2016 Millennial Money Mindset Report - mp.s81c.com · *To view the 2015 Millennial Money Mindset...

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Millennial Money Mindset Report 2016 In Partnership With

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Millennial Money Mindset Report

2016

In Partnership With

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Executive Statement The mindset of millennials is forcing traditional financial institutions to innovate and change the way they deliver services to this rising generation. New financial technology startups, known as disruptors, are opening the eyes of this “connected” generation and changing the financial experience. Millennials’ wants and expectations of their financial institution are evolving and creating a new opportunity within the industry. There is a plethora of data on millennials and how they are different from previous generations. Our objective with this study was to assess their mindset regarding their finances and how their wants and behaviors may be changing. The results collected in this study present both a problem and an opportunity for traditional financial institutions. The problem is that an overwhelming number of millennials are willing to switch financial institutions. More importantly, higher income millennials are wanting more from their financial institution and are willing to switch primary financial institutions. The reality for a traditional financial institution is that the next generation of consumers want more and are willing to go somewhere else to meet their needs. Thus, institutions that can adapt and meet the needs of millennials have much to gain. As we did in 2015, we have made the results of this study public. The goal is to help the financial services industry better understand the mindset, needs, and behavior of millennials to spur development and/or adoption of solutions that are appropriate for the next generation of consumers.

Method The results released in this report are based on a nationwide online survey of 500 randomly selected Americans between the ages of 21 and 35, collected January 12 through January 16, 2016. Respondents were randomly selected using a nationwide sample panel from Qualtrics. With a sample of 500 respondents, we can say with 95% confidence that the amount of survey error due to taking a random sample instead of surveying all members of the population is ± 4.4%.

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Key Observations Millennials plan to purchase financial products: • 70% indicated that they will purchase or open a financial product in the next 12 months. • Top products to be purchased or opened include:

o Credit Card (37.6%) o Checking Account (36.2%) o Savings Account (36%) o Auto Loan (18.2%) o Life Insurance (15.4%) o Mortgage (14.4%).

• Less than 5% of millennials do not have a relationship with a primary financial institution. They are switching or considering switching primary financial institutions. • 18.6% of millennials have switched primary financial institutions in the past 12 months.

o 28.8% of millennials that make over $75,000 have switched in the past 12 months.

• 36% are likely or very likely to switch primary financial institutions in the next 12 months. o 55.5% of millennials that make over $75,000 are likely or very likely to switch primary

financial institutions in the next 12 months.

They are turning to sources other than their primary financial institution for products and advice. • 30.6% of millennials have added a financial product from an institution other than their primary

financial institution. o 53.4% of millennials that make over $75,000 have added a financial product from an

institution other than their primary financial institution.

• 61% have turned to family members for advice. 38% have turned to friends.

• 27% have used an app or online tool for financial advice. • 27% of millennials have turned to a professional advisor (financial planner, CPA, attorney or stock

broker) for advice.

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They have multiple financial relationships. • 31% have added a financial product from a provider other than their primary financial institution. • Millennials making more than $95,000 have a relationship with (on average) over 4 financial

institutions. They want the old and the new. • 61.3% stated that branch location was an important factor when shopping for financial products

or an institution.

• 58.9% cited online banking tools as an important factor. • Branch Location (23%), Customer Service (15.4%) and Online Banking Tools (13.8%) were cited

as the MOST important factor. They have challenges. • Biggest financial challenges for millennials include:

o Making enough money (59.2%) o Staying on budget (40.6%) o Managing debt (30.6%) o Developing a budget or financial plan (26%).

They have goals and are paying down debt. • Top goals for millennials in 2016 include:

o Save for a vacation (55.2%) o Increase savings (52.8%) o Pay down debt (42.4%) o Save for a large purchase (39.8%) o Buy a car (36.2%) o Make home improvements (31.2%).

• 70% of millennials indicated that they had debt.

• Total average debt for all respondents was $43,264, down from $47,689 in 2015 study.

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• Average debt by age range:

o 21-25 = $13,116 (Down $1,029 from 2015 study) o 26-30 = $46,622 (Down $2,546 from 2015 study) o 31-35 = $69,552 (Down $11,473 from 2015 study).

• Only 19% have a comprehensive financial plan to achieve their goals. They want help and tools. • 75% wished their financial institution offered more guidance and tools to help them manage their

finances. • 81% of millennials would use an app or online tool offered by their financial institution if it

provided comprehensive advice and helped them achieve their goals and manage their debt. o 91% of respondents who make $95,001+ indicated that they would be interested in using

a financial app that helped them manage their finances and achieve their goals. • Only 12.2% of millennials do not use the online tools provided by their primary institution.

