Investor Behavior Survey. November 2014

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Mark Hopkins
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1 Investor Behavior Survey November 2014

2 Contents Section One Page Methodology 2 Section Two Detailed Findings 3 Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Nationwide is not an affiliate of Harris Poll. MFN-0148AO 1

3 Methodology This survey was conducted online from June 11, 2014 to June 30, 2014 among the U.S. online general population: 2,033 U.S. online general population adults aged 18 or older, who are: q q q Household financial decision makers Have investable assets of $50K or more We refer to this group as, Consumers, or Overall Respondents are categorized into 5 additional demographic groups, which are not mutually exclusive: q Affluent Gen Y Ages 18-35, referred to as Gen Y, (N=354) q Affluent Gen X Ages 36-49, referred to as Gen X, (N=424) q High Net-Worth Investors with $250K or more in investable assets (N= 811) q Retirees retiring in the next 5 to 10 years (N=454) q Retirees/Retired currently retired (N= 451) q All Others consumers who fall outside of the categories above (N=356) Research participants are drawn from the Harris Poll Online (HPOL) research panel. Because the sample is based on those who were invited to participate in the HPOL panel (and not random), we cannot calculate estimates of theoretical sampling error. Results are weighted to the U.S. General Online Population of adults by age, sex, race/ ethnicity, education, region and household income. This study is for informational purposes only, does not constitute advice and is not intended and should not be relied upon as an offer or recommendation with respect to the purchase or sale of any security. In addition, this report does not consider the specific investment objectives, financial situation and particular needs of any person. 2

4 Detailed Findings 3

Overall, fewer than half (42-49%) of consumers are confident in their financial preparedness for retirement Retirees and High-Net Worth are more confident than Gen Y, Gen X and Retirees.

5 Overall, fewer than half (42-49%) of consumers are confident in their financial preparedness for retirement Retirees and High-Net Worth are more confident than Gen Y, Gen X and Retirees. Confidence in Saving for Retirement (Very/Extremely Confident) In your ability to save for retirement In your retirement plan provider's ability to prepare you for retirement That you know how much to save for retirement That your retirement savings plan will provide you with adequate income in retirement That you will have enough saved for retirement 49% 47% 45% 43% 4 Gen Y 55% 46% 50% 43% 43% Gen X 46% 47% 43% 38% 36% Retiree [D] 45% 44% 41% 37% 37% Retired [E] 66% 61% 59% 61% 6 High Net- Worth [F] D 64% 60% D 58% 59% 58% Letters indicate a statistically significant difference between lettered (B,C,D,E,F) groups at the 95% confidence level. Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1005 How confident are you? 4

6 All groups feel they should have more money saved at this point than they do High Net-Worth believe they should be saving 3 more than they are currently while the other subgroups believe they should be saving between 67% and 100% more. Have Savings Account Gen Y Affluent [B] Gen X Affluent [C] Among those who have something in savings amount currently in savings Retiree [D] Retired [E] High Networth [F] Mean $73,900 $59,200 $91,400 $73,700 $97,600 B $127,000 BDE Median $20,000 $15,000 $20,000 $25,000 $30,000 $38,000 Amount believed should be in savings Mean $264,000 $553,100 DE $229,900 $197,400 $136,600 $334,400 E Median $50,000 $30,000 $35,000 $50,000 $50,000 $50,000 % difference between amount currently in savings vs. amount believed should be in savings (median) 100% 75% 100% 67% 3 Letters indicate a statistically significant difference between groups at the 95% confidence level; outliers have been removed.. Base: Has Savings Account (N=1861), Gen Y Affluent (N=322), Gen X Affluent (N=395),Retiree (N=419), Retired (N=413), High Net-Worth (N=756) Q1015 Approximately how much do you have in your savings account(s)? Please use a whole dollar amount. Q1020 Approximately how much do you believe you should have in your savings account(s)? Please use a whole dollar amount. 5

Many consumers (40%) are guessing about the amount of money they will need to retire All groups rarely reach out to retired friends (1-4%), family (1-5%) or the Social Security Administration (1-4%).

