Gen Y Investor Insights: Millennial Millionaires in …...Gen Y Investor Insights: Millennial Millionaires in the Making Exploring the Mindset of Millennials With High Net Worth and
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Gen Y Investor Insights: Millennial Millionaires in
the Making Exploring the Mindset of Millennials With High Net Worth and Those With
High Potential For Future Wealth
January 2015
Generation Y, also known as the Millennials, has typically been painted with a broad brush. TD Ameritrade research finds there are distinct differences within this group, depending on current wealth and level of income. • Mass Affluent Millennials have very specific goals in mind when it comes to
their financial planning. The best approach to connecting with this group is likely identifying their needs and being responsive.
• Potential High Net Worth Millennials have some investable assets but high incomes. They may represent the most promising target group for RIAs, because they’re mostly overlooked by financial firms and may be looking an advisor to help them reach their goals.
• High Net Worth Millennials can be influenced by advisors, but they rely more
on the attitudes and behaviors that made their parents successful. This group typically has an advisor and isn’t looking to switch.
The Mass Affluent Millennial group is defined as those respondents:
• Between the ages of 18 and 39* • Have investable assets between $25,000 and $500,000 • And an annual household income between $50,000 and $149,999.
The Potential High Net Worth Millennial group is defined as those respondents:
• Between the ages of 18 and 39 • Have investable assets between $25,000 and $500,000 • And an annual household income of $150,000 or more.
The High Net Worth Millennial group is defined as those respondents:
• Between the ages of 18 and 39 • And have more than $500,000 worth of investable assets.
* The Millennial generation is typically defined as those Americans born between 1980 and 1992. This survey included investors born as early as 1975.
Millennials invest in a wide variety of assets. Wealthy millennials are also more likely to have managed accounts, options, foreign stocks and privately owned businesses
0% 10% 20% 30% 40% 50% 60% 70% 80%
Privately owned business
Foreign stocks
Options
Annuities
Managed portfolios
ETFs
Real Estate (excl. residence)
Bonds
Certificates of Deposit
Brokerage / Trading account
Mutual funds
Stocks
High Net Worth Millennial
Potential HNW Millennials
Mass Affluent Millennials
All respondents
Q. What types of investments do you own?
The vast majority of Millennials are out of their parents’ house and living with a spouse or domestic partner
Q. What is your living situation? * Numbers may not add up to 100% due to rounding
2%
3%
11%
15%
68%
2%
2%
6%
29%
61%
3%
3%
15%
8%
72%
2%
2%
20%
12%
64%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Single, living with friends
Other
Single, living with family
Single, living alone
Living with Spouse / Partner
High Net Worth Millennial Potential HNWM Mass Affluent Millennials All Respondents
Millennials are predominantly “validators”: They may want an advisor to help manage their finances, but they expect to play a significant role making decisions
Q. Investor type based on questions about how respondents gather data and make investment decisions
19%
19%
15%
13%
28%
23%
33%
21%
53%
58%
52%
66%
All Respondents
Mass Affluent Millennials
Potential HNWM
High Net Worth Millennial
Validator Soloist Delegator
65%
35%
48% 52%
Yes
No
High Net Worth Millennials by a wide margin use an advisor, more than other generations. Potential High Net Worth Millennials represent an untapped market for advisors.
41% 59%
40% 60%
47% 53%
33%
67%
Yes
No
Q19 Do you use a professional financial advisor?
63 8
25 3
High Net Worth
Tend to use their family’s advisor and have no plans on changing
29
8 55
9
Potential HNWM
32
8 49
11
Mass Affluent Millennial
More likely to seek a different advisor
Q25. Which of the following best applies to you? * Numbers may not equal 100% due to rounding
More likely to choose their own advisor
Using the same financial advisor my family has always used and will stick with that advisor Using the same financial advisors that my family has always used and I plan on switching Using a different financial advisor than my family used None of these
39 32
26 31
59 53
6
18 31 55 58
29
21 9
24 13 16
38
21 21
Total Mass AffluentMillennials
Potential High NetWorth Millennial
High Net WorthMillennial
Gen X Boomers
2
Potentials and Mass Affluents prefer advisors who are older. More High Net Worth Millennials want to work with someone their own age.
