Self Directed Investing - US - March 2011

SCOPE AND THEMES
What you need to know
Data sources
Consumer survey data
VMS
Abbreviations and terms
Companies mentioned in this report
EXECUTIVE SUMMARY
Industry overview
Market size
Competitive context
The consumer
Marketing and advertising
Innovations and innovators
INSIGHTS AND OPPORTUNITIES
Key points
High-income women need advice, willing to pay for it
Hispanics are active, do-it-yourself investors
ETF assets growing, but investors need more information
INSPIRE TRENDS
Rebuilding Trust
Implications
MARKET SIZE
Key points
U.S. stocks and bonds total $52.4 trillion
Figure 1: U.S. Securities Market Size, 2009 and 2010
Mutual fund assets increase to $11.8 trillion in 2010
Figure 2: U.S. Mutual Funds and ETFs, total assets, 2009 and 2010
Retirement assets rebound to $16 trillion in 2009
Figure 3: Composition of household assets, 2007 and 2009
Figure 4: U.S. Retirement Assets, by plan type, 2007-09
Figure 5: Individual Retirement Account assets, by type of institution, Q4 2009 and Q2 2010
Figure 6: Defined Contribution Plan assets, by type of investment, Q4 2009 and Q2 2010
SEGMENT PERFORMANCE
Key points
Figure 7: U.S. Household Financial Assets, 2007-Q3 2010
Figure 8: Household Net Worth, 2005-Q3 2010
Figure 9: Household Net Worth, 2005-Q3 2010
MARKET DRIVERS
Key points
Saving for retirement creates enormous opportunity for investment firms
Study says 81% of all adults will not be able to retire by age 65
Personal savings rate rebounds – but is it too little, too late?
Figure 10: U.S. personal savings rate, 1980-2010
Boomers stand to inherit $8.4 trillion–maybe
Figure 11: Homeowner equity as a proportion of total real estate valuations, Q3 2010
Figure 12: U.S. homeowner equity, 2005-Q3 1010
High unemployment, reduced income remain obstacles to saving
Figure 13: Unemployment rate, January 2009-January 2011
LEADING COMPANIES
Key points
Figure 14: Leading self-directed investment companies, 2010
Fidelity
Charles Schwab
Vanguard
Sharebuilder from ING Direct
USAA
E*TRADE
TD Ameritrade
Scottrade Inc.
INNOVATION AND INNOVATORS
Key points
Bank of America’s Merrill Edge discount brokerage platform
A prepaid investment card for the unbanked
Schwab expands into social media to reach young investors
TD Ameritrade sponsors online financial reality series
MARKETING STRATEGIES
Key points
Low prices, incentives, research tools dominate advertising
Direct mail activity
Notable direct mail, print, and email advertising
Figure 15: ING email advertisement, January 2010
Figure 16: ING direct mail ad, June 2010
Figure 17: TD Ameritrade email advertisement, July 2010
Figure 18: TD Ameritrade direct mail advertisement, May 2010
Figure 19: E*Trade email advertisement, September 2010
Figure 20: USAA direct mail ad, December 2010
Figure 21: ING email advertisement, January 2011
Figure 22: Scottrade email advertisement, September 2010
Figure 23: Schwab direct mail advertisement, June 2010
Figure 24: Fidelity direct mail advertisement, November 2010
Figure 25: Vanguard direct mail advertisement, June 2010
Television advertising
Figure 26: E*Trade television ad, 2010
Figure 27: Charles Schwab television ad, 2010
Figure 28: TD Ameritrade television ad, 2010
Figure 29: E*Trade television ad, 2011
Figure 30: E*Trade television ad, 2010
Figure 31: Scottrade television ad, 2010
THE CONSUMER
Key points
One-third of those surveyed has a self-directed account
Figure 35: Ownership of a self-directed investment account, by gender, November 2010
Figure 36: Online trading services used, by gender, October 2006
Age has little correlation with self-directed account ownership
Figure 37: Ownership of a self-directed investment account, by age, November 2010
Income is a big factor, particularly among men
Figure 38: Ownership of a self-directed investment account, by income, November 2010
Figure 39: Ownership of a self-directed investment account, by gender and income, November 2010
Figure 40: Ownership of a self-directed investment account, by race/Hispanic origin, November 2010
Figure 41: Ownership of a self-directed investment account, by geographic area, November 2010
Figure 42: Reasons for managing own investments, by gender, November 2010
Figure 43: Reasons for managing own investments, by income, November 2010
Figure 44: Reasons for managing own investments, by gender and income, November 2010
Figure 45: Reasons for managing own investments, by age, November 2010
Figure 46: Favored attribute of investment company, by gender, November 2010
Figure 47: Favored attribute of investment company, by gender and income, November 2010
Figure 48: Favored attribute of investment company, by age, November 2010
Figure 49: Favorite attribute of investment company, by income, November 2010
The vast majority of investors rarely trade
Figure 50: Trading frequency, by gender, November 2010
Figure 51: Consumers who have used online brokerage accounts, by gender and age, October 2006
Youngest investors are most frequent traders
Figure 52: Trading frequency, by age, November 2010