7 Many consumers (40%) are guessing about the amount of money they will need to retire All groups rarely reach out to retired friends (1-4%), family (1-5%) or the Social Security Administration (1-4%). Amount of money needed for retirement determined by Gen Y Gen X Retiree [D] High Net- Worth [F] I guessed 40% 36% F 41% F 35% F 26% A recommendation from a financial advisor 16% 20% B 18% B 23% BD I did my own research with books and/or articles that talked about how much money people need for retirement I calculated it based on how much I earned during my working career or based on my most recent salary 15% 17% 16% 17% 16% 20% C 17% C I used an online calculator 8% 8% 9% 8% 9% I spoke with friends who have already retired 3% 4% F 3% 1% I spoke with my parents who have already retired 5% CDF 1% I contacted the Social Security Administration 4% 1% 3% Base: Provided Amount Needed To Retire (N=1561), Gen Y Affluent (N=349), Gen X Affluent (N=410), Retiree (N=448), Retired (NA), High Net-Worth (N=539) Q1040 How did you determine the amount of money you will need to retire? 6

Overall, nearly a fifth (18%) of consumers are not sure if they are investing enough for

not currently investing enough for retirement. Amount of money should be investing vs.

they should be investing 60% or more for retirement than they are now.

19% 25% 33% 71% 57% B F Not currently investing enough 44% 68% CD 56% 49% 3 E Not sure

Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1045

8 Overall, nearly a fifth (18%) of consumers are not sure if they are investing enough for retirement Gen Y is more likely (68%) than other consumers (11-56%) to report they are not currently investing enough for retirement. Amount of money should be investing vs. amount currently investing Gen Y is more likely () than other consumers (2-8%) to report they should be investing 60% or more for retirement than they are now. Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] Currently investing enough 39% 19% 25% 33% 71% 57% B F Not currently investing enough 44% 68% CD 56% 49% 3 E Not sure 18% 19% 18% 18% F F F Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1045 Overall, how much money do you think you should be investing versus how much you are investing for retirement purposes? 7

Has a Financial Plan 61% 64% 63% 60% 69% D 74% E 39% 36% 37% 40% F F 31% F 26% Gen Y Gen X Retiree [D] Retired [E]

9 Overall, three out of five consumers (61%) have a financial plan High Net-Worth consumers are the most likely to have a financial plan (74%). Has a Financial Plan 61% 64% 63% 60% 69% D 74% E 39% 36% 37% 40% F F 31% F 26% Gen Y Gen X Retiree [D] Retired [E] High Net-Worth [F] Yes Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q727 Do you have a financial plan? No 8

Overall, a quarter (27%) of those who don t have a financial plan have not gotten around to it. In addition, a fifth (20%) say they don t need one and the same amount don t know how to create one.

10 Overall, a quarter (27%) of those who don t have a financial plan have not gotten around to it. In addition, a fifth (20%) say they don t need one and the same amount don t know how to create one. Gen Y (40%), Gen X (30%) and Retirees (29%) are most likely to have not created a financial plan because they are procrastinating. Retirees (44%) and High Net-Worth (35%) are more likely than Gen Y (9%), Gen X (15%) or Retirees (1) to say they don t need one. The thought of creating one is more overwhelming to Gen Y (28%) compared to the other subgroups (9%-15%). Reasons for Not Having a Financial Plan Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] Have not gotten around to it yet. 27% 40% 30% 29% 18% Don't need one. Don't know how to create a financial plan. Useless because don't earn enough/have enough assets. Do not plan to retire for a long time. All of the information needed is in my head, don't need a formal one. The thought of creating one is too overwhelming. Don't expect to ever be able to retire. 20% 20% 17% 16% 15% 9% 8% 30% 23% F 8% 3% Other 16% 15% BC BC BC Base: Does Not Have A Financial Plan (N=833), Gen Y Affluent (N=137), Gen X Affluent (N=187), Retiree (N=185), Retired (N=139), High Net-Worth (N=221) Q730 What are the reasons you do not have a financial plan? Please select all that apply. 1 19% F F F 34% 23% 7% 1% 7% D D E E 28% CD 15% 10% 10% 21% 20% 20% 26% BC B BC 15% 44% 17% 18% 6% E 9% 7% 35% 9

retirees (24%), Retirees (31%) and High Net-Worth (24%) groups are more likely than either Gen Y (6%) or Gen X () to delegate investment decisions Gen Y (58%) and Gen X (54%) are more likely than the

Investment Approach Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] Do own research and make own investment decisions 48% 58% D 54% D 46% 38% 43% Make own decisions, but use investment

11 retirees (24%), Retirees (31%) and High Net-Worth (24%) groups are more likely than either Gen Y (6%) or Gen X () to delegate investment decisions Gen Y (58%) and Gen X (54%) are more likely than the other subgroups (38-46%) to do their own research and make their own investment decisions. Investment Approach Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] Do own research and make own investment decisions 48% 58% D 54% D 46% 38% 43% Make own decisions, but use investment professional for information and a second opinion 3 36% 33% 31% 31% 33% Delegate decisions about investments to an investment professional 19% 6% B 24% 31% 24% BC BCF BC Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1000 To help us understand your approach to investing, please indicate which one of the following statements comes closest to describing you right now. 10

Overall, half of consumers (51%) use an advisor for planning needs, followed by the web (43%) Gen Y are more likely than other subgroups to turn to family (50% vs. 14-34%), financial blogs (28% vs.

