e*trade financial q2 2019 streetwise report · millennial, gen x, and baby boomer broker...

E*TRADE FINANCIALQ2 2019 STREETWISEREPORTInsights from the E*TRADE quarterly tracking study of 900+ experienced investors

© 2019 E*TRADE Financial Corporation. All rights reserved.

This presentation contains confidential information and may

not be disclosed without E*TRADE Financial Corporation’s

written permission.Public

2

Q2 2019 survey methodology and background

Methodology

This wave of the survey was conducted from April 1 to April 11 of

2019 among an online US sample of 917 self-directed active

investors who manage at least $10,000 in an online brokerage

account. The survey has a margin of error of ±3.20 percent at the 95

percent confidence level. It was fielded and administered by

Research Now. The panel is broken into thirds of active (trade more

than once a week), swing (trade less than once a week but more

than once a month), and passive (trade less than once a month).

The panel is 60% male and 40% female, with an even distribution

across online brokerages, geographic regions, and age bands.

This study looks into the minds and behaviors of self-

identified experienced investors

• They self-select as having moderate to professional investing

experience

• They take charge of their investments

• They believe they understand the markets, investment products,

and asset classes

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

0%

5%

10%

15%

20%

Jan-2019 Feb-2019 Mar-2019 Apr-2019

S&P 500 DJIA VIX

Q2 2019 survey timing mapped against major market indexes

S&P 500®/DJIA

Survey in the field

4/114/1VIX®

3

SENTIMENT

VIEWS ON THE MARKET AND WHERE

OPPORTUNITIES LIE

4 Public

0%

10%

20%

30%

40%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19Dazed and Confused Easy Rider

Singin' in the Rain Pulp Fiction

Raging Bull Jackass

Apocalypse Now Fear and Loathing in Las Vegas

If you had to pick a movie title that best describes how you personally feel

about the market this quarter, which would it be?

52% 56% 62%46%

58%

48% 44%38%

54% 42%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Bullish Bearish

When it comes to the current market, are you…?

Bullishness rose this quarter Most believe the market will rise in Q2 2019

Investors are feeling significantly less Dazed and Confused

Where do you predict the market will end this quarter?

Views on the market

4

5

41%

28% 31%

40%

27%33%

Agree Neither agree nor disagree Disagree

Q2'19Q1'19

Views on the economy and rates

Is the US economy healthy enough for the Fed to enact additional

rate hikes this quarter? (%=Strongly/Somewhat)

5%

25%

45%

65%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Market volatility Recession Political instability Inflation Armed conflict, war, or terrorism

What risks are you actively managing right now when it comes to your portfolio?

Investors continue to be more likely to think

rate hikes are ok

Market volatility and political instability concerns ticked down slightly

15%

49%

29%

5%2%

14%

41%

32%

10%3%

A B C D F

Investors more likely to give the economy an A or B

What grade would you give the current state of the US economy

right now?

5

6

Asset class interest

Interest in individual stocks, equity mutual funds, and ETFs rose since last quarter

Interest in large- and mid-caps decreased while interest in small-caps ticked up since last quarter

If you could give one piece of advice to a friend or family member who is thinking of investing right now, would it be to get into…

Select your top four.1 (Top 10 shown.)

How interested/comfortable are you with investing in each of the following sectors this quarter, without taking into account the investment

products which you can invest through?1 (% Very/Extremely interested; base=all)

51% 46%43%

38%36% 34% 30%

27%

18%13%

48%42%

45%39% 35%

30%33%

31%24%

17%

55%48%

40%36% 34% 37%

25%

33%

19% 19%

Individual stocks Equity mutualfunds

Money marketfunds or other

cash alternatives

Fixed incomemutual funds

Bonds ETFs CDs Investableproperties

Treasury bills Commodities

Q2'19

Q1'19

Q2'18

41%34% 34%

25%22% 22% 19% 18%

46%

38%32%

27%25% 24% 22% 22%

49%

41% 38%

27%29% 28%

22% 21%

Large US companies(large cap)

Mid-sized UScompanies (mid cap)

Small US companies(small cap)

Domestic bonds/debt Internationalcompanies in

developed markets

Internationalcompanies in emerging

markets

Internationalbonds/debt issued indeveloped markets

Internationalbonds/debt issued in

emerging markets1. Focuses on y/y and q/q—other quarters available upon request

7

US sector interest

48% 48%

44%

34%

27%

22% 22% 22%19%

15%

50%

40%38%

36%

29% 30%

23%20%

16%17%

46%

41%44%

40%

22%24% 24%

22%20% 18%

Q2'19

Q1'19

Q2'18

What industries do you think offer the most potential this quarter? Select your top three.1 (Top 10 shown.)

