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6 key facts that can help advisors capture a piece of the substantial mass-affluent market

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Although the definition of “mass affluent” varies by source, it is a sizable market indeed. It’s generally defined as households with investable assets between $100,000 and $1 million, and includes affluent individuals and their slightly wealthier counterparts. In fact, according to research from Spectrem Group, in 2015, there were 29.8 million mass-affluent households with a net worth of between $100,000 and $1 million. According to a Celent report, the mass-affluent segment comprises approximately 16 percent of the entire U.S. retail investor population, second in size only to the mass market.

A major source of investment assets and profits for financial institutions, the mass-affluent consumer represents an underserved market worth a second look, according to a report from PwC.

“These often-overlooked consumers are searching for products, services and advice from financial institutions they can trust to meet their needs,” says PwC. However, in the years since the financial crisis of 2008, many mass-affluent individuals have become wary of financial institutions. Still, they continue to seek advice for financial matters.    

Mass-affluent individuals are an especially large and lucrative market for retirement advisors. According to the BAI Retail Delivery report “The Role of Retirement in Capturing Mass Affluent Consumers’ Assets,” mass-affluent consumers overall designate 56 percent of total investable assets for retirement. What’s more, the mass affluent have more than $1.2 trillion in retirement assets – and nearly one-third of the mass affluent have 401(k) assets available to roll.

In order to optimize their approach and sell annuities, advisors must understand how mass-affluent individuals think and behave. The following characteristics and beliefs can give advisors some insight into this market.

A substantial number of mass-affluent individuals are not currently working with a financial advisor.

LIMRA research from LIMRA shows that 3 million mass-affluent households are without a financial advisor, and their combined $700 billion in assets aren’t under advisorship. About one-third of mass-affluent clients believe they don’t need an advisor because they can manage their finances better on their own.


Responsive and proactive communication is important to this group.  

Says a research study by Spectrum Research, the main reasons mass-affluent individuals switch financial advisors are the professional’s failure to return phone calls in a timely manner, their lack of good ideas and advice, not being proactive in their contact and slow email responses. These communication-related issues are all more important than long- or short-term portfolio losses.

Mass-affluent individuals are concerned with protecting their assets, managing finances and saving for retirement.

As the PwC report shows, the top three financial priorities of the mass-affluent individuals are protecting their existing assets (82 percent), managing their household finances (67 percent) and saving for retirement (60 percent).

Mass-affluent clients aren’t confident they’ll be able to live their desired lifestyle in retirement.

Jafor Iqbal, LIMRA Secure Retirement Institute assistant vice president, explained that mass-affluent individuals are very concerned about retirement security. “Many individuals are interested in having a lifetime guaranteed income as a value proposition, and many of these customers are interested in annuities,” he said. 

Nearly half of mass-affluent individuals don’t know if their money will last through retirement.

According to a recent MaritzCX study, 45 percent of mass-affluent and high-net-worth investors are concerned about having enough money to last through retirement– and 30 percent believe they’ll have to work through retirement to earn income. “While these investors have been saving steadily toward retirement, many have no idea how much savings is enough or how they will generate income from those savings once they retire. Uncertainty drops considerably when investors have an up-to-date financial plan,” said the study. 

Affluent investors aren’t sure they’ll have wealth left to leave to their children.

According to the MaritzCX study, about two-thirds of affluent investors are either convinced or “unsure if convinced” that they’ll have no wealth left to transfer to their children.

Advisors who can meet the needs of investors in this enormous and lucrative segment will need to provide the right level of communication and understand priorities. Since this group is generally uncomfortable with retirement preparedness and their ability to leave wealth to their heirs, a fixed indexed annuity that can provide guaranteed lifetime income and includes a death benefit option can be a valuable component of a mass-affluent individual’s portfolio — especially as they near retirement.


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