• Only 17% of respondents indicated they needed to meet with someone in person to be

comfortable with financial advice. *To view the 2015 Millennial Money Mindset Report, please go to iQuantifi.com.

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Demographics 1. In what year were you born?

Age Range %

22-26 23.0%

27-31 36.6%

32-36 36.6%

2. What is your gender?

Female 49%

Male 51%

Female

Male

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3. What is your marital Status?

4. How Many dependents do you have (children under the age of 18 who live with you)?

Relationship 11%

Single 34%

Engaged 9%

Married 46%

Relationship

Single

Engaged

Married

None 41%

1 22%

2 24%

3 8%

4+ 5% None

1

2

3

4+

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5. What is your total household income?

Income Range %

Less than $25,000 28.2%

$25,000-$35,000 11.4%

$35,001-$45,000 8.2%

$45,001-$55,000 8.8%

$55,001-$65,000 6.6%

$65,001-$75,000 7.6%

$75,001-$85,000 8.0%

$85,001-$95,000 4.0%

$95,001+ 17.2%

Total 100.0%

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Products 6. Do you expect to purchase or open any of the following products in the next 12 months?

(Select all that apply)

7.2%

6.2%

10.6%

4.6%

4.6%

15.4%

7.8%

18.2%

14.4%

37.6%

36.0%

36.2%

29.6%

0.0% 10.0% 20.0% 30.0% 40.0%

Home Equity Line of Credit

Brokerage Account

Retirement Account

Disability Insurance

Payday Loan

Life Insurance

Student Loan

Auto Loan

Mortgage

Credit Card

Saving Account

Checking Account

None of Above

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7. Have you switched primary financial institutions (your primary bank or credit union) in the

past 12 months?

8. How likely are you to switch primary financial institutions in the next 12 months?

N/A 4.6% Yes

18.2%

No 77.2%

N/A

Yes

No

13.4%

23.0%

36.8%

26.8%

0.0% 10.0% 20.0% 30.0% 40.0%

Very Likely

Likely

Unlikely

Very Unlikely

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9. Have you added a financial product from an institution other than your primary financial

institution in the past 12 months?

10. Thinking about all of the financial products you currently have/use (checking, savings,

credit card, mortgage, student loan, life insurance, investment account, etc.) how many different financial institutions do you have a relationship with?

Yes 30.6%

No 69.4%

Yes

No

34.40%

21.80%

18.20%

10.80%

6.20% 4.60%

0.80% 1.00% 0.40% 1.80%

0.0%

10.0%

20.0%

30.0%

40.0%

1 2 3 4 5 6 7 8 9 10+

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11. When shopping for financial products or a relationship with a financial institution, which of

the following factors are important to you? Select all that apply.

Factors %

Branch Location – Branches or locations near for you 61.3%

Online Banking Tools 58.9%

Customer Service 52.5%

ATM Location(s) 49.1%

Convenience 46.5%

Mobile Banking – Ability to purchase and manage entirely online 41.8%

Rates or Products Offered 34.5%

Incentive to Join 26.2%

Relationship with Bank/Advisor 18.4%

Recommendation from a Friend/Peer Review 14.9%

Mission and Community Focus of Organization 6.5%

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12. When shopping for financial products or a relationship with a financial institution, which

factor is most important to you?

0.6%

12%

11.2%

7.8%

6%

4.2%

3%

3%

13.8%

15.4%

23%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Mission and Community Focus of Organization

Rates for Products Offered

Mobile Banking - Ability to purchase and manage entirely online

Convenience

ATM Location(s)

Incentive to Join

Relationship with Bank/Advisor

Recommendation From a Friend/Peer Review

Online Banking Tools

Customer Service

Branch Location - Branches or locations near you

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13. What is the APPROXIMATE amount (ballpark amount is ok!) of your total current debt

(Including student loans, credit cards, mortgage, etc.) If none, enter 0.

Age Range Average Debt

22-26 $12,087.15

27-31 $44,076.36

32-36 $58,049.83

14. Thinking about your personal financial institution, what would you say are the biggest challenges when it comes to your finances? Select all that apply.

11.2%

40.6%

30.6%

26.0%

59.2%

20.4%

16.8%

15.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

None - I have no financial challenges

Staying on budget/plan

Managing my debt

Developing a budget or financial plan

Making enough money

Understanding where/how to invest my money

Understanding where to start to accomplish my financial goals

Knowing what to do regarding my finances

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15. What are your immediate financial goals for 2016, as well as your financial goals for the

next 3-5 years? Check all that apply.

