Financial advisors are competing for a portion of an economic pie that has grown dramatically since the 2008-2009 financial crisis—albeit unequally, said Charles Roame, managing partner of Tiburon Strategic Advisors.
Consumer households in the U.S. had a $50.3 trillion in investable assets, including savings and retirement accounts, according to Tiburon research released Thursday. That's double the $25.1 trillion in household investable assets held in 2008.
About two-thirds of the investible assets are weighted toward traditional investment accounts and about one-third are in retirement accounts, Tiburon said.
“For advisors and financial institutions including banks, it is important how much money is out there and what consumers are doing with it,” Roame said during a telephone press conference. “It is also important to note that there has been an unequal recovery since the financial crisis.”
Of the 127.5 million households in the United States, upper- and middle-income households have done better than lower economic households because the stock market has gone up and real estate has increased in value, he said.
The baby boomer generation, as expected, is gradually shrinking—down from 42.6 million households in 2017 to a predicted 39.8 million households by 2027. The millenials and the generations behind them will grow to 53.1 million households by 2027 down from 27.8 million households 10 years earlier, according to Tiburon.
However, Roame noted, baby boomers hold most of the assets today and will continue to do so for at least a couple of decades. Attendees at a recent Tiburon CEO Summit estimated between 50 percent and 75 percent of their clients are baby boomers.
Another encouraging sign for consumers and advisors, Roame said, is that savings rates have been going up each year since hitting a post-recession low of 4.1 percent in 2013. They stood at 6.6 percent last year. During the recession years, savings rates actually tumbled into the negative, as people relied on their savings to pay expenses, he said.