Don’t Overlook Growth Opportunity with Middle-Market Households

Trailing Boomers, Gen X & Y, form vast prospect pool

With nearly three fourths of all middle-market households in the workforce and actively saving for retirement, a real growth opportunity exists for financial firms and advisors, according to the LIMRA Secure Retirement Institute (LIMRA SRI).

One key recommendation encourages companies to grow long-term relationships with the middle-market. Characteristics of the middle market include:

  • The middle-market wealth segment is defined as household assets from $100 thousand to $249 thousand and make up 13 million households or 11 percent of total U.S. households.
  • More than 80 percent of middle-market households have assets in a retirement plan or an IRA. Three in 10 own cash value life insurance.
  • Collectively, middle-market households own $2.1 trillion in financial assets with an average net worth of $447,500 and financial assets averaging $160,900.

While 28 percent (3.7 million households) are fully or partially retired, the remaining 72 percent (7.8 million households) are not retired and are expected to remain economically productive for a long time. Consisting of leading-edge and trailing-edge Boomers (age 46-59) and Gen X and Y households (age 45 and under) this segment has $1.24 trillion in assets. LIMRA SRI suggests this group represents a big opportunity because most of these households are 10 or more years away from retirement. In addition:

  • Barriers to entry in the middle-market are few. Many financial firms and advisors do not actively cultivate this market, so there is less competition.
  • A significant portion of this group are boomers in their peak earning years who need advice for retirement saving and managing cash flow.
...this group represents a big opportunity because most of these households are 10 or more years away from retirement

Gen X and Y households have 20 or more years of savings ahead of them. They are more likely to elevate to affluent or high-net worth segments in the coming years. Developing a relationship with the younger end of the market also could mean profitable long-term business growth. Because this market can be effectively served with simpler planning techniques and strategies, the needs of the middle market can be satisfied without a complicated effort. Everyone wins.