Someone your own age Someone older than you Someone younger No preference
Q29 When it comes to the age of your advisor, would you prefer …?
Investment returns
Easily accessible
Breadth of investment
options
Works for large, well known
company
High touch service
Famous / well known in the area
Other
29%
22%
17%
14%
6%
5%
6%
36%
28%
13%
11%
2%
4%
6%
36%
20%
12%
14%
8%
5%
6%
24%
21%
18%
15%
8%
11%
2%
Boomers
26%
25%
19%
15%
3%
0%
13%
Total Mass Affluents Potential HNW High Net Worth
High Net Worth Millennials judge their advisor’s value across many factors, including breadth of investment options. Mass Affluents want strong returns and access.
69%
67%
51%
22%
14%
10%
8%
Total
Phone
In person
Blog/ Newsletter
High Net Worth Millennials favor a range of methods for communicating with their advisor. Potentials and Mass Affluents prefer e-mail or telephone.
74%
66%
42%
19%
0%
0%
0%
Mass Affluents
69%
67%
55%
34%
37%
28%
21%
High Net Worth
61%
78%
54%
14%
0%
0%
0%
Boomers
79%
59%
44%
12%
8%
2%
3%
Potential HNW
44%
20%
6%
6%
6%
0%
3%
2%
0%
2%
12%
36%
21%
7%
5%
4%
3%
3%
2%
2%
2%
16%
Total Referral by friend or
colleague
Referral from parents or grandparents
Investment conference / Seminar
Cold Call
Advertisement
Social Media
Quoted / Featured in news article
Read article or blog by the advisor
TV or radio show
Community event
Other
Potential high net worth Milllennials prefer to be connected with an advisor through referrals. Wealthy Milllennials will make first contact through a variety of methods.
Mass Affluents High Net Worth Boomers
49%
36%
2%
0%
0%
0%
0%
0%
0%
2%
11%
23%
24%
11%
6%
5%
8%
7%
3%
6%
2%
5%
45%
10%
5%
4%
1%
0%
1%
0%
0%
1%
33%
Potential HNW
85%
85%
67%
49%
46%
38%
25%
22%
Total Returns phone calls
that day
Easily accessible by email
Returns phone calls immediately
Rely on advisor for all investment decisions
Make own decisions, with advisor assistance
Seek out advisors for special situation
Accessible by Facebook, LinkedIn,
Not interested in working with an advisor
Mass Affluent and Potential HNW Millennials want advisors to be accessible and return calls quickly. High Net Worth Milllennials seek more access and across more channels.
Mass Affluents High Net Worth Boomers
87%
89%
49%
43%
32%
32%
11%
6%
89%
87%
76%
66%
61%
61%
54%
47%
85%
84%
64%
45%
34%
16%
4%
8%
Q29b To what extent do you agree or disagree with the following…?
80%
82%
62%
41%
45%
38%
17%
20%
Potential HNW
High Net Worth Millennials define financial success as leaving money to heirs and overall net worth. Other Millennials are focused on a comfortable retirement
0 5 10 15 20 25 30 35
Leaving money to my heirs
Leaving a substantial positive net worth
Paying bills on time
Being able to indulge in luxury items
Being debt free
Not having to depend on a job for income
Saving for education or retirement
High Net Worth Millennial Potential HNWM Mass Affluent Millennial
Q2. Which one of the following statements is closest to your definition of financial success?
5
25
64
4 3
Potential High Net Worth Millennial
I am far behind where I want tobe and unlikely to achievefinancial success
I am working at becomingfinancially successful but maynot succeed
I am on my way to reachingfinancial success
I am already there
Don't know/ not sure
5
36 56
1 2 Mass Affluent Millennial
26
13 50
10
1 High Net Worth Millennial
Not-yet-wealthy Millennials are more optimistic than their Already-Wealthy peers
Q20. Which of the following best describes where you are on the path to your financial success?
