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Investment Trends - US - February 2016

The economy is strengthening, the stock market has been volatile, and interest rates remain low. The recession hit portfolios hard, and many people adjusted their investing behavior, with some becoming more aggressive and others more conservative. Different generations have different investment goals and allocate their investment portfolios accordingly. This report will examine how investors view investing whether – and how – they have changed their investment goals.

This report covers the attitudes and behaviors of investors regarding their investments and their investing plans:

  • Do they have investment account(s) and, if so, what kind?
  • How much do they have invested in taxable and tax-advantaged retirement accounts?
  • What are their investment plans for the next 12 months?
  • How do they feel about robo-advisers?
  • How do they plan to adjust their investment strategies to fit their vision of the US economy?

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • A disconnect that indicates lack of understanding
            • Figure 1: Attitudes toward investing, December 2015
          • Ownership of financial assets is increasingly concentrated
            • Figure 2: Family financial holdings, selected years 1989-2013
          • Only one-third have a tax-advantaged retirement account
            • Figure 3: Ownership of tax-advantaged retirement account, by demographic segments, December 2015
          • The opportunities
            • Robo-advisers balance requirements accessible to many
              • Figure 4: Reason for not having an investment account, by gender and marital status, December 2016
            • Millennials are looking to invest more
              • Figure 5: Future investment plans, by generation, December 2015
            • Banks have an opportunity with Millennials
              • Figure 6: Location of non-retirement accounts, Millennials, December 2015
            • What it means
            • The Market – What You Need to Know

              • Total net assets of investment companies tops $18 billion
                • Number of investment firms is falling
                • Market Size

                  • Total net assets of investment companies tops $18 billion
                    • Figure 7: Total net assets of investment companies, 2991- 2014
                  • Change in financial asset ownership
                    • 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
                    • Figure 9: Family financial holdings, selected years 1989-2013
                • Market Breakdown

                  • Number of investment firms is falling
                    • Figure 10: Number of investment firms, 1997 - 2014
                  • Equities dominate mutual funds
                    • Figure 11: Breakdown of mutual funds, 2014
                  • ETFs continue to challenge mutual funds
                    • Figure 12: ETF market, 2005 - 2014
                • Market Factors

                  • Disposable income is increasing, personal savings is increasing more
                    • Figure 13: Disposable personal income (DPI), personal savings, personal savings as a % of DPI
                  • Aging of America influences investments
                    • Figure 14: Willingness to trade risk for reward, by generation, December 2015
                • Key Players – What You Need to Know

                  • 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?

                              • The stock market has been strong
                                • Figure 15: DJIA, monthly averages, Jan. 1, 2011-Jan. 1, 2016
                              • Retirement confidence is increasing
                                • Figure 16: Percentage of workers who are confident about having enough money for a comfortable retirement, 2008-2015
                            • What’s Struggling?

                              • Industry is losing advisers
                                • 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
                                  • Figure 18: Percentage of families who own stock either directly or indirectly, selected years 1989-2013
                              • What’s Next?

                                • The growth of robo-advisers is disrupting the industry
                                  • Figure 19: Use of robo-advisers, by type of investment account, December 2015
                                  • Figure 20: Use of robo-advisers, by generation, December 2015
                                  • Figure 21: Vanguard Personal Advisor Services and Betterment online ads, 2015
                                • Human advisers are still in demand
                                  • Changing fee structures to attract Millennials
                                    • 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

                                    • 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

                                              • About half of consumers have some kind of investment account
                                                • Figure 23: Investment account ownership, December 2015
                                              • Blacks are less likely to have any type of investment account
                                                • Figure 24: Investment account ownership, by race, December 2015
                                            • Location of Investment Accounts

                                              • Institutions have to fight harder for non-retirement accounts
                                                • Figure 25: Location of investment accounts, by type of investment account
                                              • Millennials prefer banks for non-retirement investing
                                                • Figure 26: Location of non-retirement investment accounts, by generation, December 2015
                                              • Self-directed accounts are more popular among men
                                                • Figure 27: Location of non-retirement investment account, by gender and age, December 2015
                                            • Why Consumers Don’t Have an Investment Account

