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Self Directed Investing - US - May 2014

“The self-directed investment market is changing and becoming more consumer-driven. Younger investors, a demand for more sophisticated investments, and an increased need for mobile functionality are all forcing the industry to adapt to a new environment. It all points to growth for the industry, and companies that adjust most quickly to their customers’ needs will benefit the most.”

– Robyn Kaiserman, Financial Services Analyst

Some questions answered in this report include:

  • How will the influx of younger self-directed investors impact the industry?
  • Self-directed IRAs: the next big thing?
  • Alternative investments in defined contribution plans?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • The market
                      • US retirement assets reach $23 trillion
                        • Figure 1: Total US retirement assets, end of period, 2004-Q3:2013
                      • Assets in 529 College Savings Plans reach $227 billion
                        • Figure 2: Total 529 plan assets, 2004-13
                      • Market drivers
                        • Figure 3: Reason for closing self-directed account, by age, March 2014
                      • The consumer
                        • Figure 4: Ownership of self-directed investment account with at least $5K in assets, by age, March 2014
                        • Figure 5: Type of self-directed account, by age, March 2014
                      • Satisfaction with communication highest among those who trade least
                        • Figure 6: Satisfaction with communications with self-directed investment company, by frequency of trading, March 2014
                      • Mobile access is a priority for young investors
                        • Figure 7: Any important features of an online investment company, by age, March 2014
                      • What we think
                      • Issues and Insights

                          • How will the influx of younger self-directed investors impact the industry?
                            • Issues:
                              • Implications:
                                • Self-directed IRAs: the next big thing?
                                  • Issues:
                                    • Implications:
                                      • Alternative investments in defined contribution plans?
                                        • Issues:
                                          • Implications:
                                          • Trend Application

                                              • Inspire trend: Transumers
                                                • Inspire trend: Many Mes
                                                  • Inspire trend: Edutainment
                                                  • Market Size

                                                    • Key points
                                                      • US retirement assets reach $23 trillion
                                                        • Figure 8: Total US retirement assets, end of period, 2004-Q3:2013
                                                      • Retirement savings’ share of household assets staying stable
                                                        • Figure 9: Retirement assets’ share of household assets, 2000-13
                                                      • Most retirement assets are in IRAs
                                                        • Figure 10: Breakdown of assets in retirement plans, end of period, selected years, 2000-Q4 2013
                                                      • IRAs have the largest share of retirement market
                                                        • Figure 11: Share of US consumer retirement assets, by type of plan, end of period, selected years, 2000-13
                                                      • The cost of college is still increasing, but more slowly
                                                        • Figure 12: Tuition and fees for educational institutions by type, in current dollars, 2003/04-2013/14
                                                      • Assets in 529 College Savings Plans reach $227 billion
                                                        • Figure 13: Total 529 plan assets, 2004-13
                                                      • Self-directed investors are getting younger
                                                        • Figure 14: Age of investors with at least $5,000 in self-directed account, Nov. 2010, May 2012, March 2014
                                                    • Market Drivers

                                                      • Key points
                                                        • Unemployment continues to drop
                                                          • Figure 15: US unemployment rate, January 2010-March 2014
                                                        • The population is aging
                                                          • Figure 16: US population projections, by age, 2015, 2020 and 2030
                                                          • Figure 17: Reason for closing self-directed account – got closer to retirement, by age, March 2014
                                                        • Growing Asian population
                                                          • Figure 18: US population projections, by race, 2015, 2020 and 2030
                                                        • Student debt is cutting into household assets
                                                          • Figure 19: Consumer debt, by type, total amount and percentage of all consumer debt, Q1 2009, Q4 2013
                                                          • Figure 20: Amount of student debt, Q1 2009-Q4 2013
                                                        • Minimum student loan payments are limiting investment funds
                                                          • Figure 21: Minimum monthly student loan payments, by age, January 2014
                                                      • Competitive Context

                                                        • Key point
                                                          • Investment advisers are the alternative…
                                                            • Figure 22: Ownership of self-directed account with at least $5,000 in assets, by age, March 2014
                                                            • Figure 23: Preference for working with financial adviser, by household income, December 2013
                                                          • But there are fewer of them
                                                          • Innovations and Innovators

                                                            • Key points
                                                              • Scottrade introduces FRIPs
                                                                • Robinhood targets younger investors and traders
                                                                  • Prepaid cards for self-directed IRAs
                                                                    • Venovate – a new crowdfunding option
                                                                    • Marketing Strategies

