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Financial Needs of Affluent and High Net Worth Consumers - US - November 2016

"Most affluent and HNWI (high net worth individuals) have sophisticated financial needs and concerns, but only approximately half use a financial adviser and only one third have a written financial plan. Advisory services might make it easier for them to reach their goals, but trust in professionals is relatively low among this group, and many wealthy people prefer to manage their finances themselves. Robo-advice is another option and young affluents and HNWIs are beginning to utilize this. How can the financial services industry integrate the benefits of technology with those of a human adviser?"
- Robyn Kaiserman, Senior Financial Services Analyst

This report discusses the following key topics:

  • One third aren’t sure they have enough for retirement
  • Most don’t have a written plan
  • Advisers are not necessarily trusted
  • Robo-advisers don’t impress HNWI

Although affluent consumers and HNWIs have a lot of assets, they still have concerns about their finances. Wealth management and advisory services might help them feel more comfortable. Robo-advisers are making inroads into this segment, but banks have an opportunity, too, especially with affluent Millennials, many of whom want advisers to have a presence at their banks.

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • One third aren’t sure they have enough for retirement
            • Figure 1: Confidence in having enough for retirement, by household income, August 2016
          • Most don’t have a written plan
            • Figure 2: Has a written financial plan, by household net worth, August 2016
          • Advisers are not necessarily trusted
            • Figure 3: Attitude toward advice and advisers, by gender and age, August 2016
          • Robo-advisers don’t impress HNWI
            • Figure 4: Attitudes toward advice and financial services, by household net worth, August 2016
          • The opportunities
            • Focus on mortgage lending
              • Figure 5: Financial priorities – Buying a home, by generation, August 2016
            • Robo-advisers should target Millennials
              • Figure 6: Use robo-adviser, by generation, August 2016
            • Parents of young children may need help achieving short-term goals
              • Figure 7: Financial goals, by parental status, August 2016
            • Retirement planning for the highest-earning affluents
              • Figure 8: Attitudes toward advice and advisers, by household income, August 2016
            • What it means
            • The Market – What You Need to Know

              • An increase in the number of households with $500K+ in income-producing assets
                • Projected affluent market to increase
                  • Median and mean incomes are trending up
                    • More people earn high incomes
                    • Market Size and Forecast

                      • An increase in the number of households with $500K+ in income-producing assets
                        • Figure 9: Number of households with $500K+ in income-producing assets, 2011-16 (forecast)
                      • Historic and projected affluent market
                        • Figure 10: Fan chart forecast number of US households with income-producing assets of $1 million+, 2011-21
                    • Market Factors

                      • Median income is trending up
                        • Figure 11: Median US income, Jan. 1, 2010-Jan. 1, 2015
                      • More people earn high incomes
                        • Figure 12: Individuals aged 15+ with annual income of $150K+, 2006-15
                    • Key Players – What You Need to Know

                      • More self service
                        • Goals-based planning
                          • Expanding wealth management channel capabilities
                          • What’s In?

                            • More self-service
                              • Figure 13: Use of financial advice, by generation, August 2016
                            • Goals-based planning
                              • Figure 14: Attitudes toward advice and financial services, by household investable assets and household net worth, August 2016
                              • Figure 15: Bank of America/Merrill Lynch Email ad, 2016
                          • What’s Struggling?

                            • Gender wage gap continues
                              • Figure 16: Internet users aged 18+ with $500K+ in investable assets, by demographics, August 2016
                            • Wealthy have goals, but no plans
                              • Figure 17: Attitudes toward advice and financial services, by household net worth, August 2016
                          • What’s Next?

                            • Expanding wealth management channel capabilities
                              • Figure 18: Use of financial technology, by generation, August 2016
                          • The Consumer – What You Need to Know

                            • What the wealthiest have already achieved
                              • Short-term goals may be better achieved with help
                                • Young women plan to earn more and invest more
                                  • Accessibility through all channels is key
                                    • Financial advisers are most trusted – but still have work to do
                                      • Trust in adviser depends on age, not income
                                        • Only half of affluents use a human financial adviser
                                          • Better online banking drives more switching than better mobile banking
                                            • Fees force switching the most
                                              • Saving money is important to affluents and HNWIs
                                                • Almost half of affluent and HNW do their own research
                                                • Financial Priorities

