The Institute for Innovation Development recently talked to David M. Thompson, managing director, affluent practice at Phoenix Marketing International—a marketing consulting and advanced analytical market modeling firm. Their Wealth & Affluent Monitor provides continuous intelligence regarding affluent and high-net-worth households’ investment, financial and lifestyle behaviors, needs and attitudes. Their research has revealed significant changes in the affluent marketplace that have major implications for financial advisors going forward.
Bill Hortz: I see that Phoenix has been conducting in-depth research in the U.S. affluent investor marketplace since 2003. Please tell us about your Wealth & Affluent Monitor research platform and how you develop your market intelligence.
David Thompson: Our Wealth & Affluent Monitor is a marketing research platform for obtaining, analyzing and delivering ongoing tactical and strategic intelligence about wealthy investors to our clients in the wealth and asset management, banking, insurance and other channels.
Our syndicated service completes over 900 online questionnaires monthly with qualified affluent and high-net-worth households in the U.S., and about 1,500 semi-annually in Canada. We provide a range of services to our clients throughout the year, including monthly investor sentiment updates, quarterly and annual reports, adding proprietary content to our questionnaires, and analysis support.
The content of our questionnaires is very comprehensive, and includes all of the key topics in wealth management (portfolio composition, asset allocations, use, strength and depth of relationship with advisors and providers, attitudes towards wealth and investing, new digital channels, and extensive demographics) as well as credit and debit card usage and behaviors.
Hortz: What are the different affluent market segments you have been following and monitoring? Have you seen major trends or changes in any of these categories of affluent investors over recent years?
Thompson: Our core affluent and HNW segments include: emerging affluent: younger households (<age 45) who have not yet accumulated high levels of wealth (<$250k investable), but have the income ($125k+) to move into the higher wealth categories over time; mass affluent (households with $250k-$999k investable); and HNW ($1mm+ investable)
We also track other segments including penta-millionaires ($5mm+ investable), affluent women decision-makers, affluent generations including millennials, and affluent business owners.
Regarding trends in affluent segments, yes, we are seeing some significant shifts that are impacting the industry. With their embrace and comfort with technology, younger, emerging affluent have very different expectations regarding an advisory relationship than their parents. Emerging affluent expect a high degree of personalization in advice, and typically seek a more goals-based or holistic approach from their wealth management firm, employing a more diverse array of delivery channels. Many mass-affluent investors are struggling with advancing age and finding that they are not prepared financially for retirement.
Hortz: What other major trends or emerging categories do you see developing and what are the implications for advisors?