Table of Contents
Executive Summary
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- The issues
- A disconnect that indicates lack of understanding
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- Figure 1: Attitudes toward investing, December 2015
- Ownership of financial assets is increasingly concentrated
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- Figure 2: Family financial holdings, selected years 1989-2013
- Only one-third have a tax-advantaged retirement account
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- Figure 3: Ownership of tax-advantaged retirement account, by demographic segments, December 2015
- The opportunities
- Robo-advisers balance requirements accessible to many
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- Figure 4: Reason for not having an investment account, by gender and marital status, December 2016
- Millennials are looking to invest more
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- Figure 5: Future investment plans, by generation, December 2015
- Banks have an opportunity with Millennials
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- Figure 6: Location of non-retirement accounts, Millennials, December 2015
- What it means
The Market – What You Need to Know
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- Total net assets of investment companies tops $18 billion
- Number of investment firms is falling
Market Size
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- Total net assets of investment companies tops $18 billion
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- Figure 7: Total net assets of investment companies, 2991- 2014
- Change in financial asset ownership
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- Figure 8: Percentage of families holding financial assets, by type of asset, selected years 1989-2013
- While some families have more assets, most have less
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- Figure 9: Family financial holdings, selected years 1989-2013
Market Breakdown
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- Number of investment firms is falling
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- Figure 10: Number of investment firms, 1997 - 2014
- Equities dominate mutual funds
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- Figure 11: Breakdown of mutual funds, 2014
- ETFs continue to challenge mutual funds
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- Figure 12: ETF market, 2005 - 2014
Market Factors
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- Disposable income is increasing, personal savings is increasing more
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- Figure 13: Disposable personal income (DPI), personal savings, personal savings as a % of DPI
- Aging of America influences investments
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- Figure 14: Willingness to trade risk for reward, by generation, December 2015
Key Players – What You Need to Know
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- A strengthening stock market
- Retirement confidence is increasing
- Industry is losing advisers
- The growth of robo-advisers
- Changing fee structures to attract Millennials
- Gift cards for stock make investing more accessible
What’s Working?
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- The stock market has been strong
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- Figure 15: DJIA, monthly averages, Jan. 1, 2011-Jan. 1, 2016
- Retirement confidence is increasing
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- Figure 16: Percentage of workers who are confident about having enough money for a comfortable retirement, 2008-2015
What’s Struggling?
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- Industry is losing advisers
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- Figure 17: Want to work with advisers like themselves, by generation, October 2015
- Investors are mixed on the need for advisers
- Stock ownership is declining
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- Figure 18: Percentage of families who own stock either directly or indirectly, selected years 1989-2013
What’s Next?
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- The growth of robo-advisers is disrupting the industry
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- Figure 19: Use of robo-advisers, by type of investment account, December 2015
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- Figure 20: Use of robo-advisers, by generation, December 2015
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- Figure 21: Vanguard Personal Advisor Services and Betterment online ads, 2015
- Human advisers are still in demand
- Changing fee structures to attract Millennials
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- Figure 22: Reasons for not having an investment account, December 2015
- Gift cards for stock make investing more accessible
The Consumer – What You Need to Know
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- Most consumers have some type of investment account
- Millennials prefer to hold non-retirement investment accounts at banks
- Retirement contributions are steadier than non-retirement contributions
- Hispanics and non-Whites make their own investment decisions
- Millennials are optimistic and want to invest
Investment Account Ownership
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- About half of consumers have some kind of investment account
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- Figure 23: Investment account ownership, December 2015
- Blacks are less likely to have any type of investment account
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- Figure 24: Investment account ownership, by race, December 2015
Location of Investment Accounts
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- Institutions have to fight harder for non-retirement accounts
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- Figure 25: Location of investment accounts, by type of investment account
- Millennials prefer banks for non-retirement investing
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- Figure 26: Location of non-retirement investment accounts, by generation, December 2015
- Self-directed accounts are more popular among men
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- Figure 27: Location of non-retirement investment account, by gender and age, December 2015
Why Consumers Don’t Have an Investment Account
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- Most feel they don’t have enough money
