Today's Advisory Career

Finding Hidden Potential with Middle Market Pre-Retirees

7 insights to position your practice for change

by Marcia Mantell, RMA

Ms. Mantell is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors and their clients. She is author of “What’s the Deal with Retirement Planning for Women?” and blogs at

In many parts of the financial advisory business, fishing for millionaires is a central strategy. And sure, the higher the asset base of each client, the higher the income potential for the advisory firm and each financial advisor. In reality, however, there are a limited number of millionaires. Plus, there’s an uber-aggressive competitive environment focused on landing those few who might be shopping for a new relationship. On the other hand, and often overlooked, is the almost unlimited number of half-millionaires and quarter-millionaires and want-to-be-millionaires. The bottom line is: there is simply way more opportunity to find and serve new clients when you fish in a well-stocked pond.

In a recent interview with Larry Cohen, director of Strategic Business Insights ( and author of a new expansive research report, The Changing Nature of Retirement, he stresses the importance of financial advisors making the shift to build millionaire clients rather than trying to find the few and far between.

“You don’t land millionaires in most cases,” Cohen comments. “There is too much competition. Millionaires are generally older and already in long-term established advisory relationships.” On the other hand, if you look to the younger Boomers who are still working and getting their financial households in order before retirement, or the older Gen X clients juggling too many financial pressures while trying to save more for retirement, he believes financial advisors who are building their businesses, or looking to expand, will have more success more quickly in this middle market.

A Look at the Numbers

For every one US millionaire household (defined here as those with $1 million to $5 million in investable assets), there are 5 households with $100,000 or more investable assets. Looking deeper into the American households who need financial, investment, retirement, and insurance advice, you’re looking at nearly 8 households with $50,000 in investable assets to every one household with $1 to $5 million.

In his research report, Cohen stratifies households into a variety of smart segments. For example, he estimates that some two-thirds of households in the boomer segment have retirement account balances “woefully inadequate to fund 20+ years of retirement.” While not yet near one-million dollars, they are hungry for information, advice and rock-solid steps they can take to get themselves into a better financial position than they would otherwise have as they enter retirement.

While most of the older Boomers (born 1946 – 1954) are retired, the younger Boomers are still a mighty population to target. There are some 43 million younger Boomers along with 33 million older Gen Xers. That should be a plenty big target group for advisors to focus their business building efforts on. They all need, want, or will have to retire in the not-so-distant future.

The Retirement Dilemma

Cohen has been consistent in his assessment of “retirement” over the last decade. The research he has led confirms his position that “retirement is an anachronism of the 20th Century. It didn’t exist before then and it won’t exist in the same way as we continue to march onward in the 21st Century.” He adds, “And no one sees these changes more starkly than today’s financial advisors.”

Caught between clients who desperately want to step out of the rat race and their financial balance sheets that glow red, financial advisors are in a position to retool their shops to help clients become more retirement ready. Clients are looking for concrete steps and viable action plans. Those who can methodically ease out of working for a paycheck and gradually take on creating their own paychecks should be in less stressful financial situations.

In the meanwhile, advisors can be expanding their businesses by helping clients accelerate savings, reduce debt, protect more assets, and better secure financial household positions just prior to retirement. This strategy spells long-term success for advisors who focus part of their business on the middle market.

The Middle Market’s Hidden Potential

Recognizing that serving the middle market can initially be a challenge for advisors, it takes a deliberate strategy for making it work. Rather than looking to simply gather assets, it’s about finding each client’s hidden potential and building a pipeline that spans time and capacity to save.

Traditional business-building models suggest that the most efficient way to achieve success is to focus on a niche business. That is generally true, and great if you got in years ago with the dentists or lawyers or the electric company employees. In the conversation with Cohen, he noted that today’s advisors generally don’t have that option, so looking for growth can be achieved by segmenting prospects into a different style of tranches.

