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Investment Trends - US - April 2019

Covered in this report

This report addresses the attitudes and behaviors of consumers related to investing.

  • Who has investment accounts, and where do they hold them?
  • For consumers who are not investing, what obstacles are preventing them from doing so?
  • What are consumers’ near-term investment plans?
  • How would consumers choose to allocate windfall investment funds?
  • What are consumers’ attitudes and comfort levels regarding the stock market, advisors, and investing in general?

"The FinTech revolution has borne a stable of robo-advisor and other self-service investment options for the average consumer, and brought with it tools and products that were previously only accessible for wealthy investors at traditional institutions. But while consumers now have greater accessibility to the investment sector, the glut of available services may also induce analysis paralysis for individuals who simply don’t know where to begin, and human advice remain the most trusted authority."
- Chris Shadle, Financial Services Analyst

This report looks at the following areas:

  • Who has investment accounts, and where do they hold them?
  • For consumers who are not investing, what obstacles are preventing them from doing so?
  • What are consumers’ near-term investment plans?
  • How would consumers choose to allocate windfall investment funds?
  • What are consumers’ attitudes and comfort levels regarding the stock market, advisors, and investing in general?

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Themes
          • Do as I say, not as I do
            • Investing is confusing and costly
              • Men and women think about investing differently
                • What it means
                • The Market – What You Need to Know

                  • Total assets under management growing, while number of firms stays level
                    • Divergence of median and mean financial holdings underscores worsening inequality
                      • An aging America
                        • Debt may inhibit investing
                        • Market Size

                          • Number of investment companies remains consistent
                            • Figure 1: Number of investment companies, 2000-17
                          • Total net assets under management on sharp rise
                            • Figure 2: Total net assets of investment companies, and yearly percentage change, 2000-17
                        • Market Factors

                          • Divergence of median and mean financial holdings underscores growing inequality
                            • Figure 3: Household financial holdings, selected years, 1989-2016
                          • An aging America
                            • Figure 4: US population, by age, 2015, 2020, 2025
                          • Personal saving rate lags far behind experts’ recommendations
                            • Figure 5: Personal saving rate, January 2007-January 2019
                          • Growing consumer debt may limit investment opportunity
                            • Figure 6: Outstanding consumer credit, revolving and nonrevolving, 1985-2018
                        • Key Trends – What You Need to Know

                          • Investment sector impacted by several consumer trends
                            • Investing is confusing and expensive
                              • New product offerings allow consumers to invest at lower cost
                              • Trends Impacting Investing

                                • Young Consumers are Redefining Adulthood
                                  • Gender disparity is significant
                                    • Socially responsible investing allows consumers to choose Moral Brands
                                      • Consumers want help, but can also suffer from analysis paralysis
                                      • What’s Struggling?

                                        • Investing is confusing, and costly
                                          • Figure 7: Reasons for not having an investment account, by age, February 2019
                                        • Perception of robo-advisor abilities
                                          • Figure 8: Preference for human versus robo-advisor, August 2018
                                        • Investment sector still haunted by specter of 2008 financial crisis, political uncertainty
                                          • Figure 9: VIX index of expected volatility, March 2014-March 2019
                                      • What’s New and What’s Next?

                                        • JPMorgan launches You Invest, then undercuts ETF market
                                          • Figure 10: Chase You Invest Email, December 2018
                                        • Navy Federal unveils EasyStart Investor
                                          • Figure 11: Navy Federal Credit Union Email, November 27, 2018
                                        • Ally Bank offers commission-free ETFs
                                          • Figure 12: Ally Bank Email, August 2018
                                        • Advice in the digital age: ideas from Fidelity, TD Ameritrade
                                          • Stash’s Stock-Back rewards program
                                            • Figure 13: Stash email campaign, March 12, 2019
                                        • The Consumer – What You Need to Know

                                          • Account ownership rates are high, but many consumers are completely uninvested
                                            • Young investors are more comfortable with banks, older ones prefer traditional brokerages
                                              • Most plan to maintain level of investment, very few plan to reduce
                                                • Financial advisor is most trusted source of info, but most consumers don’t consider many sources
                                                  • Only half of consumers confident in retirement savings
                                                    • People don’t know what to do with $10,000
                                                    • Investment Account Ownership

                                                      • Most consumers have an investment account, but many do not
                                                        • Figure 14: Investment account ownership, by age, February 2019
                                                      • Lack of money and expertise are the primary barriers to investing
                                                        • Figure 15: Reasons for not having an investment account, February 2019
                                                      • Multicultural consumers are investing at significantly lower levels
                                                        • Figure 16: Investment account ownership, by race and ethnicity, February 2019
                                                      • Online brokerage accounts to see flurry of activity
                                                        • Figure 17: Investment plans for next year, online brokerage accounts, by age, February 2019
                                                    • Location of Investment Accounts

                                                      • Young investors are more comfortable with banks, older ones prefer traditional brokerages
                                                        • Figure 18: Location of investment accounts, by age, February 2019
                                                      • Investing is confusing: some even unsure of where accounts are held
                                                        • Figure 19: Location of investment accounts, by gender, by age, February 2019
                                                    • Near-term Investing Plans

                                                      • Most plan to maintain level of investment, very few plan to reduce
                                                        • Figure 20: Investment plans for next year, by age, February 2019
                                                      • Men and parents significantly more likely to plan investment increases
                                                        • Figure 21: Investment plans for next year, by gender and parental status, February 2019
                                                    • Hypothetical: Allocating a $10,000 Windfall

                                                      • Consumers are under-informed and risk-averse
                                                        • Figure 22: Hypothetical investment scenario, February 2019
                                                      • Young consumers are most likely to invest in single trusted brand
                                                        • Figure 23: Hypothetical investment scenario, by generation, February 2019
                                                    • Sources of Investment Information

                                                      • Human investment advisors are most popular source of information
                                                        • Figure 24: Sources of investment information, February 2019
                                                      • Friends and family much more important for young investors and women
                                                        • Figure 25: Reliance on human advisor versus friends and family, by age, February 2019
                                                      • Young male investors “look” to podcasts over TV, newspapers, magazines
                                                        • Figure 26: Podcasts as a source of investment information, by age and gender, February 2019
                                                      • Most investors turn to just one or two sources of information
                                                        • Figure 27: Repertoire analysis, number of sources of investment information used, February 2019
                                                    • Attitudes toward Investing

                                                      • Gender divide is apparent in consumer attitudes
                                                        • Figure 28: Attitudes toward saving income and investing, by gender, February 2019
                                                      • Consumers agree on the importance of a diversified portfolio
                                                        • Figure 29: Attitudes toward saving income and investing, by age, February 2019
                                                      • Only half are confident in retirement savings
                                                        • Figure 30: Attitudes toward saving income and investing, February 2019
                                                    • Appendix – Data Sources and Abbreviations

                                                      • Consumer survey data
                                                        • Direct marketing creative
                                                          • Abbreviations
                                                          • Appendix – Market Tables

                                                              • Figure 31: Percentage of total net mutual fund assets, by type, 2015-17
                                                              • Figure 32: Household financial holdings, selected years, 1989-2016
                                                              • Figure 33: Percentage of households holding financial assets, by type of asset, selected years 1989-2016
                                                              • Figure 34: Percentage of households owning stock directly or indirectly, selected years 1989-2016
                                                              • Figure 35: Percentage of households financial assets as a share of total assets, selected years 1989-2016

                                                          Investment Trends - US - April 2019

                                                          US $4,395.00 (Excl.Tax)