Half of the 16 firms evaluated failed to achieve 50 out of a possible 100 points, with the industry average at 50.98 points, a decline of 13.28 points from the previous study conducted.

Dalbar said it was disappointed to see scores decline so dramatically following the adoption of new statement evaluation criteria.

“Few best practices were observed,” Dalbar said in a release. This is “in stark contrast to statements provided in the U.S., which combined innovative design and graphic tools, with comprehensive and detailed account information.”

To match consumer needs and to reflect changes in the industry, Dalbar updated its evaluation criteria for testing investment account statements for its 2010 Trends and Best Practices in Brokerage Statements report.

Results from advisory board meetings, consumer-facilitated sessions and advisor focus groups were consulted upon and factored into the updates.

In addition, Dalbar surveyed a large pool of investors about their preferences for statement content and design. The study asked investors to prioritize 17 possible statement features, ranging from graphic elements to specific types of informational content.

Dalbar found that the five most important statement elements are:

– overall rate of return;
– summary of fees charged;
– sections that track investment goals and account growth;
– sections that summarize account details; and
– asset allocation of accounts.

In its 2010 review of brokerage statements, Dalbar found that many companies failed to include rates of return values charts and visual aids, market gain/loss reporting, and client messaging.

“Today’s clients are expecting high levels of value from their financial statements, and brokerage statements, many of which have remained unchanged since 2005, fail to measure up,” Dalbar said in a release.

This is in contrast to the mutual fund industry, “which has continually strived to provide innovation in its statements,” Dalbar said.

The need for improvement is clear according to Anita Lo, Dalbar’s vice president of Canadian strategy. “It may be a daunting task, but firms need to keep up with the changing expectations of clients who deserve to have a clear and informative statement about their financial health,” she said.

The top five ranked firms from this year’s study were: Edward Jones; ATB Securities; RBC Direct Investing; TD Private Investment Advice; and Scotia iTrade,

IE