Figure 53: Trading frequency, by income, November 2010
High-income men are most active traders; most women rarely trade
Figure 54: Trading frequency, by gender and income, November 2010
Hispanics are more frequent traders than most
Figure 55: Trading frequency, by Hispanic origin, November 2010
Figure 56: Trading frequency, by area, November 2010
Figure 57: Trading frequency, by region, November 2010
Figure 58: Types of financial products owned, by gender, November 2010
Respondents tend to have same types of investments, regardless of age
Figure 59: Types of financial products owned, by age, November 2010
Highest earners invest in most types of instruments
Figure 60: Types of financial products owned, by income, November 2010
Figure 61: Types of financial products owned, by gender and income, November 2010
Fidelity is most popular investment company among self-directed investors
Figure 62: Location of self-directed account, by gender, November 2010
Figure 63: Location of self-directed account, by age, November 2010
Fidelity is also favorite among highest earners
Figure 64: Location of self-directed account, by income, November 2010
Figure 65: Location of self-directed account, by gender and income, November 2010
Figure 66: Location of self-directed account, by region, November 2010
Figure 67: Location of self-directed account, by geographic area, November 2010
A quarter of respondents have portfolios between $100K-$500K
Figure 68: Total assets in accounts, by gender, November 2010
Figure 69: Total assets in accounts, by income, November 2010
Figure 70: Total assets in accounts, by gender and income, November 2010
Age is major factor in portfolio size
Figure 71: Total assets in accounts, by age, November 2010
Online channel is most popular way to manage investment accounts
Figure 72: Favored communication method for managing account, by gender, November 2010
Figure 73: Favored communication method for managing account, by income, November 2010
Figure 74: Favored communication method for managing account, by gender and income, November 2010
Favorite communications method varies greatly by age
Figure 75: Favored communication method for managing account, by age, November 2010
Hispanics prefer online management more than others
Figure 76: Favored communication method for managing account, by Hispanic origin, November 2010
Rural respondents prefer the in-person touch
Figure 77: Favored communication method for managing account, by geographic area, November 2010
Investors get ideas from a wide variety of sources
Figure 78: Source of investment ideas, by gender, November 2010
Figure 79: Source of investment ideas, by gender and income, November 2010
Young investors are do-it-yourselfers, older people rely on advisors
Figure 80: Source of investment ideas, by age, November 2010
Highest earners are most self-reliant
Figure 81: Source of investment ideas, by income, November 2010
Hispanics more inclined to take DIY route than others
Figure 82: Source of investment ideas, by Hispanic origin, November 2010
Suburbanites, rural dwellers rely more on advisers than urban residents
Figure 83: Source of investment ideas, by area, November 2010
Figure 84: Number of active self-directed accounts, by gender, November 2010
Figure 85: average number of active self-directed accounts, by gender, November 2010
Figure 86: Number of active self-directed accounts, by gender and income, November 2010
Figure 87: average number of active self-directed accounts, by gender and income, November 2010
Oldest respondents have the most accounts
Figure 88: Number of active self-directed accounts, by age, November 2010
Figure 89: Average number of active self-directed accounts, by gender, November 2010
Highest earners have the most accounts
Figure 90: Number of active self-directed accounts, by income, November 2010
Figure 91: average number of active self-directed accounts, by income, November 2010
CLUSTER ANALYSIS
Producers
Demographics
Characteristics
Opportunity
Enjoyers
Demographics
Characteristics
Opportunity
Advisees
Demographics
Characteristics
Opportunity
Cluster characteristics
Figure 92: Self directed finance clusters, December 2010
Figure 93: Types of financial products owned, by self directed investment clusters, December 2010
Figure 94: Reason for making own decisions, by self directed investment clusters, December 2010
Figure 95: Favored attribute of investment firm, by self directed investment clusters, December 2010
Figure 96: Favored source of info about investments, by self directed investment clusters, December 2010
Cluster demographics
Figure 97: Self directed investment clusters, by gender, December 2010
Figure 98: Self directed investment clusters, by age group, December 2010
Figure 99: Self directed investment clusters, by household income, December 2010
Figure 100: Self directed investment clusters, by race, December 2010
Figure 101: Self directed investment clusters, by Hispanic origin, December 2010
Cluster methodology
APPENDIX: TRADE ASSOCIATIONS