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Self Directed Investing - US - March 2011

The personal savings rate has risen sharply since mid 2008, but that rate is still well below historical levels, and follows nearly 15 years of neglect. Consumers have a lot to make up for.

This enormous task is likely to occupy many Americans for the rest of their lives, most particularly the near-term task of saving for retirement. This creates a huge opportunity for investment firms to offer the services and tools people will need to achieve their goals.

One part of that opportunity is in self-directed investment accounts, including retirement accounts such as 401ks. Mintel’s research for this report has identified opportunities and challenges for investment firms, including:

  • What is the difference between the investment styles of men and women with self-directed accounts? What are they looking for from their financial services provider?
  • How are attractive market segments broken out by race/ethnicity for providers of these types of accounts?
  • How frequently are investors trading in their accounts? Which types of investments are the most popular?
  • What are the most important sources of information for these investors?
  • How are competitors advertising their products and services in this industry? What are the most common underlying themes?

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Table of contents

  1. 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

                                                                                                                                                  Companies Covered

                                                                                                                                                  • American Association of Individual Investors
                                                                                                                                                  • Bank of America Corporation
                                                                                                                                                  • Bureau of Economic Analysis
                                                                                                                                                  • Citigroup Inc.
                                                                                                                                                  • Employee Benefit Research Institute
                                                                                                                                                  • Financial Industry Regulatory Authority (FINRA)
                                                                                                                                                  • Financial Planning Association
                                                                                                                                                  • Greenfield Online
                                                                                                                                                  • Investment Company Institute
                                                                                                                                                  • Merrill Lynch & Co. Inc
                                                                                                                                                  • MetLife, Inc.
                                                                                                                                                  • TD Waterhouse
                                                                                                                                                  • The Financial Services Roundtable
                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                  • Wells Fargo & Company

                                                                                                                                                  Self Directed Investing - US - March 2011

                                                                                                                                                  £3,199.84 (Excl.Tax)