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- Figure 28: Reasons consumers don’t have an investment account, by gender, December 2015
- Women’s interest in investing grows with age
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- Figure 29: Reasons for not having an investment account, by gender and age, December 2015
- Once household income reaches $75K, lack of money is less a reason for not having an investment account
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- Figure 30: Reasons for not having an investment account, by household income, December 2015
- Fear of risk impacting decision to invest
Investment Account Balances
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- Balances in retirement and non-retirement accounts are the same
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- Figure 31: Amount in investment accounts, December 2015
- Women lag men in retirement and non-retirement account savings
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- Figure 32: Total amount in non-retirement accounts, by gender, December 2015
- Figure 33: Total amount in tax-advantaged retirement accounts, by gender, December 2015
- Retirement contributions are steadier than non-retirement contributions
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- Figure 34: Contributions to investment accounts, by gender, December 2015
- Hispanics are not saving
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- Figure 35: Investment account contributions, by Hispanic origin, December 2015
Engagement in Investing
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- Men are more interested and engaged in investing than are women
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- Figure 36: Engaged in investing, by gender, December 2015
- Engagement increases with investment account balance
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- Figure 37: Engagement with investing, by non-retirement investment account balances, December 2015
- Hispanics and non-Whites make their own investment decisions
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- Figure 38: Engaged in investing, by Hispanic origin and race, December 2015
Changing Investment Goals
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- Asset growth or income?
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- Figure 39: Investment goals, by generation, December 2015
- Investment goals differ with income
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- Figure 40: Investment goals, by household income, December 2015
- How investors’ goals have changed
Changing Investment Strategies
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- Men are more likely to change strategies
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- Figure 41: Changing investment strategies, by gender, December 2015
- Millennials are active investors
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- Figure 42: Changing investment strategies, by generation, December 2015
Future Investment Plans
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- Women need to be encouraged
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- Figure 43: Future investment plans, by gender, December 2015
- Millennials are optimistic and want to invest
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- Figure 44: Expectations of growth, by generations, December 2015
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- Figure 45: Future investment plans, by generation, December 2015
- Hispanics are planning to be more active in investing
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- Figure 46: Future investment plans, by Hispanic origin and race, December 2015
- Parents are more likely to be aggressively investing
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- Figure 47: Future investment plans, by parental status, December 2015
Investment Strategies
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- Income drives investment goals
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- Figure 48: Investment goals, by household income, December 2015
- Men are being more cautious than women
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- Figure 49: How investment strategy has changed, by gender, December 2015
Attitudes toward Investing
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- Millennials want the benefits of investing – but are uncomfortable with it
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- Figure 50: Attitude toward investing by generation, December 2015
- Hispanics are relying on investing for wealth
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- Figure 51: Attitude toward investing, by Hispanic origin, December 2015
- Younger men, older women are interested in socially responsible investing
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- Figure 52: Importance of socially responsible investing, by gender, December 2015
- Hispanics want to invest in causes
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- Figure 53: Importance of socially responsible investing, by Hispanic origin, December 2015
Cluster Analysis
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- Cluster Methodology
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- Figure 54: Investor clusters, December 2015
- Cluster 1: Disconnected Worriers
- Demographics
- Characteristics
- Opportunity
- Cluster 2: Young Optimists
- Demographics
- Characteristics
- Opportunity
- Cluster 3: Confident Independents
- Demographics
- Characteristics
- Opportunity
- Cluster Characteristic Tables
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- Figure 55: Investment account ownership, by target cluster, December 2015
- Figure 56: Location of non-retirement investment account, by target clusters, December 2015
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- Figure 57: Location of tax-advantaged retirement account, by target clusters, December 2015
- Figure 58: Total amount in non-retirement account(s), by target cluster, December 2015
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- Figure 59: Total amount in tax-advantaged retirement account(s), by target cluster, December 2015
- Figure 60: Investment behaviors, by target cluster, December 2015
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- Figure 61: Future investment plans, by target cluster, December 2015
- Figure 62: Attitudes toward investing, by target clusters, December 2015
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
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