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Investment Trends - US - February 2017

"The investment world is being buffeted by several disruptive trends. One is the rise of robo-advisers, which provide algorithm-based investment advice without the help of humans. These allow lower minimum balances, have lower trading costs, and often even offer access to humans. Demographics are also forcing changes, as Baby Boomers are decumulating now rather than investing, more women are earning higher incomes and need more investment advice, and young people increasingly prefer to pay fees rather than commissions. This Report examines these trends and the effects they are having on the investment world."
Robyn Kaiserman, Senior Financial Services Analyst

This report will cover the following areas:

  • Women are still behind
  • Many still don’t have enough for retirement
  • Most know they need to work harder to save

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Women are still behind
            • Figure 1: Investable assets, by gender, November 2016
          • Many still don’t have enough for retirement
            • Figure 2: Investable assets, by generation, November 2016
          • Most know they need to work harder to save
            • The opportunities
              • Young people are interested – but need to learn
                • Figure 3: Investing behavior, by gender and age, November 2016
              • Robo-advisers should target young investors
                • Figure 4: Use of robo-adviser, by age and gender, November 2016
              • Banks should focus on Millennials as investment customers
                • Figure 5: Location of investment account(s), by generation, November 2016
              • What it means
              • The Market – What You Need to Know

                • Increase in mutual fund companies drives increase in investment firms
                  • Total net assets of investment companies shrinks since 2014
                    • Equity funds are most popular
                      • Personal savings is rising faster than disposable income
                        • The future of the new DOL Fiduciary Rule is murky
                        • Market Size

                          • Number of investment firms still lower than peak
                            • Figure 6: Number of investment firms, 1997-2015
                          • Total net assets of investment companies tops $18 billion
                            • Figure 7: Total net assets of investment companies, year-end 1998-2015
                        • Market Breakdown

                          • Equity funds are most popular
                            • Figure 8: Breakdown of US mutual fund assets, year-end 2015*
                        • Market Factors

                          • Personal savings is rising faster than disposable income
                            • Figure 9: DPI (disposable personal income), personal savings, personal savings as a percentage of DPI
                          • Changing demographics will have an effect
                            • Figure 10: Population by generation, 2012-22
                          • What is the future of the new DOL Fiduciary Rule?
                          • Key Players – What You Need to Know

                            • Features of leading robo-advisers
                              • Where are the women advisers?
                                • The challenge for human advisers
                                  • Women still struggle with retirement savings
                                    • Robo-advisers are sure to grow in popularity
                                      • Hybrid advisers will likely be more popular
                                        • Robo-advisers target segments
                                        • What’s In?

                                          • Features of leading robo-advisers
                                            • Figure 11: Comparison of five leading robo-advisers
                                          • Robo-leaders each take a different approach
                                            • Figure 12: Vanguard Personal Advisor Services mobile ad, 2016
                                            • Figure 13: Schwab Intelligent Portfolios™ email, 2016
                                            • Figure 14: Betterment mobile ad, 2016
                                            • Figure 15: Personal Capital mobile ad, 2015
                                          • How do investors choose?
                                            • Advisers are more important than firms
                                            • What’s Struggling?

                                              • Where are the women advisers?
                                                • The challenge for human advisers
                                                  • Figure 16: Attitudes toward investing, by generation, November 2016
                                                • Retirement is still a problem for women
                                                  • Figure 17: Attitudes toward investing, by gender, November 2016
                                              • What’s Next?

                                                • The growth and future of robo-advisers
                                                  • Figure 18: Use robo-adviser, by gender and age, November 2016
                                                • Hybrid advisers will likely be more popular
                                                  • Robo-advisers target segments
                                                    • True Link – A robo focused on Baby Boomers
                                                      • Wealthfront offers a 529 college savings plan
                                                        • Betterment offers a 401(k) plan
                                                          • Banks will enter the robo-fray
                                                              • Figure 19: Capital One Investing email ad and landing page, 2016
                                                            • Investor attitudes suggest hybrid advisers would be popular
                                                            • Consumers – What You Need to Know

                                                              • Many preretirees still don’t have enough to retire
                                                                • Men are more active investors outside of retirement
                                                                  • Opportunities for banks
                                                                    • Young women need investment education
                                                                      • Men are more active and engaged investors
                                                                        • Most investors believe human advisers are better
                                                                          • Different generations prefer different media channels
                                                                            • Millennials would rather pay fees than commissions
                                                                            • Investable Assets

