This is the latest in a series of columns about portfolio strategies, financial planning and asset management.
Clients who are high earners, not rich yet — known as HENRYs — present an appealing opportunity for financial advisors and firms.
Generally in their 20s or 30s, these young, six-figure earners bring new business now and can fuel a firm’s future as their assets grow and as older clients age.
And much of the market may be up for grabs.
An InspereX survey last year found that only 18% of advisors’ clients are younger than 50, while 59% are in their 60s or older. With the financial services industry so centered on retirees and those approaching retirement, advisors who attend to high-income young adults may find a promising client population.
Young clients at four-year-old Amplius Wealth Advisors are “eager and open to talk to us” because they’ve been less saturated with financial industry and wealth management marketing than other demographic groups, Matthew Liebman, founding partner, CEO and wealth advisor, told me.
One advantage to working with HENRYs, in fact, is that the group has been "somewhat forgotten or neglected by our industry on the whole," he said.
“They tend to be educated, hardworking, sophisticated. These tend to be the clients that are really going to dive into what you're presenting to them and want to understand it, because that's how they do so well in their field. And they're sort of high energy,” Liebman said. “You really need to engage with these folks. And to me that was always very appealing.”
It makes sense that HENRYs require a different approach than clients decades older, given their life stage. They may or may not have children, and many are focused on planning for big near-term purchases as well as longer-term goals.
Cyndeo Wealth Partners sees HENRYs as clients who the firm knows will “get there” — reaching at least $1 million in assets — 27-year-old Kent Kilgroe told me.
Kilgroe’s HENRY clients mostly don’t have children yet but are making big purchases, whether they’re getting married or trying to buy their first home or a car.
“That's where a lot of the planning comes into play,” he said. “The investments piece is really important, but because a lot of them are young and making these bigger purchases, the planning piece is an emphasis.”
In a recent account review, for example, a younger HENRY client wasn’t as interested in discussing investments as he was on planning for buying a house, Kilgroe noted.
Building a HENRY Book
Liebman, whose firm has about $1.5 billion in assets under management, started building his HENRY book while at Merrill Lynch, where he and other Amplius partners previously worked.
Starting at Merrill at age 30, Liebman traveled in the private equity, real estate and hedge fund world in New York, “and I could sort of speak their language. So a lot of it was networking and word of mouth. … One of the keys to servicing and growing that segment is you need advisors on your team that are of a similar demographic,” he said.
“I guess I am technically maybe not as young anymore. So some of those clients have aged with me to being more middle-aged, and a lot of them, I'm happy to say, are quite wealthy now,” 47-year-old Liebman told me.
Those wealthy, middle-aged clients now help provide active pipelines of new, younger clients by recommending the team to their family members and work associates, he said.
And now that Liebman is older — he’s the oldest advisor on the firm’s eight-person team other than his father — “we have hired several younger advisors that would still qualify as being contemporaries of this segment. And I think that is essential to connecting with those clients,” he said.
Kilgroe, whose firm manages over $2.5 billion in assets, entered the financial industry in 2022 through his father after selling cars for about two years after college graduation.
Being a 20-something, “I just naturally got into the HENRY demographic,” he explained. Many of the team’s longtime clients have children and grandchildren, “and me being young and able to relate to them, I've been tasked with building relationships with them.”
Younger clients naturally gravitate toward Kilgroe, who can relate to them because they’re close in age, “but also because we have the experience of the team that has been doing this for a very long time,” he added.
Another advisor in his mid-30s at Cyndeo works with HENRYs who are professionals around his own age, and yet another focuses on young athletes who are “very, very high earners” and therefore don’t represent the usual HENRY client, Kilgroe said.
Cyndeo’s young clients include professional basketball players living overseas and college basketball players “getting paid very well,” he said.
HENRY Planning Strategies
The key to working with HENRYs is getting them on a disciplined, tax-efficient savings plan to grow assets, whereas with older clients, advisors talk about asset decumulation and transition to the next generation, Liebman noted. He crudely divides savings categories into retirement, children’s education and a catchall that includes real estate.
Along those lines, one non-negotiable for Cyndeo’s HENRY clients is automated savings.
“The goal is to get clients to have at least a million or more with us. We like to try and put them on the path to save to eventually get there, even if it might take a long time. And no matter how much they can automate a month to their savings or investments, I think that's something really, really important for HENRYs to do,” Kilgroe said. “It's a good habit to build.”
Liebman also cited a $1 million threshold for a client to shift from HENRY to wealthy. “To me, that is when they're no longer on the way up, but they have arrived.”
Building HENRYs’ Portfolios
How do HENRYs build wealth?
“Once they have a little bit more money saved up, we do like to put them into individual stock positions, but as they're building … it's more of a focus on broad diversified, focus on long-term growth ETFs,” Kilgroe said. “And because they're young and have a long time horizon, it's more on the aggressive side.
“And then for a lot of them we are building up a cash or money market account too, where maybe every month they're depositing $500 to $1,000 or $2,000 into that. And maybe they're keeping half of it in the money market, and then the other half we're put into the long-term stock account,” Kilgroe added.
Many clients like ETFs but some like to dive into individual stocks, he said.
One of Kilgroe’s clients, a professional basketball player living inexpensively, has saved about $2 million so far, depositing nearly $90,000 a month into his accounts. “I would say he's no longer a HENRY, just because he's still a high earner, but he's not not rich yet. He is rich.”
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