                                                                      • Key points
                                                                        • Cash incentives are a popular pitch
                                                                          • Figure 24: Importance of cash incentive in deciding on online brokerage firm – any important, by age, March 2014
                                                                          • Figure 25: TD Ameritrade IRA rollover email, 2014
                                                                          • Figure 26: E*TRADE rollover 401(k) print ad, 2014
                                                                          • Figure 27: TD Ameritrade prepaid Visa card incentive email, 2014
                                                                        • Many ads focus on low fees
                                                                          • Figure 28: Scottrade low fee mobile ad, 2013
                                                                          • Figure 29: Fidelity low fee online ad, 2013
                                                                          • Figure 30: Vanguard low fee online ad, 2014
                                                                        • Investment tools and advice
                                                                          • Figure 31: TD Ameritrade investment tool print ad, 2014
                                                                          • Figure 32: Scottrade mobile ad, 2014
                                                                          • Figure 33: Fidelity Active Trader Pro® print ad, 2013
                                                                          • Figure 34: E*TRADE advice and tools mobile ad, 2014
                                                                        • Brand analysis: Fidelity
                                                                          • Figure 35: Fidelity mileage incentive for new account direct mail ad, 2014
                                                                          • Figure 36: Fidelity 401(k) rollover print ad, 2014
                                                                          • Figure 37: Fidelity mobile capability video, 2013
                                                                        • Brand analysis: Charles Schwab
                                                                          • Figure 38: Charles Schwab “Accountability” mobile ad, 2014
                                                                          • Figure 39: Charles Schwab accountability video ad, 2014
                                                                        • Brand analysis: Scottrade
                                                                          • Figure 40: Scottrade mobile app mobile ad, 2014
                                                                          • Figure 41: Scottrade award print ad, 2013
                                                                          • Figure 42: Scottrade mobile app print ad, 2013
                                                                        • Brand analysis: Vanguard
                                                                            • Figure 43: Vanguard low cost mutual fund provider online ad, 2013
                                                                          • Brand analysis: E*TRADE
                                                                            • Figure 44: E*TRADE new Type E commercial, 2014
                                                                          • Brand analysis: TD Ameritrade
                                                                            • Figure 45: TD Ameritrade trader print ad, 2014
                                                                            • Figure 46: TD Ameritrade mobile app email ad, 2014
                                                                            • Figure 47: TD Ameritrade Olympics online ad, 2014
                                                                            • Figure 48: TD Ameritrade Olympics commercial, 2014
                                                                        • Social Media – Self-Directed Investing

                                                                          • Key points
                                                                            • Market overview
                                                                              • Key social media metrics
                                                                                • Figure 49: Key performance indicators, selected self-directed investment brands, April 14, 2013-April 13, 2014
                                                                              • Brand usage and awareness
                                                                                • Figure 50: Brand usage and awareness of selected self-directed investment brands, February 2014
                                                                              • Interaction with brands
                                                                                • Figure 51: Interaction with selected self-directed investment brands, February 2014
                                                                              • Leading online campaigns
                                                                                • Executives front-and-center of digital strategy
                                                                                  • Using hashtags to start a dialogue
                                                                                    • What we think
                                                                                      • Online conversations
                                                                                        • Figure 52: Online mentions, selected self-directed investment brands, April 14, 2013-April 13, 2014
                                                                                      • Where are people talking about self-directed investment brands?
                                                                                        • Figure 53: Mentions by page type, selected self-directed investment brands, April 14, 2013-April 13, 2014
                                                                                      • What are people talking about online?
                                                                                        • Figure 54: Mentions by topic of conversation, selected self-directed investment brands, April 14, 2013-April 13, 2014
                                                                                    • Who Has a Self-Directed Account?

                                                                                      • Key points
                                                                                        • Men are more likely to have a self-directed account
                                                                                          • Figure 55: Ownership of self-directed investment account with at least $5K in assets, by gender, March 2014
                                                                                          • Figure 56: Ownership of self-directed investment account with at least $5 K in assets, by age, March 2014
                                                                                          • Figure 57: Ownership of self-directed investment account with at least $5K in assets, by gender and age, March 2014
                                                                                          • Figure 58: Ownership of self-directed investment account with at least $5K in assets, by household income, March 2014
                                                                                          • Figure 59: Ownership of self-directed investment account with $5K in assets, by race/Hispanic origin, March 2014
                                                                                      • What Companies Do They Use?

