The Ultra-Wealthy Market Might Not Be ‘All Sewn Up’
There are more ultra-wealthy American households today than ever, according to a report from Spectrem Group. This well-heeled market has 132,000 households. That’s up from 117,000 in Spectrem’s 2012 report.
These are the households with $25 million or more in net worth, not including primary residence (NIPR).
Some might think that the “average” insurance producer or financial advisor has little chance of bumping into these people in the course of everyday life. (When we say “average,” we refer to producers who serve households with a net worth ranging from $100,000 at the low end to $5 million or so at the high end.)
But you never know. Spectrem found that that these wealthy households are “working households.” In fact, the wealthiest of these “one percenters” now consist of two income wage earners under age 55, nearly three-quarters of whom work more than 40 hours per week, the researchers said.
Since the income of the wage earners in those households will likely not be evenly split, the lower-income earners in the households might be fairly reachable. They could, for instance, move in circles where many agents and advisors also move, such as art museum events, charitable fund raisers, golf outings and groups, etc. And since these individuals often work 40-plus hours per week, an agent or advisor might engage with them through employment-related connections such as colleagues, clients, vendors, industry peers and others at the person’s workplace or in the same field.
The point being, these very wealthy people are not living behind a moat. They’re out there, moving around in the community, working and engaged with life. That opens up meeting possibilities for producers and maybe future business too.
There’s more. The younger members of these very wealthy households are pretty tech savvy. According to Spectrem, they are “embracing technology such as Skype and Facetime for informal meetings.”
Bringing that home, if they are working long hours, these ultra-wealthies might have precious little time left for a face-to-face with an agent or advisor. But they might be receptive to having a video chat about insurance and financial issues. They might even welcome this, if the agent or advisor is digitally proficient. And since they are very well off, they likely own, or have access to, the high-powered security software and systems that help protect privacy. If the advisor also has secure connections and systems, the wealthy person could be impressed, and interested.
Many super-wealthy people don’t manage their own money, of course. They use attorneys, accountants and other experts for that. But it’s conceivable that at least some of the under-55 wealthies might be open to insurance engagements online. After all, according to the Spectrem research, this group believes that this technology will become increasingly important as advisors seek to communicate with their children and grandchildren. So the idea is already on their minds.
One more thing. Spectrem found that only 69 percent of the younger wealthy households are satisfied with their financial advisor, and even fewer feel their advisor has the required knowledge and expertise. That compares to nearly all (90 percent) of older wealthy households who report being satisfied with the responsiveness and performance of their financial advisors.
The 31 percent who are underwhelmed might start checking around for a new advisor. They might even use their super-secure computers to do some of this sleuthing. Agents and advisors who have the background and expertise to serve this market might consider that potential need when designing outreach strategies.
Bottom line: The ultra-wealthy market might look “all sewn up.” But the under-55-wealthies might not be in that category. For entrepreneurial-minded advisors, even those who don’t yet have a one-percenter as a client, this could spell opportunity.