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Affluent and High Net Worth Investing - US - December 2018

"In the US, more and more consumers are joining the ranks of the affluent and high net worth investors. These individuals are not intimidated by investing, are committed to securing a comfortable retirement, and they prefer a responsive and available human touch when needed."
- Chris Shadle, Financial Services Analyst

This report looks at the following areas:

  • As branch closures continue, banks need to consider the negative impact on suburban and rural investors
  • Despite conceding on cost, robo-advisors are not popular among the investing elite
  • Affluent and high net worth investors are not looking for new accounts

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • As branch closures continue, banks need to consider the negative impact on suburban and rural investors
              • Figure 1: Affluent and high net worth investors, by area, August 2018
            • Despite conceding on cost, robo-advisors are not popular among the investing elite
              • Figure 2: Preference for human versus robo-advisor, August 2018
            • Affluent and high net worth investors are not looking for new accounts
              • Figure 3: Investment account ownership, by amount of household investable assets, August 2018
            • The opportunities
              • Roughly one third of wealthiest investors continue to make contributions
                • Figure 4: Investment behaviors regarding contribution, August 2018
              • Gender divide extends to the highest echelons
                • Figure 5: Investment behaviors, by gender, August 2018
              • The presence of children augments information gathering
                • Figure 6: Sources of investment information, by presence of children, August 2018
              • What it means
              • The Market – What You Need to Know

                • The US is home to more millionaires than the next eight countries combined
                  • More households are earning $200K+
                    • As the US grows older, it grows wealthier
                      • Tax Cuts and Jobs Act will most benefit the top 1%
                      • Market Size

                        • US leads the world in number of millionaires, while steadily adding more
                          • Figure 7: Number of high net worth individuals, by country, 2018
                          • Figure 8: Gains and losses in global wealth distribution, United States, thousands of adults, 2017-18
                        • More households are earning $200K+
                          • Figure 9: Percentage of households with $200K+ in total money income, 2006-16
                        • Mean and median incomes on the rise
                          • Figure 10: Percentage of households with $200K+ in total money income, 2006-16
                      • Market Factors

                        • As the US grows older, it grows wealthier
                          • Figure 11: US population, by age, 2015, 2020, 2025
                        • Tax Cuts and Jobs Act will most benefit the top 1%
                          • Figure 12: Percentage change in after-tax income of the Tax Cuts and Jobs Act, by expanded cash income percentile, 2018, 2025, and 2027
                      • Key Players – What You Need to Know

                        • Investment options previously reserved for the elite are now more accessible
                          • Brokerage rewards cards convert everyday spending to investment savings
                            • Proliferation of new robo-advisory companies has slowed, as in-house competition surges
                              • Consumers want to invest in causes they believe in
                              • What’s Happening?

                                • Fundrise makes real estate investing accessible to the masses
                                  • Figure 13: Mint email promoting Fundrise, October 2018
                                • Robinhood brings tools of the elite to the everyman
                                  • Figure 14: Robinhood informational email, August 2018
                                • Brokerage rewards cards convert everyday spending to investment savings
                                  • Figure 15: Charles Schwab email, March 2018
                                  • Figure 16: Fidelity email, Fidelity Visa Signature Rewards Card, October 2018
                              • What’s Struggling?

                                • Affluent and high net worth investors are not looking for new accounts
                                  • Figure 17: Investment account ownership, by amount of household investable assets, August 2018
                                • Proliferation of new robo-advisory companies has slowed, as in-house competition surges
                                  • Figure 18: U.S. Bank email, Automated Investor, July 2018
                              • What’s Next?

                                • JPMorgan launches You Invest
                                  • Figure 19: JPMorgan Chase, You Invest welcome email, August 2018
                                • Ethical investing
                                  • Figure 20: Financial attitudes, importance of supporting causes, by age, April 2018
                                  • Figure 21: Ellevest email, November 2018
                              • The Consumer – What You Need to Know

                                • Traditional investment firms are most popular, while robo-advisors have yet to gain serious traction
                                  • Consumers prefer human to robo-advisors on nearly every front
                                    • While many firms focus on streamlining their footprints, most wealthy consumers are sprawled across suburbia
                                      • Roughly one third of wealthiest investors continue to make contributions
                                        • Affluent and HNW investors are confident in their retirement, see the importance of education
                                        • Account Information: Affluent and HNW Investors

                                          • Traditional investment firms are most popular, while robo-advisors have yet to gain serious traction
                                            • Figure 22: Types of investment accounts held by affluent and high net worth individuals, August 2018
                                          • While many firms focus on streamlining their footprints, most wealthy consumers are sprawled across suburbia
                                            • Figure 23: Affluent and high net worth investors, by area, August 2018
                                            • Figure 24: TD Ameritrade, mobile advertisement, August 2018
                                          • Affluent and high net worth consumers are not looking for new accounts
                                            • Figure 25: Investment account ownership, by amount of household investable assets, August 2018
                                        • Sources of Investment Information

                                          • High net worth investors draw information from more sources
                                            • Figure 26: Sources of investment information, August 2018
                                            • Figure 27: Personal Capital, direct mail campaign, April 2018
                                            • Figure 28: Personal Capital, print advertisement, December 2018
                                            • Figure 29: Personal Capital, online advertisement, November 2018
                                          • The presence of children augments information gathering
                                            • Figure 30: Sources of investment information, by presence of children, August 2018
                                        • Investment Behaviors

                                          • HNW investors have higher attention to detail
                                            • Figure 31: Differences in investment behaviors between affluent and HNW individuals, August 2018
                                          • Gender divide extends to the highest echelons
                                            • Figure 32: Investment behaviors, by gender, August 2018
                                            • Figure 33: Vanguard, webinar invitation email, October 2018
                                            • Figure 34: Nationwide & Insured Retirement Institute, webinar invitation email, October 2018
                                          • Roughly one third of wealthiest investors continue to make contributions
                                            • Figure 35: Investment behaviors regarding contribution, August 2018
                                        • Attitudes toward Investing

                                          • The wealthiest investors are not easily intimidated
                                            • Figure 36: Comfort with investing, by affluent and HNW status, August 2018
                                          • Affluent and HNW investors are confident in their retirement, see the importance of education
                                            • Figure 37: Attitudes of affluent and HNW investors toward learning and retirement, August 2018
                                          • Wealthy investors have measured expectations, don’t take greater risks
                                            • Figure 38: Attitudes of affluent and HNW investors, versus general population, August 2018
                                        • Automation: Human vs Robo-Advisor

                                          • Consumers prefer human to robo-advisors on nearly every front
                                            • Figure 39: Preference for human versus robo-advisor, August 2018
                                          • Affluent customers half as likely to trust robo-advisors
                                            • Figure 40: Perceptions of robo-advisors, affluent and HNW investors versus general population, August 2018
                                        • Appendix – Data Sources and Abbreviations

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

                                                  Affluent and High Net Worth Investing - US - December 2018

                                                  US $4,395.00 (Excl.Tax)