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.
...this group represents a big opportunity because most of these households are 10 or more years away from retirement

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.

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.