Interest in energy and IT increased while financials and consumer staples declined since last quarter

1. Focuses on y/y and q/q—other quarters available upon request

8

% Interested Q/Q Δ

United States and Canada 70% +4%

Asia and Pacific 45% +5%

European Union 27% 0%

Central, Eastern, and Southeastern

Europe (including Russia) 11% (4%)

Middle East and Central Asia

Region (including North Africa) 14% (1%)

Latin America and the Caribbean 13% 0%

Sub-Saharan Africa 5% (2%)

46%

29%25%

42%

29% 29%

59%

23%18%

Yes Neither agree nordisagree

No

Q2'19

Q1'19

Q2'18

International and emerging market interest

Which regions do you think offer the greatest investment potential this quarter?1

(% = Top two box)

18% 53% 29%

Lessen exposure to emerging markets

Not make any adjustments

Increase exposure to emerging markets

Thinking about your investment approach specific to emerging

markets, which of the following adjustments do you plan to make over

the next quarter?

The health of the markets outside the US appeals to me as an

investor. (% = Strongly/Somewhat)

1. Change shown q/q from Q1’19.

Investors are slightly more interested in opportunities

abroad

Interest in North America and APAC increased

The majority won’t be changing their EM exposure

9

PORTFOLIO MANAGEMENT A LOOK AT HOW DIFFERENT AGE GROUPS MANAGE THEIR

INVESTMENTS

10

40%

23%

21%

32%

29%

23%

18%

25%

26%

10%

23%

30%

AGE: 25–34

AGE: 35–54

AGE: 55+

At least once a day Weekly Monthly Once a month or less

Millennial, Gen X, and Baby Boomer broker preferences and portfolio management

How often do you evaluate the positions in your portfolio?

“Millennials” defined as age 25–34, “Gen X” defined as age 35–54, “Baby Boomers” defined as age 55+.

Majority of Millennials and Gen X check their portfolio at least weekly

Which of the following characters better represents the type of relationship you want with your broker?

74%

26%

AGE: 25–34

72%

28%

AGE: 35–54

72%

28%

AGE: 55+

R2D2. A copilot with a diverse skill set that

offers a variety of helpful tools.

C-3PO. A constant companion that

will only offer you advice.

Investors of all ages prefer a broker like R2D2, offering a variety of helpful tools

11

Mobile usage among Millennials, Gen X, and Baby Boomers

77% 75%65% 60% 59%65% 60%

41% 37% 37%40%27%

16% 8% 13%

brokerage's mobile app positively wearable chatbots voice

AGE: 25–34

AGE: 35–54AGE: 55+

To what extent do you agree or disagree with the following statements…(% = Strongly/Somewhat agree)

“I am interested in using

wearable technologies, like

smart watches, to monitor

my portfolio.”

“I am interested in using a voice

assistant (e.g., Siri, Amazon

Alexa) to manage my portfolio.”

“Investing/trading apps have positively

affected the way I handle my

investments.”

Which of the following would you be most likely to use a voice assistant (e.g., Siri,

Amazon Alexa) to do, when it comes to investing and trading?(Select top two)

Approximately how often do you use an investing and trading app

on your smartphone?

23%

6%

5%11%

55%

AGE: 55+

42%

10% 7%

11%

30%

AGE: 35–54

65%11%

8%

6%

10%

AGE: 25–34

“It is important to me that my app

has robust capabilities that rival the

website experience.”


Almost three out of four Boomers would use a voice

assistant to check the markets

Almost two-thirds of Millennials use an investing app

once a week or more

Three out of four Millennials want their app to rival their desktop in functionality

11

Once a week or more 2–3 times each monthAbout once per month Less than once per monthI do not have an investing app

“I am interested in using

chatbots to manage my

portfolio.”

47%

57%

24%

55%

15%

3%

60%

45%

34%

43%

14%

3%

74%

43% 38%

29%

14%

2%

Check themarkets

Check yourportfolio

Receivenotificationsabout stockmovement

Check yourwatchlist

Receivenotifications

aboutaccountactivity

Place trades

12

VIEWS ON RETIREMENT HOW EXPERIENCED INVESTORS THINK

ABOUT RETIREMENT INVESTING

13

47% 43% 39% 37% 36% 35%32% 35%24% 22% 24% 25%

13%23%

8% 10% 16%4%

Not having enough savedfor retirement

Loss of a loved one Personal relationshipissues

Not understanding how toinvest smartly

Physical injury Loss of a job

Retirement investing among Millennials, Gen X, and Baby Boomers

50%

35% 32% 28%21% 18% 17% 17%

69%

39%

16%

29%24% 20%

10% 11%

72%

38%

11%

33% 31%

4% 3% 5%

For retirement For an unknownemergency

For a big purchasesuch as a car or new

home

Simply because it'sthe right thing to do

For vacation orentertainment

To pay for aneducation

To take care of aparent or other older

relative

To get rich

AGE: 25–34

AGE: 35–54

AGE: 55+

What are the main reasons you are saving for the long term? (% = Selected as a top three choice.)