Traditional business-building models suggest that the most efficient way to achieve success is to focus on a niche business. That is generally true, and great if you got in years ago with the dentists or lawyers or the electric company employees. Today’s advisors generally don’t have that option...

Here are three options Cohen suggests for segmenting older Boomers and younger GenXers where you’ll find a lot more fish:

  • High-velocity households.
    These are folks in their 50s who are high-velocity spenders today. They’ll turn into high-velocity savers tomorrow. Typically, these households have exchanged retirement savings for college tuition for their children. Their financial obligations are hefty for the next few years, but when the last semester of college is paid for, they will be in a position to “super save” for retirement.
  • Digging-out-of-debt households
    Many people in their 50s and early 60s took on debt for children’s college, second mortgages, or are still recovering from job loss during the recession. These prospects are hungry for expert advice on debt management and debt consolidation. As debts are serviced, more assets free up for investing and protection.
  • Laddering goals households
    In the complicated world of investing today, many middle-market families aren’t sure where to save the next dollar. After they complete one goal, such as saving adequately in their emergency fund, what is the next rung on the ladder and how much should they be saving toward that goal? Expert financial advice is welcome.

The New Face of Advice

Cohen suggests that by focusing on the realities of today’s 50-somethings (who are radically different from the 50-somethings a decade ago), advisors’ offerings should become more comprehensive. It will be important to take the long view around building client lifetime value. Advisors who stratify their business to meet the needs of today’s financially complicated households stand to build strong, long-lasting, and profitable relationships.

These 7 insights might help financial advisors build and expand their practices:

1. Hire 1 – 2 young advisors
Let them start with middle market prospects to fill your pipeline with long term potential.

2. Use easily-accessible technology
Your time is valuable. One-on-one’s with middle market clients might not be efficient. Instead, communicate and education via webinars. They are efficient for advisors and a wealth of information for clients and prospects. All created and delivered conveniently.

3. Deal with debt
Become well-versed in debt management techniques and debt consolidation options. It’s no secret that Boomers and Gen Xers have piles of debt. Offer solutions and clear steps to handle current debt load, reduce future debt, and reroute completed debt payments to savings.

4. Recognize that financial planning is situational and non-standard
The financial industry has tried for years to create a handful of standard solutions. Yet, each client’s situation is unique. Create a custom plan, then set it on auto-pilot for each client. Touch base periodically to check status and progress toward goals.

5. Don’t judge a client’s financial journey
This particular group of 50-somethings often thinks they’ve messed things up. That is generally not the case. Resources have been more limited, opportunities less available than with previous generations. They’ve focused on essentials for the family first, including making a better life for their children and assisting elderly parents. Help them navigate their situation and remind them to be proud of what they have accomplished.

6. Help clients face the odds of “never retiring”
Many middle market Boomers and Gen Xers think working forever is a retirement plan. For the vast majority, work, or work for the same level of pay, simply may not be an option after reaching their 60s. Construct various scenarios to showcase other options and a range of trade-offs for clients to consider.

7. Use timelines that span decades
In our 3-second attention-span world today, it’s often hard for individuals to grasp how long it takes to pay off debt or to save sufficiently for retirement. Rather than seeing quarterly or annual results, illustrate how success is possible—and probable—when you look at time spans over 20, 30, or 40 years.

The Bottom Line

The middle market of younger Boomers and older GenXers should provide financial advisors with significant growth potential. These future clients expect your expert advice across many more financial topics than older clients or millionaires.
Cohen’s research reveals that:

  •  nearly 50% of those age 55 to 59 report needing expert help in retirement planning, up from 46% in 1996; and,
  • 45% of those age 60 – 64 report needing expert retirement planning, versus 34% in 1996.

The tide has indeed turned. The very nature of retirement is changing and will continue to change. Millionaires have any number of options for advice available to them. The middle market needs, and is looking for, a financial advisor’s integrated, comprehensive, custom planning services delivered in an efficient, directive manner to build toward becoming more retirement ready. Even if they may come up short of a million dollars, they have potential. ◊