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MacroMonitor Market Trends December 2012

MacroMonitor Market Trends is a newsletter from Consumer Financial Decisions (CFD) that highlights topical news and trends of interest to you and your colleagues. If you would like more information about the topic in the newsletter or would like to discuss other ways that we can assist you in your research or marketing efforts, please contact us.

Eight Key Trends in Changing Consumer Financial Needs

With the release of 2012–13 MacroMonitor data, this month's Market Trends newsletter offers eight key trends. Following are the trends and comments. Look for mini-presentations about these trends in the coming months.


Figure 1: Trust of Financial Institutions and Professionals

The US stock market has improved, as has consumer confidence; investors have recovered 2008 losses. Yet trust in financial institutions and professionals remains low and is not improving.


Figure 2: Retirement-Account Ownership

Despite the stock market's recovery, the incidence of household retirement accounts (IRAs, 401(k)s) is on pause. The proportion of households with annuities, however, continues to grow as a result of Baby Boomers' imminent retirement. In an environment of constrained resources, many households' retirement savings are taking a backseat to more pressing financial needs.


Figure 3: Ownership Of Investments*

Household penetration of retail (stock or bond) mutual funds continues to languish at levels last evident before the 1991 recession. Stock ownership has returned to a mid-1990 level: 15% of all households. Ownership of corporate or municipal bonds and Treasuries remains highly concentrated in fewer than 5% of all households. Consumer investing continues to ebb.


Figure 4: Access to Financial Services Using Mobile Devices, Cards, and Online Channels

Debit-card use and online financial-services use continue their rapid upward trajectory. Use of other credit and ATM cards is postpeek. Nearly two in five households have used mobile technology for financial services in the past two years. As technology improves and mobile access finds adoption, transactions and information gathering will cannibalize older channel and product use.


Figure 5: Insurance-Product Ownership

Between 2008 and 2012, the downturn in home ownership is evident in the decline in homeowners insurance and the increase in renters insurance. Declines continue in ownership of group and individual life insurance (including term, whole, interest-rate sensitive, or universal). Ownership of disability insurance continues a three-decade erosion; ownership of long-term-care insurance remains statistically the same in 2012 as in 1988. Universal need for protection—life, health, and property—remains, but many households are having to risk protection security because of economic constraints.

Institutional Relationships

Figure 6: Institutional Relationships

During the past decade, households' mean number of institutional relationships has eroded. New data indicate the trend is reversing. Growth may be attributable to Boomer and Revolving Retired households' increased financial needs, the start of new accounts before an imminent consolidation, or a resurgence in the number of financial relationships. Lack of trust does not encourage households to put their eggs in fewer baskets; the road ahead may be bumpy for institutions counting on deepening their share of wallet.


Figure 7: Debt: Credit Use

Equity-based credit (first and second mortgages and HELOCs) continues to drift down as home ownership has declined between 2008 and 2012. Outstanding credit-card balances and other forms of consumer debt have decreased sharply between 2010 and 2012. The household incidence of vehicle loans is eroding; vehicle ownership is declining. American consumers continue to reduce debt in spite of increased consumer confidence and consumer spending—both confidence and spending remain far below prerecession numbers.

Household Composition

Figure 8: Household Composition

The past decade's economic ups and downs have increased the number of households assuming financial responsibility for family members—financial care of Boomerang Kids and dependent adults. One result is that the definition of nuclear family is more diverse than it has been. As households juggle the needs of more family members and their competing priorities, financial-services providers' challenge is to provide solutions to meet households' financial needs.


Since the turn of the twenty-first century, US households have experienced booms, busts, and the Great Recession of 2008. The subsequent slow economic recovery has changed how consumers perceive, for example, the financial industry, household debt, and retirement—in short, their financial future. The majority of households are recalibrating priorities and trade-offs. Our eight key trends show financial-services providers the direction of some changes and offer important input for strategic decision making.

MacroMonitor sponsors may request a presentation of these trends and more, including information customized and proprietary to their institution and a Q&A session.

To learn more about the MacroMonitor and the many ways in which you may use it throughout your institution, or for any questions, please contact CFD.