                                                                              • Many preretirees still don’t have enough to retire
                                                                                • Figure 20: Household investable assets, by generation, November 2016
                                                                              • Blacks are at a serious disadvantage
                                                                                • Figure 21: Household investable assets, by race, November 2016
                                                                            • Investment Account Ownership

                                                                              • Men are more likely to be investing outside of retirement
                                                                                • Figure 22: Investment account ownership, by gender, November 2016
                                                                              • Hispanics more likely to close accounts
                                                                                • Figure 23: Investment account ownership, by Hispanic origin, November 2016
                                                                            • Location of Investment Account

                                                                              • Men are more likely to use several accounts
                                                                                • Figure 24: Location of investment account, by gender, November 2016
                                                                              • Millennials prefer banks
                                                                                • Figure 25: Location of investment account, by generation, November 2016
                                                                              • Banks and robo-advisers have advantage with Hispanics
                                                                                • Figure 26: Location of investment account, by Hispanic origin, November 2016
                                                                              • Investment firms hold the largest accounts
                                                                                • Figure 27: Location of investment account, by household investable assets, November 2016
                                                                            • Reasons for Not Having an Account

                                                                              • Most don’t have the money
                                                                                • Figure 28: Reasons for not having an account, November 2016
                                                                              • Young women need investment education
                                                                                • Figure 29: Reasons for not having an account, by gender and age, November 2016
                                                                            • Investment Behaviors

                                                                              • Men are more likely to make regular investment contributions
                                                                                • Figure 30: Make regular contributions, by gender, November 2016
                                                                              • Men are more engaged with investing
                                                                                • Figure 31: Engagement with investing, by gender, November 2016
                                                                              • Engagement increases with age
                                                                                • Figure 32: Engagement with investing, by generation, November 2016
                                                                              • Higher-income investors research on their own
                                                                                • Figure 33: Investment behaviors, by household income, November 2016
                                                                            • Robo-adviser or Human Adviser?

                                                                              • Most investors have more faith in human advisers
                                                                                • Figure 34: Robo-advisers vs human advisers, November 2016
                                                                              • Younger people see more advantages in robo-advisers
                                                                                • Figure 35: Robo-advisers vs human advisers, by gender and age, November 2016
                                                                              • Hispanics more interested than non-Hispanics
                                                                                • Figure 36: Robo-advisers vs human advisers, by Hispanic origin, November 2016
                                                                            • Source of Information

                                                                              • Men get information from more places
                                                                                • Figure 37: Source of investment information, by gender, November 2016
                                                                              • Millennials prefer websites, older investors prefer humans
                                                                                • Figure 38: Source of investment information, by generation, November 2016
                                                                              • Wealthy investors rely heavily on advisers
                                                                                • Figure 39: Source of investment information, by investable assets, November 2016
                                                                            • Attitudes toward Investing

                                                                              • Millennials would rather pay fees than commissions
                                                                                • Figure 40: Attitudes toward investing, by generation, November 2016
                                                                              • Hispanics may be a good target for hybrid advisers
                                                                                • Figure 41: Attitudes toward investing, by Hispanic origin, November 2016
                                                                            • Cluster Analysis

                                                                                • Figure 42: Investment account owner clusters, November 2016
                                                                              • Cluster 1: Uncomfortable Investors
                                                                                • Characteristics
                                                                                  • Opportunity
                                                                                    • Cluster 2: Disengaged Investors
                                                                                      • Characteristics
                                                                                        • Opportunity
                                                                                          • Cluster 3: Confident Investors
                                                                                            • Characteristics
                                                                                              • Opportunity
                                                                                              • Appendix – CHAID Analysis

                                                                                                • Methodology
                                                                                                  • Young fathers have confidence in robo-advisers
                                                                                                    • Figure 43: Attitudes toward investing – CHAID – Tree output, November 2016
                                                                                                    • Figure 44: Attitudes toward investing – CHAID – Table output, November 2016
                                                                                                • Appendix – Data Sources and Abbreviations

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

                                                                                                              Companies Covered

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                                                                                                              Investment Trends - US - February 2017

                                                                                                              US $3,995.00 (Excl.Tax)