How often do you worry about each of the following? (% = Always/Frequently)


Saving for retirement weighs on Millennial investors more than personal relationship issues or loss of a loved one

Retirement is the highest single priority for long-term saving, although significantly less so for Millennials

14


Please rank in order how important each of the following are in meeting your goal for retirement, with one being the most important.

(% = Selected as most important)

76%

57%

30%

12%

17%4%

AGE: 35–54

56%

61%

42%

7%

28%

4%

AGE: 55+

Personal savings/IRA

401(k) Pension

Annuity

Social Security

Other/None of the above


401(k)s play a critical role in planning for retirement across all generations

79%

51%

28%

26%

14%3%

AGE: 25–34

15

54%

16%

35%

Percentage who have taken out money from

an IRA or 401(k) before the age of 59½

46%

24% 23% 21%16%

65%

10%7% 7%

12%

85%

3% 1% 3% 7%

No, I have never takenout money from an IRAor 401(k) before the age

of 59½

Yes, for a medicalemergency

Yes, to pay foreducation

Yes, because Ibecame unemployed

Yes, to make a largepurchase

AGE: 25–34

AGE: 35–54

AGE: 55+

Have you ever taken out money from an IRA or 401(k) before the age of 59½ and, if so, for what? (Select all that apply)


Have you ever regretted your decision to take money from an IRA or 401(k) before the age of 59½?

24%

26%

50%

AGE: 55+

48%

22%

30%

AGE: 35–54

Very much/Somewhat regretted

Regretted a little bit

Did not regret at all

65%25%

10%

AGE: 25–34


Majority of Millennials later regret the decision to take early withdrawals

Despite their reliance on retirement accounts, more than half of Millennials have already taken out money from an IRA or 401(k)

16

60% 60% 59% 58% 55% 54%48% 46%

39%47%

55%

40%

30%38% 35%

24%29%

23%25%

42%

22%16% 20% 20%

6%14% 12%

Rent or mortgage Health care costs Day-to-day livingexpenses like food

or utilities

Paying downstudent loans

Education costs Wanting to live fortoday

Childcare Having a parentmove in with you

Having an olderchild move back in

with you


When it comes to saving what you want for retirement, how much of a barrier is each of the following?

(% = Significant/Somewhat of a barrier)


Boomers recommend starting early, getting the match, and avoid market timing

Majority of Millennials cite several roadblocks, including YOLO

65%

57% 54% 51%44%

21%9%

80%

60% 59%

45%33%

14%8%

83%

52%

67%

54%

32%

7% 4%

Start saving as early aspossible

Pay down debt asquickly as possible

Save enough to get theemployer match on your

401(k) contribution

Invest for the long term,don't try to time the

market

Don't dip into yourretirement account early

Work with a financialadvisor to create a plan

Use online tools tounderstand and keeptrack of your financial

goals

AGE: 25–34

AGE: 35–54

AGE: 55

If you could offer a younger investor financial advice, what would it be? (Select top three)

17

Please read the important disclosures below

This presentation presents data from April 1–April 11, 2019.

The data from this and past quarters reflects the opinions of this population only from the time of fielding, which is typically the first two weeks of each quarter. It does not

represent opinions of the full quarter.

E*TRADE Financial Corporation and Research Now are separate companies that are not affiliated. E*TRADE Financial Corporation engages Research Now to program, field,

and tabulate the study.

All information in this presentation reflects results from the survey and should not be construed as reflecting the views of E*TRADE Financial, its affiliates, or Research Now. The

results herein do not constitute a recommendation or endorsement by E*TRADE Financial, its affiliates, or Research Now.

Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an

index.

Dow Jones Industrial Average: Computed by summing the prices of the stocks of 30 companies and then dividing that total by an adjusted value—one which has been

adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying

securities.

S&P 500® Index is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the US stock market.

All components of the S&P 500 are assigned to at least one of eleven S&P Select Sector Indexes, which track major economic segments and are highly liquid benchmarks.

Stock classifications are based on the Global Industry Classification Standard. The Select Sector Indexes are: Consumer Discretionary Select Sector; Consumer Staples Select

Sector; Energy Select Sector; Financials Select Sector; Health Care Select Sector; Industrials Select Sector; Technology Select Sector; Materials Select Sector;

Telecommunication Services; and Utilities Select Sector.

VIX® is the ticker symbol for Cboe Volatility Index®. The index, also called the fear index, is calculated by Cboe and generally measures expected volatility of the US market in

the next 30 days. The higher the number, the more bearish the market is in general. The VIX is used to calculate the put/call ratio.

E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks or registered trademarks of E*TRADE Financial Corporation.

All other product names are trademarks or registered trademarks of their respective holders.

© 2019 E*TRADE Financial Corporation. All rights reserved.

e*trade financial q2 2019 streetwise report · millennial, gen x, and baby boomer broker...

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