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Personal Finance and Advice - US - June 2015

Personal Finance and Advice - US - June 2015

The personal financial advice industry is changing rapidly. Robo-advisers are increasingly popular and the number of financial advisers is shrinking as more retire and fewer are hired to replace them. As a result, competition for advisory clients is increasing, and advisers have to find ways to differentiate themselves from one another and to demonstrate the value-added services they offer.

This report looks at the following areas:

Learning to live with robo-advisers
Lots of competition for customers


OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
The issues
Figure 1: Attitudes about robo-advisers, by generation, March 2015
Figure 2: Interest in using a financial adviser, March 2015
Figure 3: Top five factors in choosing an adviser, March 2015
The opportunities
Figure 4: Millennials’ use of financial adviser, March 2015
Figure 5: Top financial priorities, by parental status, March 2015
Figure 6: Interest in using a financial adviser, by marital status, March 2015
What it means
Figure 7: Attitudes toward financial advice and advisers, by generation, March 2015
THE MARKET
What you need to know
JPMorgan Chase and LPL Financial lead
The economy continues to improve
Retirement is the most important savings goal
Market breakdown
Largest financial services companies
Figure 8: Largest financial services companies, by assets, as of March 31, 2015
Largest broker-dealers
Figure 9: Largest broker-dealers, by revenue, as of firm’s year end, 2014
Figure 10: Largest broker-dealers, by assets, number of representatives, and assets per representative, as of firm’s year end 2014
Market factors
Unemployment is down
Figure 11: US unemployment, January 2012-March 2015
Consumer saving is up
Figure 12: US personal saving rate, March 2001-March 2015
Increased awareness of need for retirement planning
Figure 13: Personal savings priorities, by generation, June 2015
KEY PLAYERS
What you need to know
Advice is becoming more needs-driven
The industry is aging
Robo-advice is increasing in popularity
New regulations possible
What’s working?
Advisers are looking to add the human touch
Reaching out to Millennials
Figure 14: Use of financial adviser, by generation, March 2015
Figure 15: Vanguard personal financial advice email, 2015
Figure 16: USAA personal financial advice email, 2014
What’s struggling?
The aging of the industry
Figure 17: Factors in choice of adviser, by age, March 2015
What’s next?
Robo-advice is a challenge
Figure 18: Attitude toward robo-advice, by generation, March 2015
Figure 19: Betterment mobile (2014), online (2015) and print (2014) ads
Potential new regulations
THE CONSUMER
What you need to know
Most don’t want a financial adviser
Most think their accounts are too small
Establishing trust with clients is a must for advisers
Robo-advisers are disrupting the industry
How consumers are invested
Most investments are passive
Figure 20: Most popular investments, March 2015
Men more likely to have investments
Figure 21: Type of investments held, by gender and age, March 2015
Breakdown of investable assets
Figure 22: Amount of investable assets, March 2015
Women have less invested
Figure 23: Amount of investable assets, March 2015
Use of adviser
Most are not interested in using an adviser
Figure 24: Use of financial adviser, by interest, March 2015
Financial adviser usage increases with household income
Figure 25: Use of a financial adviser, by household income, March 2015
Factors in choice of adviser
Broad knowledge is a top factor in choosing an adviser
Figure 26: Important factors in choice of adviser, by gender and age, March 2015
Millennial women especially seek expertise
Figure 27: Important factors in choice of adviser, by gender and age, March 2015
Reasons for not using an adviser
Most think their accounts are too small
Figure 28: Top reasons for not using an adviser, March 2015
Financial priorities
Saving is most important
Figure 29: Financial priorities, March 2015
Higher incomes change priorities
Figure 30: Financial priorities, by household income, March 2015
Saving is for Gen X and Boomers
Figure 31: Financial priorities, by generation, March 2015
Figure 32: USAA financial readiness score direct mail ad, 2015
Figure 33: Thrivent retirement seminar direct mail ad, 2015
Figure 34: Wells Fargo financial review email, 2015
Attitudes toward financial advice and advisers
Challenges for the advice industry
Figure 35: USAA financial guidance direct mail ad, 2015
Figure 36: Attitudes toward financial advice and advisers, March 2015
Millennial women are harder to engage, but offer great potential
Figure 37: Attitudes about financial advice and advisers, by gender and age, March 2015
Figure 38: PNC Bank retirement readiness direct mail ad, 2015
Consumers express a sense of distrust
Robo-advisers just as good as humans?
Figure 39: Attitudes toward financial advice and advisers, by generation, March 2015
Young people need to be shown options
Figure 40: Attitudes about financial advice and advisers, by generation, March 2015
Steps taken toward financial planning
The recession spurred interest
Figure 41: Steps taken toward financial planning, by gender, age, and household income, March 2015
Gender differences disappear with age
Figure 42: Steps taken toward financial planning, by gender and age, March 2025
Figure 43: Wells Fargo budgeting webinar ad, 2015
Figure 44: USAA retirement plan email, 2014
Advice and retirement
The perfect retirement
Figure 45: Personal financial priorities, by generation and marital status, March 2015
Retirement saving is a concern
Opportunity among Hispanics may increase
Figure 46: Personal financial priorities, by Hispanic origin, March 2015
Consumers don’t look to advisers for retirement planning
Women and Gen X are least confident about retirement
Figure 47: Attitudes toward advice and retirement, March 2015
Figure 48: Attitudes toward advice and retirement, by gender and generation, March 2015
Retirement advice and preparation are needed
Figure 49: Steps taken toward financial planning, by generation, March 2015
People with more investments are more prepared
Figure 50: Steps taken toward financial planning, by number of investments or investment accounts, March 2015
Number of investment accounts
How many accounts do people have?
Figure 51: Number of investments or investment accounts, March 2015
One quarter of Millennials have no investments or investment accounts
Figure 52: Number of investments or investment accounts, by generation, March 2015
How many accounts before an adviser is used?
Figure 53: Use of adviser, by number of investments or investment accounts, March 2015
Number of financial priorities
Millennials: How many financial priorities do they have?
Figure 54: Number of financial priorities, by generation, March 2015
Types of investments consumers hold
Figure 55: Type of investments owned, by number of financial priorities, March 2015
Use of financial adviser
Figure 56: Use of financial adviser, by number of financial priorities, March 2015
Consumers with several financial priorities are more likely to have a financial plan
Figure 57: Financial planning behavior, by number of financial priorities, March 2015
APPENDIX
Data sources and abbreviations
Data sources
Abbreviations and terms
RESEARCH METHODOLOGY

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