For many advisors, addressing the needs of the mass affluent is not high on their priority list. Many choose to focus their efforts on serving the more complex needs of the HNW and the UHNW segments.
Many believe the mass affluent segment tends to be DIYers when it comes to investing and, therefore, are better served by a robo offering than a traditional full-service advisor. In fact, a new report by Phoenix Synergistics titled, The Mass Affluent and Evolving Investment Strategies corroborates what many of these advisors believe – at least partly.
The report finds that more than half of mass affluent investors, defined by Phoenix Synergistics as individuals with between $100,000 to $1MM in AUM, indicate an independent approach to investing, with those in the 18 to 49 age segment significantly more likely to report an independent approach. However, as the chart below shows, a solid majority (74%) of mass affluent consumers consult some type of financial advisor.
Furthermore, according to the report, 84% of mass affluent consumers indicate they need financial advice or guidance related to some type of financial goal or purpose. The most common type of advice relates to retirement accounts/planning and helps with selecting savings/investment options. Mass affluent consumers also expressed fears about the pandemic and how it will affect their investments. Some, particularly younger mass affluent consumers, expressed an interest in either reallocating investments to more-secure insured accounts, reallocating funds to less-volatile holdings, or selling holdings to avoid further losses.
Clearly, many financial advisors will continue to find HNW and UHNW individuals to be their most prized clients, well suited to take advantage of the breadth of services offered. A product, sales, and service targeting the mass affluent, of course, requires different resources and solutions. However, for those advisors that develop a mass affluent offering that can be delivered cost-effectively and profitably, they may be able to realize a significant opportunity.