                                                  • What the wealthiest have already achieved
                                                    • Figure 19: Financial priorities, by household net worth, August 2016
                                                  • Short term
                                                    • Short-term goals may be better achieved with help
                                                      • Figure 20: Financial priorities, August 2016
                                                    • Affluent parents are looking toward the future
                                                      • Figure 21: Financial priorities, by parental status, August 2016
                                                    • Young people plan to buy life insurance soon
                                                      • Figure 22: Financial priorities, by generation, August 2016
                                                      • Figure 23: AIG life insurance email, 2016
                                                    • Net worth doesn’t affect three of most important short-term goals
                                                      • Figure 24: Financial priorities, by household net worth, August 2016
                                                    • Medium term
                                                      • Young women plan to earn more and invest more
                                                        • Figure 25: Financial priorities, by gender and age, August 2016
                                                      • Big ticket items are planned for the medium term
                                                        • Figure 26: Financial priorities, by household income, August 2016
                                                      • Long term
                                                        • Gen X wants to pay off their mortgage
                                                          • Figure 27: Financial priorities, by generation, August 2016
                                                        • Lowest earning affluents plan long-term college saving
                                                          • Figure 28: Financial priorities, by household income, August 2016
                                                      • Factors Influencing Choice of Provider

                                                        • Accessibility through all channels is key
                                                          • Figure 29: Factors influencing choice of bank, by generation, August 2016
                                                        • Rates are important to parents
                                                          • Figure 30: Factors influencing choice of bank, by parental status, August 2016
                                                        • Young males want a financial adviser
                                                          • Figure 31: Factors influencing choice of bank, by gender and age, August 2016
                                                        • Convenience and low fees are most important to the wealthiest
                                                          • Figure 32: Factors influencing choice of bank, by household investable assets and household net worth, August 2016
                                                      • Source of Financial Information

                                                        • Financial advisers are most trusted – but still have work to do
                                                          • Figure 33: Trusted source of financial information, by household net worth, August 2016
                                                        • Financial advisers far more trusted among older affluents
                                                          • Figure 34: Trusted source of financial information, by gender and age, August 2016
                                                        • Trust in adviser depends on age, not income
                                                          • Figure 35: Trusted source of financial information, by age and household income, August 2016
                                                      • Use of Financial Advice

                                                        • Use of human advisers
                                                          • Only half of affluents use a human financial adviser
                                                            • Figure 36: Use of financial advice, August 2016
                                                          • Older affluent women most likely to use a human adviser
                                                            • Figure 37: Use of financial advice, by gender and age, August 2016
                                                          • Use of robo-advisers
                                                            • Robo-advisers appeal to younger male affluents
                                                              • Figure 38: Use of financial advice, by gender and age, August 2016
                                                            • Robo-advisers most popular among high net worth
                                                              • Figure 39: Use of financial advice, by household net worth, August 2016
                                                            • Use of both human and robo-advisers
                                                              • Many affluent use both robo- and human advisers
                                                                • Figure 40: Use of financial advice, by use of financial advice, August 2016
                                                              • Millennials are most likely to use both human and robo-advisers
                                                                • Figure 41: Use of financial advice, by generation, August 2016
                                                            • Use of Financial Technology

                                                              • Better online banking drives more switching than better mobile banking
                                                                • Figure 42: Use of financial technology, by generation, August 2016
                                                              • Fees force switching the most
                                                                • Figure 43: Use of financial technology, by household income, August 2016
                                                              • FinTech is more useful to parents than non-parents
                                                                • Figure 44: Use of financial technology, by parental status, August 2016
                                                              • Young male affluents are more likely to use mobile
                                                                • Figure 45: Use of financial technology, by gender and age, August 2016
                                                              • Among most affluent, online is more important than mobile
                                                                • Figure 46: Use of financial technology, by household investable assets, August 2016
                                                            • Attitudes toward Advice and Financial Services

                                                              • Saving money is important to affluents and HNWIs
                                                                • Figure 47: Attitudes toward advice and financial services, by household net worth, August 2016
                                                              • Advisers not always trusted
                                                                • Figure 48: Attitude toward advice and financial services, by household income, August 2016
                                                              • Young affluent males most likely to measure success by money
                                                                • Figure 49: Attitude toward advice and financial services, by gender and age, August 2016
                                                                • Figure 50: Fidelity 401(k) email ad, 2016
                                                              • Affluent are not confident about their financial future
                                                                • Figure 51: Attitude toward advice and financial services, by generation, August 2016
                                                              • Almost half of affluent and HNW do their own research
                                                                • Figure 52: Attitude toward advice and financial services, by household net worth, August 2016
                                                            • Appendix – CHAID Analysis

                                                              • Methodology
                                                                • Gen X and Baby Boomers trust their advisers
                                                                  • Figure 53: Most trusted source of financial information – CHAID – Tree output, August 2016
                                                                  • Figure 54: Source of financial information – CHAID – Table output, August 2016
                                                              • Appendix – Data Sources and Abbreviations

                                                                • Data sources
                                                                  • Fan chart forecast
                                                                    • Consumer survey data
                                                                      • Direct marketing creative
                                                                        • Abbreviations and terms
                                                                          • Abbreviations
                                                                            • Terms

                                                                            Financial Needs of Affluent and High Net Worth Consumers - US - November 2016

                                                                            US $3,995.00 (Excl.Tax)