                                              • Most feel they don’t have enough money
                                                • Figure 28: Reasons consumers don’t have an investment account, by gender, December 2015
                                              • Women’s interest in investing grows with age
                                                • 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
                                                • Figure 30: Reasons for not having an investment account, by household income, December 2015
                                              • Fear of risk impacting decision to invest
                                              • Investment Account Balances

                                                • Balances in retirement and non-retirement accounts are the same
                                                  • Figure 31: Amount in investment accounts, December 2015
                                                • Women lag men in retirement and non-retirement account savings
                                                  • 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
                                                  • Figure 34: Contributions to investment accounts, by gender, December 2015
                                                • Hispanics are not saving
                                                  • Figure 35: Investment account contributions, by Hispanic origin, December 2015
                                              • Engagement in Investing

                                                • Men are more interested and engaged in investing than are women
                                                  • Figure 36: Engaged in investing, by gender, December 2015
                                                • Engagement increases with investment account balance
                                                  • Figure 37: Engagement with investing, by non-retirement investment account balances, December 2015
                                                • Hispanics and non-Whites make their own investment decisions
                                                  • Figure 38: Engaged in investing, by Hispanic origin and race, December 2015
                                              • Changing Investment Goals

                                                • Asset growth or income?
                                                  • Figure 39: Investment goals, by generation, December 2015
                                                • Investment goals differ with income
                                                  • Figure 40: Investment goals, by household income, December 2015
                                                • How investors’ goals have changed
                                                • Changing Investment Strategies

                                                  • Men are more likely to change strategies
                                                    • Figure 41: Changing investment strategies, by gender, December 2015
                                                  • Millennials are active investors
                                                    • Figure 42: Changing investment strategies, by generation, December 2015
                                                • Future Investment Plans

                                                  • Women need to be encouraged
                                                    • Figure 43: Future investment plans, by gender, December 2015
                                                  • Millennials are optimistic and want to invest
                                                    • Figure 44: Expectations of growth, by generations, December 2015
                                                    • Figure 45: Future investment plans, by generation, December 2015
                                                  • Hispanics are planning to be more active in investing
                                                    • Figure 46: Future investment plans, by Hispanic origin and race, December 2015
                                                  • Parents are more likely to be aggressively investing
                                                    • Figure 47: Future investment plans, by parental status, December 2015
                                                • Investment Strategies

                                                  • Income drives investment goals
                                                    • Figure 48: Investment goals, by household income, December 2015
                                                  • Men are being more cautious than women
                                                    • Figure 49: How investment strategy has changed, by gender, December 2015
                                                • Attitudes toward Investing

                                                  • Millennials want the benefits of investing – but are uncomfortable with it
                                                    • Figure 50: Attitude toward investing by generation, December 2015
                                                  • Hispanics are relying on investing for wealth
                                                    • Figure 51: Attitude toward investing, by Hispanic origin, December 2015
                                                  • Younger men, older women are interested in socially responsible investing
                                                    • Figure 52: Importance of socially responsible investing, by gender, December 2015
                                                  • Hispanics want to invest in causes
                                                    • Figure 53: Importance of socially responsible investing, by Hispanic origin, December 2015
                                                • Cluster Analysis

                                                  • Cluster Methodology
                                                    • 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
                                                                            • Figure 55: Investment account ownership, by target cluster, December 2015
                                                                            • Figure 56: Location of non-retirement investment account, by target clusters, December 2015
                                                                            • 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
                                                                            • Figure 59: Total amount in tax-advantaged retirement account(s), by target cluster, December 2015
                                                                            • Figure 60: Investment behaviors, by target cluster, December 2015
                                                                            • 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

                                                                          • Data sources
                                                                            • Sales data
                                                                              • Consumer survey data
                                                                                • Consumer qualitative research
                                                                                  • Direct marketing creative
                                                                                    • Abbreviations and terms
                                                                                      • Abbreviations
                                                                                        • Terms

                                                                                        Companies Covered

                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                        Investment Trends - US - February 2016

                                                                                        £3,199.84 (Excl.Tax)