Goals 2016 Next 3-5 years

Save for a vacation 55.2% 28.2%

Pay down my credit card debt 42.4% 21.8%

Use credit card less 36.6% 19.8%

Get a new job 36.4% 23.2%

Save for a house (save for a down payment on a house) 30.4% 36.6%

Get out of debt (pay off all my debt) 29.6% 39.4%

Travel abroad 20.6% 32.0%

Pay down my student loan 18.6% 32.0%

Purchase a house (I have the down payment saved. Now I plan to actually buy a house) 18.6% 29.4%

Move to a new city 16.8% 20.4%

Move out of my parents’ house 16.4% 14.2%

Increase my overall level of savings 52.8% 46.2%

Save for large purchases (computer, TV, etc.) 39.8% 28.2%

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(cont.) What are your immediate financial goals for 2016, as well as your financial goals for the next 3-5 years? Check all that apply.

Buy a car 36.2% 31.6%

Make home improvements 31.8% 25.4%

Saving for retirement 29.0% 37.6%

Saving for a child’s college expenses 23.0% 32.6%

Go back to school 21.2% 22.0%

Have a baby 18.6% 27.0%

Plan for wedding / get married 13.2% 20.8%

Start own business 11.6% 21.6%

Buy an engagement ring 11.0% 13.0%

Other 2.4% 2.4%

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Millennial Goals in the next five years:

* “Start own business” was not included in the 2015 study.

12%

4%

45%

64%

55%

67%

66%

54%

48%

35%

40%

38%

55%

58%

59%

68%

60%

34%

50%

60%

57%

48%

63%

4%

45%

50%

71%

56%

61%

48%

41%

31%

39%

22%

43%

51%

40%

68%

57%

29%

43%

55%

48%

43%

55%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Start own business

Other

Saving for a child's college expenses

Saving for retirement

Increase my overall level of savings

Save for large purchases (computer, TV, etc.)

Buy a car

Make home improvements

Have a baby

Plan for wedding/get married

Go back to school

Buy an engagement ring

Travel abroad

Get a new job

Move to a new city

Save for vacation

Get out of debt (pay off all my debt)

Move out of my parents' house

Purchase a house (I have a down payment saved)

Save for a house (Save for a down payment on a house)

Use credit card less

Pay down my student loans

Pay down my credit card debt

2016 2015

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16. Which of the following statements apply to you? Select all those statements that describe

you or apply to you.

Statement %

I have financial goals 66%

I want to get my finances in order so I can achieve my goals 47%

I want to get my finances in order to provide peace of mind to me and my family 43%

I would be comfortable receiving financial advice only if it came from someone that I could meet with in person 20%

I have a comprehensive plan to achieve my financial goals 19%

I feel like I need help when it comes to making financial planning decisions 18%

None of these statements apply to me 9%

17. Statements Continued: Which of the following statements apply to you? Select all those statements that describe you or apply to you.

Statement %

I am comfortable managing my finances using online tools / websites 43%

I will do whatever it takes to achieve my goals 42%

I would be comfortable receiving financial advice from an online tool 39%

I lose sleep over my finances 25%

I have no idea where to start and how to get my finances in order 18%

I don’t know how to create a plan to achieve my financial goals 16%

I do not have a budget 16%

None of these statements apply to me 9%

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18. Where have you sought financial advice in the past? Select all that apply.

1%

13%

27%

27%

31%

38%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Other

I have not sought financial advice in past

App or online financial tool

Professional advisor (financial planner, stock broker, CPA, Attorney, etc.)

Blogs, websites, or other sources of information found online

Friends

Family Members

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19. Where would you most prefer to seek out and receive financial advice? Select all that

apply.

20. Do you need a comprehensive financial plan to help you achieve your financial goals?

1%

8%

20%

21%

25%

43%

45%

0% 10% 20% 30% 40% 50%

Other

I do not intend to seek out financial advice

Blogs, websites, or other sources of information found online

Friends

App or online financial tool

Family members

Professional advisor (financial planner, stock broker, CPA, Attorney, etc.)

Yes 47% No

53%

Yes

No

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21. If your financial institution offered a free app that provided you with a comprehensive and personalized financial plan on how to manage your debt and achieve your goals would you be interested in using it?

22. Please agree or disagree with the following statement: "I wish my primary financial

institution offered more guidance and/or tools to help me manage my finances."

Answer %

Agree 75%

Disagree 25%

Total 100%

Yes 81%

No 19%

Yes No

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23. In regards to online banking, my current primary financial institution provides me with:

12.2%

0.2%

3.0%

20.6%

42.0%

22.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

I do not use online tools from my primary financial institution

A terrible online experience

An online experience that needs improvement

A satisfactory online experience

A good online experience

A fantastic online experience