Financial Needs of the Mass Affluent - US - March 2005

Table of Contents

• Introduction and Abbreviations
• Introduction
• Scope of the reportOther relevant reports
• Definition
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• More Americans are wealthy
• Boomers are affluent
• Financial companies In search of more profits
• A worthy target
• Size, segmentation and potential
  • Figure 1: U.S. Revenues to FinancialIntermediaries, by Wealth Category, 2000
• Services dominated by the top players
• Mass affluent have financial relationships
  • Figure 2: Comparison of Mass Affluent andTotal Surveyed Population: Ownership of Financial Products
• But that doesnt mean theyre not up for grabs
• Differentiating to gain share
• Market Drivers
• Increase in national wealth
  • Figure 3: Average per capita disposablepersonal income, 1998 - 3Q 2004
• Stock market wealth
  • Figure 4: S&P 500, 1995-2005
• Executive pay increases
  • Figure 5: CEO and professional employeepercentage change over prior year, 1994-2003
• The advice revolution
• Especially for mutual fundsFigure 6: U.S. self-directed retirementmarket, 1990-2003
• The mass affluent online
  • Figure 7: Total high-speed Internetpenetration and forecast, 2002-2007
  • Figure 8: Comparison of Mass Affluent andTotal Population use of Internet for Certain Activities, Fall 2004
• Retirement is in the news and people are worried
  • Figure 9: Thought given to financial needsin retirement, by age, 2004
• Financial institutions in search of profitable segments
• Smoothing out revenues
  • Figure 10: Top commercial banks changesin net gains and losses from trading, 2000-2004
• Mass affluent are in the sweet spot
  • Figure 11: Wachovia: Cost to serve marketsby segment, August 2004
• Baby Boomers are about to peak in earning power
  • Figure 12: U.S. population by generation,2004
  • Figure 13: Median net worth by age,1993-2000
• Market Size & Trends
• Overview
  • Figure 14: The number of households withnet worth between $100,000 and $1 million, 1992, 1995, 1998, and 2001
• Revenue potential
  • Figure 15: U.S. revenues to financialintermediaries, by wealth category, 2001
• Market Segmentation
• Overview
• Segmentation by wealth
  • Figure 16: U.S. household population byinvestable assets, 2003
  • Figure 17: Composition of household wealthby wealth class, 2001
  • Figure 18: Segmentation of U.S. populationby net worth, 1992-2001
  • Figure 19: Rate of ownership of variousinvestments, by wealth class, 2001
  • Figure 20: Composition of household wealthby wealth class, 2001
• Supply Structure
• Overview
• Top providers
  • Figure 21: Top 10 financial firms withwhich mass affluent have accounts, Fall 2004
• Sales by institution
• Banks selling brokerage services through branches
  • Figure 22: Income from sales and servicingof mutual funds and annuities, 2003 and 3Q 2004
• Mass Affluent provider profiles
• Wachovia
  • Figure 23: Wachovia cost and revenue bysegment, 2004
• JPMorgan Chase
  • Figure 24: JPMorgan Chase portfoliomanager program, 2005
• Fidelity Investments
• Retirement roll-oversCharles Schwab
• Personal choice for the mass affluent
  • Figure 25: Schwabs advice offerings,2005
• American Express Financial Advisors
  • Figure 26: Rankings of brokers inForrester survey, 2003
• Online brokerage for the mass affluent
  • Figure 27: Kiplingers ranking of onlinebrokerage firms for affluent clients, 2004
  • Figure 28: Online brokers specialservices provided for affluent clients, 2004
• Trends in Products
• Cost/Benefit analysis of serving the mass affluent
• Separate/Managed accounts
• Advertising & Promotion
• Targeted marketing
• BroadcastFigure 29: Top five non-bank, non-creditcard financial firm television spending, 2003
• MagazinesFigure 30: Top financial magazineadvertisers 2002-August 2004
  • Figure 31: Advertising spendingallocations, 2002 and 2003
• Company Profiles
• American Express Financial Advisors
• E*TRADE
• Fidelity
  • Figure 32: Fidelity billboardadvertisement for its IRA product, February 2005
• Morgan Stanley
• Merrill Lynch
  • Figure 33: Merrill Lynch commercial,November 2004
• UBS
  • Figure 34: UBS phone booth advertisementfor art exhibit, February 2005
• The Consumer
• Mass affluent ownership of financial products
  • Figure 35: Investor profile of MassAffluent population, Fall 2004
  • Figure 36: Ownership of financialproducts, total surveyed population vs. mass affluent, Fall 2004
  • Figure 37: Ownership of securities byincome percentile, 1992-2001
  • Figure 38: mean values of financial assetsowned, Fall 2004
• Mass affluents usage of financial services
  • Figure 39: Types of financial servicesused in the last three years, by gender, December 2004
  • Figure 40: Types of financial servicesused in the last three years, by age, December 2004
  • Figure 41: Types of financial servicesused in the last three years, by household income, December 2004
  • Figure 42: Types of financial servicesused in the last year, by region, December 2004
• Management of accounts
  • Figure 43: Management of accounts, bygender, December 2004
  • Figure 44: Management of accounts, by age,December 2004
  • Figure 45: Management of accounts, byhousehold income, December 2004
  • Figure 46: Management of accounts, byinvestable assets, December 2004
  • Figure 47: Management of accounts, byregion, December 2004
• Opinions on the importance of certain attributes
  • Figure 48: Important attributes forcompanies and advisors to have, by gender, December 2004
  • Figure 49: Important attributes forcompanies and advisors to have, by age, December 2004
  • Figure 50: Important attributes forcompanies and advisors to have, by region, December 2004
• Method of conducting financial activities
  • Figure 51: Methods for conductingfinancial activities, by gender, December 2004
  • Figure 52: Methods for conductingfinancial activities, by age, December 2004
  • Figure 53: Methods for conductingfinancial activities, by investable assets, December 2004
  • Figure 54: Methods for conductingfinancial activities, by region, December 2004
• Willingness to pay for financial services
  • Figure 55: Amount spent on advisory andestate planning, by gender, December 2004
  • Figure 56: Amount spent on tax services,advisory and estate planning, by age, December 2004
  • Figure 57: Amount spent on tax andadvisory services, by household income, December 2004
  • Figure 58: Amount spent on tax andadvisory services, by region, December 2004
• Choosing an advisor
  • Figure 59: Choosing an advisor, by gender,December 2004
  • Figure 60: Choosing an advisor, by age,December 2004
  • Figure 61: Choosing an advisor, byhousehold income, December 2004
• Relationship with primary financial advisor
  • Figure 62: Relationship with primaryfinancial advisor, by gender, December 2004
  • Figure 63: Relationship with primaryfinancial advisor, by age, December 2004
  • Figure 64: Relationship with primaryfinancial advisor, by investable assets, December 2004
  • Figure 65: Relationship with primaryfinancial advisor, by region, December 2004
• Summary
• Future & Forecast
• Future trends
• Technology driven platforms
• Open architecture
• Collaborative online activity
• The effects of increased accountability
• Market forecast
• Households with net worth between one hundred thousand and onemillion dollars
  • Figure 66: Forecast of U.S. householdswith net worth between $100,000 and $1 million *, 2004-2009
• Forecast factors
• Appendix: Trade Associations
• Appendix B: Comperemedia Mail Images
• Bank of America Wealth Management
• Fidelity IRA
• American Express Financial Advisors