Financial professionals provide a valuable service to clients of all income levels, but high net worth clients are the profit centers for many producers’ practices. By adding a few high net worth clients to their client list, a financial professional gains access to other high net worth consumers via networking opportunities. Attracting and retaining these clients is critical to a firm’s long-term success.
For years, the majority of high net worth consumers have been part of the baby boomer generation. This group, which consists of people over the age of 65, has had the longest amount of time to earn money, and that’s allowed them to accumulate more wealth than other groups. Now that many boomers are retiring, however, the group’s overall wealth has begun to decline.
Financial professionals who want to build their client base over the coming decade need to shift their focus from boomer clients and concentrate on the generation that now contains the highest percentage of high net worth individuals: Generation X.
A demographic shift
The boomer generation has been at the top of the high-earning heap for so long that many outreach efforts from companies and producers are specially focused on their needs. According to the latest Ipsos Affluent Survey USA, however, this group has been overshadowed by Gen. X, which now contains a greater percentage of the affluent population. These individuals are between the ages of 34 and 54, which contributes to a diverse set of tastes and behaviors.
Ipsos noted the oldest individuals in this age range act like boomers in many ways while the youngest members of the group have more in common with millennials. This presents a challenge for producers who must find a way to reach out to all the individuals in this generation.
Some of the issues facing this generation differentiate them from their older counterparts. This group is saddled with more debt than their older and younger peers, as many of them bought homes that were dramatically impacted by the financial crisis, according to a Pew Research survey. That experience may push these individuals to seek out improved financial guidance. It also means that their investable assets may be lower than people from other generations at a similar income level.
As a result, financial professionals will want to provide options that offer guaranteed income for later in life. Annuity products and life insurance policies that will help beneficiaries deal with outstanding debt if a person dies prematurely will probably be very important to these consumers.
A communication challenge
Reaching these individuals will require a two-pronged approach, however. The younger members of this generation are likely to respond positively to online outreach that also appeals to millennials. These efforts should include blogs and social media engagement that allows potential clients to do a significant amount of research without speaking to a producer directly.
Conversely, older members of this generation will probably respond better to personal engagement from a producer. Striking a balance that appeals to individuals throughout this age group will be increasingly important for producers going forward.