“This is someone recently out of school who is a potential client that we can cultivate, but she’s probably not ready for an advisor,” says Pohlig. However, “We still don’t want to ignore MARGs just because they’re someone we’re not going to spend a lot of time on right now at this point in our business. There are still ways [they] can be served and assisted.”
Just 17 percent of millennials matching MARG characteristics are using an advisor. Pohlig recommends that this group’s needs be addressed via free financial services, such as targeted digital content that can help them budget, build their net worth and manage their debt effectively. Over time, MARGs may become more attractive and gravitate toward advisors who provide helpful and relevant content.
CHIPs
This group describes people who are “career-focused, have income potential.” They are in mid-career and are high-middle-class earners with small but growing net worth. A “CHIP” might be five to 10 years into a career, married, with high levels of debt but also $100,000 to $250,000 in investable assets. He tends to be a self-directed investor and planner increasingly worried about retirement planning.
“A CHIP is still developing in their career and going through big life events,” says Pohlig. “CHIP wants financial advice regarding these events and about early retirement planning, in person, from a human being, but they’re also cost-conscious.”
Just 24 percent of CHIPs are receiving formal financial advice, according to SEI. Pohlig recommends that they be served by flat-fee advisors offering a retainer revenue model or modular fee-for-service advice. CHIP’s relatively low asset levels might make him unattractive or underserved by advisors using an AUM-based service model. Advisors can target him with marketing during major life events such as home purchases, marriages and the births of children, since those are the times he most often seeks out professional assistance.
DREW
This stands for “debt-ridden, emerging wealth.” A DREW has more assets and a higher income than a MARG or a CHIP, but also even higher levels of debt. He most closely resembles the typical “HENRY” that advisors seek. DREW is five to 10 years into his career, with a $95,000 income. He has already saved six figures in assets, but is also hampered with six figures of debt.
“In contrast with MARG and CHIP, DREW is older and more debt-ridden,” says Pohlig. “DREW has a financial picture that is growing increasingly complex and difficult to manage on his own. He may be someone like a doctor or a lawyer who has money and great prospects, but a lot of debt.”
DREWs tend to be self-directed planners, but 29 percent are already receiving professional financial advice. AUM-based advice will meet DREW’s needs, but he tends to prefer a recurring retainer. Pohlig recommends that advisors use a hybrid model for DREWs, serving them first on retainer and transitioning to an all-AUM model over time. DREW is a great candidate for co-planning, because he wants to be actively involved in the process and is used to managing his own finances.