For most estate planners, the best time to approach potential clients is when they are fairly young and still getting established in their careers. The idea is to get to them before any other financial advisors have made inroads with them, and while they have a long and fruitful future ahead of them.
The problem is that this cohort’s wealth levels have suffered terribly since the recession. The St. Louis branch of the Federal Reserve has taken a deep look at wealth by age, and found there is an enormous gulf between the assets held by families headed by people under 40 and those held by families headed by people over 40. And the key culprit is the housing crisis.
The Fed examined homeownership rates for different age cohorts before and after the recession. Despite the efforts of the government to promote an “ownership society,” homeownership rates (especially among young families) have declined seriously in recent years.
Overall, the percentage of families owning homes has fallen to 65.1 percent in 2013 from a peak of 69.0 percent in 2004. But for young families, the decline has been much more precipitous, falling to 42.2 percent in 2013 from 50.1 percent in 2005.
The value of their home constitutes the largest asset for most families, and this is doubly true for young families. As a result, there is now a wide chasm between the wealth claimed by younger families versus those of older, more established people.