U.S. Banks and Recordkeepers Missing HENRY Opportunity

U.S. Banks and Recordkeepers Missing HENRY Opportunity


August 2018, Boston. “Banks and retirement plan providers have the benefit of incumbent relationships when addressing the HENRY segment, but they are squandering their chances to serve as long-term advice providers to the emerging wealth segment by not elevating their advice offerings to meet the demands of these participants,” explains Scott Smith, director of advice relationships at Cerulli Associates, a global research and consulting firm.

Providers that wish to serve HENRYs—“High Earners, Not Rich Yet” investors—face a considerable challenge with creating a service model that is both scalable and valued by consumers. Members of the HENRY cohort represent an emerging wealth opportunity with evolving advice needs, which offer providers the chance to capture both current assets and future flows.

“The first decision point that emerging investors face is what type of firm they will use as their primary financial services provider,” adds Smith. “Investors in the purest HENRY segment, with incomes in excess of $125,000 but investable assets of less than $250,000, indicate the highest reliance on both bank deposit and retirement plan providers compared with any other cohort.” These channels are least likely to provide much in the way of personalized financial advice; thus, many bank programs struggle to retain these high-earning clients as they graduate into higher wealth and their appetite for personalized advice grows.

“The most important part of building marketshare within this segment is maintaining relationships as these investors accumulate assets,” says Smith. “Providers targeting HENRYs will need to take the long view and realize that the benefits of reaping what they sow will accumulate over years rather than quarters.”

These findings and more are from the August 2018 issue of The Cerulli Edge–U.S. Asset and Wealth Management Edition, which explores why financial providers need to understand the life stages of emerging investors, their high net worth, and their resulting financial concerns, before marketing products and services to them.

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