Organic growth is the key to financial advisors' and wealth management firms’ future success. Advisors and senior executives need to identify where that growth will come from—and position themselves to capture it.

When assessing the future, it’s often wise to begin by looking at where we’ve been. Trends over time can give advisors and senior executives essential clues about what’s to come. “Past is prologue,” as Shakespeare wrote.

Consider how wealth distribution has evolved. Our research shows that although the number of wealthy households has grown immensely in recent years, that growth has not occurred evenly among the various levels of wealth—a fact that may have significant implications for wealth management professionals in the coming years.

Long-Term Trends In Four Segments Of Household Wealth
We examined the growth of households in four key wealth segments—the mass affluent, millionaires, the ultra-high-net-worth and the $25 million-plus—during the 17 years from 2006 through 2022.

The Mass Affluent Segment: Steady Growth And Resilience
The mass affluent segment comprises households with a net worth of between $100,000 and $1 million, excluding personal residence. Our analysis reveals that this segment has shown steady growth and resilience, particularly during the 2008 financial crisis. Mass Affluent households increased from 24.3 million in 2006 to 33.3 million in 2022, representing a growth rate of 37.0% over the 17 years.

The Millionaire Segment: Fast Growth Despite Financial Crisis Impact
The millionaire segment comprises households with a net worth of between $1 million and $5 million, excluding personal residence. While the 2008 financial crisis significantly impacted this segment, it has since recovered and demonstrated strong growth. As a result, the number of millionaire households grew from 7.9 million in 2006 to 12.7 million in 2022—marking an increase of 60.8%.


The Ultra-High-Net-Worth Segment: A Dynamic And Rapidly Growing Market
The ultra-high-net-worth (UHNW) segment includes households with a net worth of between $5 million and $25 million, excluding personal residence. This segment was also heavily affected by the 2008 financial crisis but has demonstrated remarkable recovery and growth. UHNW households increased from 1.02 million in 2006 to 1.78 million in 2022. That represents a growth rate of 74.5% during the 17 years.


The $25 Million+ Segment: A Niche Market With The Highest Growth Rate
The $25 million+ segment represents households with a net worth exceeding $25 million, excluding personal residence. Despite being the smallest segment of the four wealth groups, these households have seen the fastest growth rate. The number of $25 million+ families grew from 122,000 in 2006 to 245,000 in 2022—an impressive growth rate of 100.8% over the 17 years.


Critical Implications For Advisors And Senior Wealth Management Executives
In examining these 17 years, it’s clear that significant numbers of households exist at all levels of wealth—giving financial advisors and their firms opportunities regardless of where they focus their efforts.

That said, it’s striking how much the growth rate of affluent households accelerates as we move up the wealth ladder—from 37% for the mass affluent to 152% for families with a net worth of more than $25 million. Wealth is not being created equally, which means that future opportunities for the wealth management industry will not be distributed equally.

We believe the implications of these (and similar) disparities in wealth creation for advisors and senior executives include the following:

1. Moving upmarket means more opportunity. That doesn’t mean every advisor and firm should stop what they’re doing and target households with more than $25 million. Instead, consider how you can become positioned to attract wealthier clients than the ones you (or your advisors) are currently serving. Depending on many factors, that might involve remaining focused on the wealth level you’re at today but seeking wealthier clients from within that group. Moving upmarket from the lowest end of the mass affluent segment ($100,000) to the highest ($1 million) can impact a practice.

However, as the data reveals, the most significant organic growth opportunities will likely come from advisors who “level up” to a new client category with better growth potential. Technology such as AI will likely upend the least affluent market segments, crimping opportunities for many advisors in the future.

2. Wealthier clients can mean fewer clients. One benefit of working with wealthier clients is that advisors may generate more significant AUM, revenue and profits by serving fewer clients than they do today—simply because the clients possess more wealth. Having fewer but more profitable clients means less time spent prospecting and more time delivering real value.

3. Knowledge and insights into the wealthy are essential. To serve households with greater affluence, complexity and expectations, advisors and executives must gain a deep understanding of their newly chosen target clients. The affluent are not a monolithic group, of course. Ultra-high-net-worth families typically have needs and face issues that the mass rich and families with “just” a few million dollars may not be considering. And indeed, focusing on $25 million+ households demands comprehensive insights and knowledge about this group—including what they expect from their financial professionals, their attitudes about their wealth, and wealth’s role in their lives.

In this era of unprecedented wealth evolution, it is crucial for financial advisors and senior executives of wealth management firms to proactively pursue the wealth segment (or segments) that they believe can best fuel their organic growth—and design service experiences that cater to that segment’s unique demands. The rapidly changing landscape demands a drive to succeed, a commitment to lead, and the knowledge and resources required to win.

George Walper and Catherine McBreen are managing principals with CEG Insights (formerly Spectrem Group), leading innovators in wealth management research. Dive into our exclusive insights and strategies with our latest "Play to Win" Report. Unlock Your Path to Success – Download Now!