New Research Finds Ultra-Rich Adding Wealth And Likely Needing Advice

A new study finds a substantial increase in the most sought-after clients: those high-net-worth folks.

A booming economy combined with generous tax cuts, courtesy of President Trump and the Republican Congress, has the affluent class increasing in numbers.

Affluent households, or those with more than $100,000 income, grew by 30 percent between 2012 and 2016, according to a Conning Research study.

"While still the smallest income segment in number of households, the affluent market has significantly more financial resources than the middle market and is able to purchase a wide variety of financial products, said Mary Pat Campbell, a vice president, insurance research at Conning.

"However, financial services firms are very focused on the segment, and insurers face strong competition for affluent market share," she added.

The 2018 Life-Annuity Consumer Markets Annual reviews the consumer markets for life insurers with focused analyses of demographic segments, generations and income groupings.

Conning considers the middle market those households earning between $40,000 and $100,000 and the lower market less than $40,000.

"This upper end has really grown, the middle market is kind of not really growing that much, but the lower market, the $40,000 and under, has been shrinking," Campbell said.

Under-Penetrated And Under-Served

When it comes to age groups, agents are caught between changing demographics as boomers age out, Gen Xers present opportunities and diverse populations slip through amid incorrect perceptions.

One thing is certain: "they're all under-penetrated," Campbell said.

Start with baby boomers -- a huge market with a huge demand for retirement products. However, "the oldest baby boomers are 72, so mortality is kicking in," Campbell noted.

"There’s 73 million people though, so it’s still a sizable market. That said, it’s not a growth market. The numbers of baby boomers is going to be shrinking."

Not surprisingly, Conning settled on Generation X as the "sweet spot" for insurance products. Gen Xers are generally ages 35 to 53 and there are about 79 million of them.

“They’re in their prime earning years for many of them," Campbell said. "They’re the ones more likely to have kids, minor dependents at home at this point. That might be attractive."

In other cultural demographics, Conning confirmed the continued attractiveness of the Hispanic market -- which checked in at 57 million Americans. The ongoing immigration debate is creating incorrect perceptions, as there are nearly twice as many U.S.-born Hispanics as there are immigrant Hispanics, Campbell explained.

"They do tend to have lower household income than the general population," she added, noting that 41 percent of Hispanic households fell in the lower market and 40 percent in the middle market. "You need to have enough of a household income so you can afford the products."

Slow-Moving Solutions

The continued embrace of digital technology and simplified underwriting will help insurers and agents reach more people and markets, Campbell said.

"Some insurers really haven’t made a full digital transformation yet," she said. "I have been seeing more and more accelerated underwriting, a streamlining of the sales process. But getting leads and closing the sale, I’m not sure how much that dynamic has changed yet.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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