68%
67%
52%
38%
17%
14%
14%
12%
10%
6%
Making smart investments
Hard work
Being frugal
Education
Luck
Good timing
Good financial advisor
Receiving an inheritance
Family connections
Owning my own business
66%
69%
38%
42%
17%
22%
15%
7%
13%
10%
55%
53%
28%
33%
17%
20%
24%
20%
24%
23%
Potential HNW High Net Worth Millennial Mass Affluent Millennial
All Millennials cite smart investments and hard work as keys to acquiring wealth. Mass Affluents and Potentials also see being frugal as top factors, while High Net Worth Milllennials cite family connections and owning a business
Q30. What are the 3 biggest contributing factors to achieving wealth?
Projected Wealth Needed for a Comfortable Retirement (on average)
Mass Affluent Millennial $2.92 million
Potential HNW Millennial $4.97 million
High Net Worth Millennial $4.58 million
45
21 5
28
Mass Affluent Millennial
*Mean Planned Retirement Age
*60.8 *60.1 *56.8
Q12. At what age do you plan to fully retire?
55
23
2 21
Potential HNWM
I plan on fully retiring when I'm…
Do not want to retire, do not have need to
Want to retire, have needs that prevent me from doingsoUnsure
49
28
12
12
High Net Worth Millennial
58% 54%
49%
26%
14% 14% 13% 10%
44%
27% 18%
6% 1% 3% 1% Outliving your
SavingsHaving to work
longer tosupplement
income
Coping withhealthcareexpenses
The expense ofcaring for an
elderly parent orrelative
Relying onchildren or family
for financialsupport
Not being able toleave an
inheritance
Having to moveto an area with a
lower cost ofliving
I am notconcerned about
any of thesethings
All Concerns Biggest Concern
While the biggest concern for Mass Affluent Millennials is outliving their savings, there is also apprehension about having to work longer to supplement income and health care expenses.
55%
41% 39%
29%
19% 16% 14%
11% 41%
22% 12% 10% 8% 6% 2%
Outliving yourSavings
Having to worklonger to
supplementincome
Coping withhealthcareexpenses
The expense ofcaring for an
elderly parent orrelative
Relying onchildren orfamily for
financial support
Not being able toleave an
inheritance
Having to moveto an area with a
lower cost ofliving
I am notconcerned about
any of thesethings
All Concerns Biggest Concern
Potentials mention outliving their savings as their top tier concern overall, while other issues are secondary.
50%
44%
36% 38%
30% 29% 24%
21%
28% 17% 13%
18% 8% 7% 9%
Outliving yourSavings
Coping withhealthcareexpenses
Having to worklonger to
supplementincome
The expense ofcaring for an
elderly relative
Having to moveto area withlower living
costs
Relying onchildren/family
for support
Not being ableto leave an
inheritance toheirs
I am notconcerned
about any ofthese things
All Concerns Biggest Concern
High Net Worth Millennials have lower levels of retirement concerns, overall, but “caring for an elderly parent” is rated higher than among other millennials.
1 Generating enough income from my investments to live comfortably during retirement
25%
2 Saving for retirement 21%
3 Managing income and expenses to live within my means
18%
3 Reducing personal debt 18%
1 Saving for retirement 21%
2 Generating enough income from my investments to live comfortably during retirement
16%
3 Reducing personal debt 14%
1 Managing income and expenses to live within my means
17%
2 Saving for retirement 15%
3 Developing a financial plan or budget
12%
Reducing personal debt is a major concern among Mass Affluent and Potential High Net Worth Millennials, but not so for High Net Worth Millennials. Saving for retirement is the only top concern ranked high by all three groups.
Q2. Please rank the top three financial goals that are most important to you at this stage in your life?
Top Factors For Attaining Wealth
Making smart investments 25%
Hard work 25%
Education 17%
Being frugal 14%
Receiving an inheritance 8%
Gather information about financial decisions on social media (LinkedIn, Twitter, etc.)
