Mass Affluent Market Shows Preference for Advisors

One of the biggest potential sources of sustainable business for financial professionals has become the subset of Americans with sizable asset portfolios but without the time or resources to manage them. This mass affluent market, so named because of its large size relative to their typical income, could represent a major opportunity for financial professionals, including those in life insurance.

In the latest in-depth report on this particular market, LIMRA found that the mass affluent market could represent an untapped space for financial advisors of several types, including those who specialize in life insurance and estate planning. Understanding the issues that weigh on this market segment’s mind the most, and how they tend to view financial planning strategies, is useful for anyone looking to break into this market.

Relevant activities

As part of the study, LIMRA asked mass affluents in multiple life stages what they considered to be the most relevant financial services, and thus the kinds of activities they may enlist a financial planner or advisor to assist them with. The survey found 87 percent of respondents considered retirement planning a relevant activity. Around 85 percent believed managing retirement income to be relevant. In addition, 80 percent thought estate planning was relevant to their financial needs, and 75 percent thought the same of life insurance.

Breaking down these results further, LIMRA found trends within various subsets of the mass affluent market. The so-called “emerging mass affluent” tended to find a greater number of these activities relevant to their needs, with 96 percent of this group having said financial planning was important to their needs. LIMRA suggested that companies could target these individuals by approaching them about a wide range of financial topics instead of just a few. The core of the mass affluent market was also generally more receptive on average, particularly in the areas of investments and estate planning. Retired members of the mass affluent market reported lower levels of perceived relevance with these topics.

Effects of disrupters limited

In the mass affluent market study, LIMRA noted that several areas of the financial services industry had been affected by an increase in the popularity of online tools, and the subsequent decrease in the use of a personal advisor. According to a survey from Cogent Reports, 30 percent of affluent Americans currently use some type of automated advisor service, commonly known as robo-advisors. Retirement planning and use of loans or credit were some of the areas where this disruption is most noticeable. However, few members of the mass affluent market showed much interest in using online tools for estate planning purposes. The vast majority of mass affluents throughout all three subsets preferred the use of a personal advisor for this purpose, suggesting the importance of a human touch when dealing with these sensitive issues.

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Primary takeaways

These surveys are useful for financial professionals in their ability to demonstrate the relevance of these services for a broad audience. From these results, LIMRA predicted the mass affluent market would respond well to marketing surrounding topics like financial planning, retirement and estate planning, with an emphasis on the benefits of using a personal, human advisor in dealing with these matters. In fact, for each of these topics, respondents showed a strong preference for their own advisor, instead of just getting access to a group of advisors. For other topics, especially among the emerging and core segments of the mass affluent market, it seems more are open to the idea of using advisor teams or robo-advisors online. According to LIMRA, this could provide financial professionals a low-cost option when designing plans for this market.

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Highland Capital Brokerage

Highland Capital Brokerage

Highland Capital Brokerage is committed to developing client-focused relationships with financial advisors using our core competencies of life insurance, annuities, and long-term care. We distinguish ourselves by providing point-of-sale support, advanced marketing, and creative estate and business planning techniques.
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