                                                                                        • Key points
                                                                                          • Fidelity most used, E*TRADE most recognized
                                                                                            • Figure 60: Brand usage or awareness, by brand, February 2014
                                                                                          • More use Fidelity
                                                                                            • Figure 61: Companies used for additional self-directed investment accounts, by gender, March 2014
                                                                                            • Figure 62: Companies used for additional self-directed investment accounts, by age, March 2014
                                                                                            • Figure 63: Companies used for additional self-directed investment accounts, by household income, March 2014
                                                                                            • Figure 64: Companies used for additional self-directed investment accounts by number of companies where self-directed accounts are held, March 2014
                                                                                            • Figure 65: Companies used for additional self-directed investment accounts, by user frequency groups – checking, March 2014
                                                                                            • Figure 66: Companies used for additional self-directed investment accounts, by user frequency groups – trading, March 2014
                                                                                            • Figure 67: Companies used for additional self-directed investment accounts, by number of products in self-directed investment account, March 2014
                                                                                            • Figure 68: Companies used for additional self-directed investment accounts, by products held in self-directed investment account, March 2014 (Part 1)
                                                                                            • Figure 69: Companies used for additional self-directed investment accounts, by products held in self-directed investment account, March 2014 (Part 2)
                                                                                        • Former Users – Reasons for Closing Account

                                                                                          • Key points
                                                                                            • Most people close their accounts because they need the money
                                                                                              • Figure 70: Reasons for closing self-directed investment account, by gender, March 2014
                                                                                              • Figure 71: Reasons for closing self-directed investment account, by age, March 2014
                                                                                              • Figure 72: Reasons for closing self-directed investment account, by household income, March 2014
                                                                                          • Products Held in a Self-Directed Account

                                                                                            • Key points
                                                                                              • Stocks and mutual funds are most common investments
                                                                                                • Figure 73: Products in self-directed investment account, by gender, March 2014
                                                                                                • Figure 74: Products in self-directed investment account, by age, March 2014
                                                                                                • Figure 75: Products in self-directed investment account, by gender and age, March 2014
                                                                                                • Figure 76: Products in self-directed investment account, by household income, March 2014
                                                                                                • Figure 77: Products in self-directed investment account, by Hispanic origin, March 2014
                                                                                                • Figure 78: Products in self-directed investment account, by number of products in self-directed investment account, March 2014
                                                                                            • Frequency of Monitoring Accounts

                                                                                              • Key points
                                                                                                • Half check their accounts at least several times a week
                                                                                                  • Figure 79: Frequency of checking self-directed investment account, by gender, March 2014
                                                                                                  • Figure 80: Frequency of checking self-directed investment account, by age, March 2014
                                                                                                  • Figure 81: Frequency of checking self-directed investment account, by household income, March 2014
                                                                                                  • Figure 82: Frequency of checking self-directed investment account by number of companies used for self-directed investment accounts, March 2014
                                                                                                  • Figure 83: Frequency of checking self-directed investment account, by number of products in self-directed investment account, March 2014
                                                                                              • Frequency of Trading

                                                                                                • Key points
                                                                                                  • One quarter hardly ever trade
                                                                                                    • Figure 84: Frequency of trading in a self-directed investment account, by gender March 2014
                                                                                                    • Figure 85: Frequency of trading in a self-directed investment account, by age, March 2014
                                                                                                    • Figure 86: Frequency of trading in self-directed investment account, by gender and age, March 2014
                                                                                                    • Figure 87: Frequency of trading in a self-directed investment account, by household income, March 2014
                                                                                                    • Figure 88: Frequency of trading in a self-directed investment account, by number of companies used for self-directed investment accounts, March 2014
                                                                                                    • Figure 89: Frequency of trading self-directed investment account, by number of products in self-directed investment account, March 2014
                                                                                                    • Figure 90: Frequency of trading in self-directed investment account, by products in self-directed investment account, March 2014 (Part 1)
                                                                                                    • Figure 91: Frequency of trading in self-directed investment account, by products in self-directed investment account, March 2014 (Part 2)
                                                                                                • Type of Self-Directed Account Held

