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

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


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

Email

Phone

In person

Mail

Facebook

Twitter

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,

Twitter

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


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



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


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


Having to worklonger to

supplementincome


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


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%


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%


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


Single 24%


Asian 16%

Female 62%


Top Factors for Attaining Wealth

Hard work 28%


Education 15%

Being frugal 12%

Good timing 6%

Gather information about financial decisions on social media (LinkedIn, Twitter, etc.)


Information via Technology

Top Concerns


Having to work longer to supplement income 41%


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


Single 27%


Hispanic 11%

Male 53%


Top Factors For Attaining Wealth

Hard work 21%


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.)


Seek Information via Technology

Top Concerns



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.

Brokerage services provided by TD Ameritrade, Inc., member FINRA /SIPC

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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