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Investment Trends - US - February 2017

Published By :

Mintel

Published Date : Feb 2017

Category :

Banking

No. of Pages : N/A

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

Table of Content

OVERVIEW

What you need to know
Definition

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

THE MARKET – WHAT YOU NEED TO KNOW
Increase in mutual fund companies drives increase in investment firms
Total net assets of investment companies shrinks since 2014
Equity funds are most popular
Personal savings is rising faster than disposable income
The future of the new DOL Fiduciary Rule is murky

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

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

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

KEY PLAYERS – WHAT YOU NEED TO KNOW
Features of leading robo-advisers
Where are the women advisers?
The challenge for human advisers
Women still struggle with retirement savings
Robo-advisers are sure to grow in popularity
Hybrid advisers will likely be more popular
Robo-advisers target segments

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

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

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

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

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

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

LOCATION OF INVESTMENT ACCOUNT
Men are more likely to use several accounts
Figure 24: Location of investment account, by gender, November 2016
Millennials prefer banks
Figure 25: Location of investment account, by generation, November 2016
Banks and robo-advisers have advantage with Hispanics
Figure 26: Location of investment account, by Hispanic origin, November 2016
Investment firms hold the largest accounts
Figure 27: Location of investment account, by household investable assets, November 2016

REASONS FOR NOT HAVING AN ACCOUNT
Most don’t have the money
Figure 28: Reasons for not having an account, November 2016
Young women need investment education
Figure 29: Reasons for not having an account, by gender and age, November 2016

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

ROBO-ADVISER OR HUMAN ADVISER?
Most investors have more faith in human advisers
Figure 34: Robo-advisers vs human advisers, November 2016
Younger people see more advantages in robo-advisers
Figure 35: Robo-advisers vs human advisers, by gender and age, November 2016
Hispanics more interested than non-Hispanics
Figure 36: Robo-advisers vs human advisers, by Hispanic origin, November 2016

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

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

CLUSTER ANALYSIS
Figure 42: Investment account owner clusters, November 2016
Cluster 1: Uncomfortable Investors
Characteristics
Opportunity
Cluster 2: Disengaged Investors
Characteristics
Opportunity
Cluster 3: Confident Investors
Characteristics
Opportunity

APPENDIX – CHAID ANALYSIS
Methodology
Young fathers have confidence in robo-advisers
Figure 43: Attitudes toward investing – CHAID – Tree output, November 2016
Figure 44: Attitudes toward investing – CHAID – Table output, November 2016

APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Consumer survey data
Consumer qualitative research
Direct marketing creative
Abbreviations and terms
Abbreviations

 

List of Table

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