12 Overall, half of consumers (51%) use an advisor for planning needs, followed by the web (43%) Gen Y are more likely than other subgroups to turn to family (50% vs %), financial blogs (28% vs %) and social media ( vs. 1-8%) for financial planning. Resources Used for Financial Planning Needs Financial advisor/ professional Web sites My gut feeling Traditional" media Family Friends Books Financial blogs Social media Other 51% 43% 35% 33% 29% 19% 18% 17% 5% 4% Gen Y 39% 37% 50% 55% 6 6 B B BC 49% 51% 45% 33% 45% E E E E 23% 31% 35% 41% 37% 41% B B B B 50% 34% 30% 24% CD E 31% 23% 26% 9% 20% C E E 28% CD 1% Gen X 34% 21% 2 23% 21% E E E E 19% 8% 6% 1% 5% CD E E E 1% Retiree [D] Retired [E] High Net-Worth [F] 17% 36% 34% 4% 7% 5% C BC 20% E Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q703 (Q12) Which, if any, of the following resources do you use for your financial planning needs? 11

Overall, a large majority (86%) have taken at least one of the actions presented (with their financial advisor) in the past year Retirees (83%) and High-Net Worth (77%) are more likely than Gen Y

13 Overall, a large majority (86%) have taken at least one of the actions presented (with their financial advisor) in the past year Retirees (83%) and High-Net Worth (77%) are more likely than Gen Y (55%), Gen X (6) and Retirees (68%) to have met with/spoken to their advisor in the past year. Activities Done with Financial Advisor/Professional in Past Year I have taken ac+on with my financial advisor/ professional in the past year (Net) 86% Gen Y 86% Gen X 87% Retiree [D] 83% Retired [E] 88% High Net- Worth [F] 91% D I met or spoken with him/ her at least once in the past year 69% 55% 6 68% B 83% F 77% I had him/her move assets to or from the stock market, bonds, CDs, or money market accounts 36% 36% 40% 36% 35% 4 E I created/modified a formal financial plan with my financial advisor/professional 34% 39% I have not taken any action with my financial 17% advisor/professional in F the past year Base: Currently Works With A Financial Advisor/Professional (N=1180), Gen Y Affluent (N=192), Gen X Affluent (N=238), Retiree (N=271), Retired (N=301), High Net-Worth (N=545) Q715 (Q7) Which, if any, of the following have you done with your financial advisor/professional within the past year? Please select all that apply. 4 E 38% E 28% 37% E 9% 12

14 Overall, more than half (56%) agree that professional financial advice will help them be more successful than going it alone High Net-Worth (25%) and Retirees (24%) are more likely than Gen X (15%) to disagree that professional financial advice is better than going it alone. I think professional financial advice will help me be more successful in meeting my goals than going it alone. 56% 56% 56% 59% 56% 57% 24% 2 20% 2 28% 2 20% 19% 15% 20% 24% C 25% CD Gen Y Affluent [B] Gen X Affluent [C] Retiree [D] Retired [E] High Net-Worth [F] Agree (Top 2 Box) Neutral Disagree (Bottom 2 box) Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1110 How much do you agree with this statement? 13

Overall, consumers are most comfortable sharing decision-making with those who know more about investing than they do (39%) Gen Y is more likely (33%) than any other subgroup (18-25%) to be most

Comfort Level with Finances Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] I can share the decisionmaking process with those who know more about investing than I do 39% 30% 39% 44% BF 4 B

15 Overall, consumers are most comfortable sharing decision-making with those who know more about investing than they do (39%) Gen Y is more likely (33%) than any other subgroup (18-25%) to be most comfortable when they feel Empowered. Comfort Level with Finances Gen Y Gen X Retiree [D] Retired [E] High Net- Worth [F] I can share the decisionmaking process with those who know more about investing than I do 39% 30% 39% 44% BF 4 B 38% B Confident I n my decisions based on my own extensive analysis 29% 24% 28% 28% 35% B 3 B Empowered - I'm actively involved in navigating and may be soliciting input and consultation to help me, but I'm making the decisions 24% 33% CD 2 21% 18% 25% E I'm in synch with what most people are doing, "I belong" 8% D 7% 5% 6% Base: All Qualified Respondents (N=2033), Gen Y Affluent (N=354), Gen X Affluent (N=424), Retiree (N=454), Retired (N=451), High Net-Worth (N=811) Q1105 Regarding my finances, I am most comfortable when I feel. 14

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