                                                                                                  • Key points
                                                                                                    • Largest self-directed accounts are retirement accounts
                                                                                                      • Figure 92: Type of self-directed investment account with most assets, by gender, March 2014
                                                                                                      • Figure 93: Type of self-directed investment account with most assets, by age, March 2014
                                                                                                      • Figure 94: Type of self-directed investment account with most assets, by household income, March 2014
                                                                                                      • Figure 95: Type of self-directed investment account with most assets, by race/Hispanic origin, March 2014
                                                                                                  • Attitudes toward Self-Directed Investing

                                                                                                    • Key points
                                                                                                      • Cost is a main driver
                                                                                                          • Figure 96: Attitudes toward self-directed investing and advisers, by gender, March 2014
                                                                                                          • Figure 97: Attitudes toward self-directed investing and advisers, by age, March 2014
                                                                                                          • Figure 98: Attitudes toward self-directed investing and advisers, by gender and age, March 2014
                                                                                                          • Figure 99: Attitudes toward self-directed investing and advisers, by household income, March 2014
                                                                                                          • Figure 100: Attitudes toward self-directed investing and advisers, by user frequency groups – Trading, March 2014
                                                                                                      • Use of Electronic Trading

                                                                                                        • Key points
                                                                                                          • Few investors trade online, even on a computer
                                                                                                            • Figure 101: Use of computers and mobile devices for trading, by gender, March 2014
                                                                                                            • Figure 102: Use of computers and mobile devices for trading, by age, March 2014
                                                                                                            • Figure 103: Use of computers and mobile devices for trading, by gender and age, March 2014
                                                                                                            • Figure 104: Use of computers and mobile devices for trading, by household income, March 2014
                                                                                                            • Figure 105: Use of computers and mobile devices for trading, by user frequency groups – Trading, March 2014
                                                                                                            • Figure 106: Use of computers and mobile devices for trading, by number of companies used for additional self-directed investment accounts, March 2014
                                                                                                        • Satisfaction With Self-Directed Investment Company

                                                                                                          • Key points
                                                                                                            • Customers want more communication
                                                                                                              • Figure 107: Satisfaction with communication with self-directed investment company, by gender, March 2014
                                                                                                              • Figure 108: Satisfaction with communication with self-directed investment company, by age, March 2014
                                                                                                              • Figure 109: Satisfaction with communication with self-directed investment company, by gender and age, March 2014
                                                                                                              • Figure 110: Satisfaction with communication with self-directed investment company, by household income, March 2014
                                                                                                              • Figure 111: Satisfaction with communication with self-directed investment company, by Hispanic origin, March 2014
                                                                                                              • Figure 112: Satisfaction with communication with self-directed investment company, by user frequency groups – Checking, March 2014
                                                                                                              • Figure 113: Satisfaction with communication with self-directed investment company, by user frequency groups – Trading, March 2014
                                                                                                              • Figure 114: Satisfaction with communication with self-directed investment company, by number of accounts at different firms, March 2014
                                                                                                          • Important Features of an Online Investment Company

                                                                                                            • Key points
                                                                                                              • Firms need to communicate with customers in the way customers want
                                                                                                                • Figure 115: Important features of an online investment company, by gender, March 2014
                                                                                                                • Figure 116: Important features of an online investment company – any important , by age, March 2014
                                                                                                                • Figure 117: Important features of an online investment company – any important , by household income, March 2014
                                                                                                                • Figure 118: Important features of an online investment company – any important, by Hispanic origin, March 2014
                                                                                                                • Figure 119: Important features of an online investment company – any important, by frequency of checking account, March 2014
                                                                                                                • Figure 120: Important features of an online investment company – any important, by frequency of trading, March 2014
                                                                                                                • Figure 121: Important features of an online investment company – any important by number of companies used for self-directed investment accounts, March 2014
                                                                                                                • Figure 122: Important features of an online investment company – any important, by number of products in self-directed investment account, March 2014
                                                                                                                • Figure 123: Important features of an online investment company – any important, by products owned in self-directed investment account, March 2014 (Part 1)
                                                                                                                • Figure 124: Important features of an online investment company – any important, by products owned in self-directed investment account, March 2014 (Part 1)
                                                                                                            • Appendix – Other Useful Tables