Gather information about financial decisions on a financial app
Top 3 Concerns
Outliving your savings 58%
Having to work longer to supplement income 54%
Coping with healthcare expenses 49%
36% were referred to their advisor by their parents or
grandparents
50% were 10 years or younger when they had their first
discussion with their parents about saving money
Interesting Demographics
Single 35%
Post-Graduate Degree 49%
Caucasian 79%
Female 73%
Trading done with a broker 29%
14% of Mass Affluent
Millennials are expecting to receive an
inheritance of $100,000 or
more
More likely to receive financial
advice from family and friends than any other group
Interesting Demographics
Single 24%
Post-Graduate Degree 46%
Asian 16%
Female 62%
Trading done with a broker 22%
Top Factors for Attaining Wealth
Hard work 28%
Making smart investments 25%
Education 15%
Being frugal 12%
Good timing 6%
Gather information about financial decisions on social media (LinkedIn, Twitter, etc.)
Gather information about financial decisions on a financial app
Information via Technology
Top Concerns
Outliving your savings 55%
Having to work longer to supplement income 41%
Coping with healthcare expenses 39%
44% were referred to their advisor by friends or
colleagues
26% were between 11 and 15 when
they had their first discussion with their
parents about saving money
19% of Potential
HNWMs are expecting to receive an
inheritance of $100,000 or
more
Stock analysts and company websites
are equally important to this group when receiving advice
Interesting Demographics
Single 27%
Post-Graduate Degree 52%
Hispanic 11%
Male 53%
Trading done with a broker 34%
Top Factors For Attaining Wealth
Hard work 21%
Making smart investments 19%
Education 14%
Being frugal 10%
Family connections provide opportunity I wouldn’t have otherwise 8%
Gather information about financial decisions on social media
(LinkedIn, Twitter, etc.)
Gather information about financial decisions on a financial app
Seek Information via Technology
Top Concerns
Outliving your savings 50%
Coping with healthcare expenses 44%
The expense of caring for an elderly parent or relative 38%
10% met their advisor at a conference or seminar
17% were 16 years or older when they
had their first discussion with their
parents about saving money 39% of HNWMs
are expecting to receive an
inheritance of $100,000 or more
Significantly higher chance they will
read full company financial statements than their cohorts
Results of the Millionaires in the Making Study are based on a survey conducted by The Pert Group on behalf of TD Ameritrade, Inc. Five hundred thirty-six investors between the ages of 18 and 39 (“Millennials”) participated in a telephone survey from January 15 – February 28, 2014, where they were asked to share their views on attitudinal, behavioral and usage patterns of brands in the financial services industry. An additional 273 investors aged 40 years and older were surveyed for comparative purposes. Baby Boomers are those born from 1945 to 1964, while “Generation X” is defined as those Americans born from 1965 to 1979. The margin of error in this survey is ±5%. This means that in just over one case out of 20, survey results based on the 809 total respondents will differ by no more than 5 percentage points in either direction from what would be obtained by seeking the opinions of all investors within an age group. The Pert Group and TD Ameritrade, Inc. are separate, unaffiliated companies and are not responsible for each other's products and services.
TD Ameritrade Institutional TD Ameritrade Institutional is a leading provider of comprehensive brokerage and custody services to more than 4,500 fee-based, independent registered investment advisors and their clients. Our advanced technology platform, coupled with personal support from our dedicated service teams, allows investment advisors to run their practices more efficiently and effectively while optimizing time with clients. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.
TD Ameritrade Holding Corporation Millions of investors and independent registered investment advisors turn to TD Ameritrade’s (NYSE: AMTD) technology, people and education resources to help make investing and trading easier. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 39 years. An official sponsor of the 2014 and 2016 U.S. Olympic and Paralympic Teams, as well as an official sponsor of the National Football League for the 2014, 2015 and 2016 seasons, TD Ameritrade has time and again been recognized as a leader in investment services. Visit TD Ameritrade's newsroom on www.AMTD.com for more information.
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