Filed Under:Markets, Affluent

A 7-step guide for advising the mass affluent

Mass affluent clients need help.
Mass affluent clients need help.

I’m convinced the mass-affluent market holds colossal potential for advisors and agents to match needs to solutions; particularly, to help clients conquer the fear of outliving assets. Definitions of the mass affluent vary in our industry, but the Fact Book on Retirement Income 2014, from the LIMRA Secure Retirement Institute, refers to this segment as being comprised of households with $250,000 to $499,000 in total “non zero value” assets — and reveals that collectively, they have more than $2.3 trillion in assets. Let’s review the opportunity to help these consumers navigate a path to retirement readiness and consider some pointers that may help guide them on their journeys.

Are the mass affluent prepared at all for what lies ahead? Maritz Research documented in its March 2013 report entitled “The Changing Face of Retirement Income” that 54 percent of near-retirees surveyed who had investment savings of less than $500,000 agreed or strongly agreed that they are concerned about having enough money to last through retirement. You’ve probably seen similar research results.

The Fear

I believe the crux of the issue may be that many people in this market segment have no idea how much money they will need for retirement – they may have never enlisted a financial services professional to help them do the appropriate planning to determine what their expenses might be, how much income will be called for, and for what period of time.

The Opportunity

This is where agents and advisors have the potential to seize a key opportunity: to help the mass affluent get a clearer picture of their retirement needs and available solutions. Ideally, that professional will take a holistic view and have access to all the products that people need, because it’s my contention that no single product can meet every need – not life insurance, not annuities, not long-term care insurance, not mutual funds.

The Approach

The advisor should provide me with a personalized approach, however. I believe agents and advisors can deliver the most meaningful service when they walk step by step with clients through the planning process to help them realize what they need and want. Yet, I’m probably not the only person in our industry who has heard of an agent coming to the table with pre-packaged solutions ready to dole out, before taking the time to truly know and understand the client.

The Basics and Beyond

Beyond basic needs, what are the aspirations? What else does the client need and want, and for how long? A discussion about life insurance might be appropriate at this stage, because despite our industry’s initiatives to educate consumers on the value of coverage, not everyone (and certainly not everyone in the mass-affluent segment) has life insurance. It seems that for several years, people have worried about having enough money for other priorities that they don’t understand the value of life insurance as a financial tool.  

The Contingencies

Given that every circumstance can’t be foreseen – a reality that may compound the fear of mass-affluent consumers who are unsure their assets will be sufficient – build in flexibility for the unknown, such as how long clients will live. Flexible options have the potential to help people experience retirement with less stress.

The New Index Products

Newer index products also have potential to help alleviate fear among the mass affluent.

The Bottom Line

As you work with mass-affluent clients, keep in mind also that the needs you’ll see today may not be the same ones you’ve seen in the past. Emphasize facing the needs and fears right now, because for consumers in this market segment, every month and year counts. The longer people wait, the less likely they are to be able to meet their basic and aspirational needs, and the more they may have to give up in retirement.

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Nichole Morford

Nichole Morford
Managing Editor

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