                                                                                                              • Who has a self-directed investment account?
                                                                                                                • Figure 125: Ownership of self-directed investment account with at least $5K in assets, by gender and income, March 2014
                                                                                                                • Figure 126: Ownership of self-directed investment account with at least $5K in assets, by age and income, March 2014
                                                                                                              • What companies do they use?
                                                                                                                • Figure 127: Brand usage or awareness, by brand, February 2014
                                                                                                                • Figure 128: Companies used for additional self-directed investment accounts, by gender and age, March 2014
                                                                                                              • Frequency of monitoring accounts
                                                                                                                • Figure 129: Frequency of checking self-directed investment account, by gender and age, March 2014
                                                                                                                • Figure 130: Frequency of checking self-directed investment account, by product owned in account, March 2014
                                                                                                                • Figure 131: Frequency of checking self-directed investment account, by product owned in account, March 2014
                                                                                                              • Attitudes toward self-directed investing
                                                                                                                • Figure 132: Attitudes toward self-directed investing and advisers, by race/Hispanic origin, March 2014
                                                                                                                • Figure 133: Attitudes toward self-directed investing and advisers, by user frequency groups – Checking, March 2014
                                                                                                              • Use of electronic trading
                                                                                                                • Figure 134: Use of computers and mobile devices for trading, by user frequency groups – Checking, March 2014
                                                                                                                • Figure 135: Use of computers and mobile devices for trading, by number of products in self-directed investment account, March 2014
                                                                                                              • Satisfaction with self-directed investment company
                                                                                                                • Figure 136: Satisfaction with communication with self-directed investment company, by number of products in self-directed investment account, March 2014
                                                                                                              • Important features of an online investment company
                                                                                                                • Figure 137: Important features of an online investment company – any important, by age, March 2014
                                                                                                            • Appendix – Social Media

                                                                                                              • Online conversations
                                                                                                                • Figure 138: Online mentions, selected self-directed investment brands, April 14, 2013-April 13, 2014
                                                                                                              • Brand analysis
                                                                                                                • Figure 139: Fidelity key social media indicators, April 2014
                                                                                                                • Figure 140: E*TRADE key social media indicators, April 2014
                                                                                                                • Figure 141: Vanguard key social media indicators, April 2014
                                                                                                                • Figure 142: Scottrade key social media indicators, April 2014
                                                                                                                • Figure 143: Charles Schwab key social media indicators, April 2014
                                                                                                                • Figure 144: TD Ameritrade key social media indicators, April 2014
                                                                                                              • Brand usage or awareness
                                                                                                                • Figure 145: Brand usage or awareness, February 2014
                                                                                                                • Figure 146: TD Ameritrade usage or awareness, by demographics, February 2014
                                                                                                                • Figure 147: Charles Schwab usage or awareness, by demographics, February 2014
                                                                                                                • Figure 148: Fidelity usage or awareness, by demographics, February 2014
                                                                                                                • Figure 149: Vanguard usage or awareness, by demographics, February 2014
                                                                                                                • Figure 150: Scottrade usage or awareness, by demographics, February 2014
                                                                                                                • Figure 151: E*TRADE usage or awareness, by demographics, February 2014
                                                                                                              • Activities done
                                                                                                                • Figure 152: Activities done, overall, February 2014
                                                                                                                • Figure 153: TD Ameritrade – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 154: TD Ameritrade – activities done – I have researched the brand on social media to …, by demographics, February 2014
                                                                                                                • Figure 155: Charles Schwab – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 156: Charles Schwab – activities done – I have researched the brand on social media to…, by demographics, February 2014
                                                                                                                • Figure 157: Fidelity – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 158: Fidelity – activities done – I have contacted/interacted with the brand online on social media to…, by demographics, February 2014
                                                                                                                • Figure 159: Fidelity – activities done – I follow/like the brand on social media because…, by demographics, February 2014
                                                                                                                • Figure 160: Fidelity – activities done – none of these, by demographics, February 2014
                                                                                                                • Figure 161: Vanguard – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 162: Vanguard – activities done – I have contacted/interacted with the brand online on social media to…, by demographics, February 2014
                                                                                                                • Figure 163: Vanguard – activities done – none of these, by demographics, February 2014
                                                                                                                • Figure 164: Scottrade – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 165: E*TRADE – activities done – I have looked up/talked about this brand online on social media…, by demographics, February 2014
                                                                                                                • Figure 166: E*TRADE – activities done – I have contacted/interacted with the brand online on social media to…, by demographics, February 2014
                                                                                                                • Figure 167: E*TRADE – activities done – none of these, by demographics, February 2014
                                                                                                            • Appendix – Trade Associations

                                                                                                              Companies Covered

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

                                                                                                              Self Directed Investing - US - May 2014

                                                                                                              £3,174.67 (Excl.Tax)