What credit unions need to know about the mass affluent - Member Access Processing

Though credit unions typically cater to a group of people with common interests, it’s undeniable that the members within that group differ vastly.

Everyone in your member base might be involved with the same university, for example, or a particular industry. But they are all unique and likely come from various walks of life and have a wide range of interests. One demographic in particular that financial institutions tend to lump into one big group is the mass affluent.

In fact, high-income consumers, those who make $100,000 or more per year, come from a wide range of backgrounds and might be looking for entirely different services and features in their financial institution. To market to all your high-income consumers in the same way would be to alienate a large portion of this group.

Who are the mass affluent?

The mass affluent are generally defined as people who have between $250,000 and $1 million in investable assets, according to a Nielsen report. Many of them make $100,000 or more per year, though more than half make less than this amount. The lowest income earners in this group make about $50,000 per year.

The typical mass affluent consumer is a baby boomer who grew up in America’s middle class. They worked hard throughout their adult lives and did not inherit their wealth. Many are couples who own their own homes, and either don’t have any kids or are empty nesters.

But just because this paints the picture of the average affluent consumer doesn’t mean it applies to all – or even most – people in this group.

What financial goals do the mass affluent have?

A study by Fiserv company Raddon found that affluent consumers can be neatly categorized into four groups, The Financial Brand reported. These groups are:

  • High-debt.
  • Low-asset.
  • High-asset.
  • High-net worth.

Though consumers who fall into these groups are all high-income earners, their differences in debt, asset and net worth levels encourage vastly different financial goals.

The high-debt consumer generally wants to learn how to reduce spending and debt. This person also wants to focus on either saving for college or paying down student loans.

The low-asset consumer most likely has student loans to pay off and has little trust in financial advisors. While they appreciate advice, they want to make their own decisions and conduct their own research on where to invest their money.

The high-asset consumer probably has little to no debt and is very comfortable working with an investment advisor. This person also enjoys learning about new investment technologies and likes to explore how technology can make financial management easier.

The high net worth consumer is typically an older customer, has the least amount of debt and probably already is working with an investment advisor. This person is well-versed in the world of investments and is comfortable making his or her own decisions about where to put money and having discussions about particular investments.

What interests do the mass affluent have?

The mass affluent aren’t just widely different in their financial goals. They also have vastly different interests.

Nielsen pointed out that, for some, world travel is of high importance, while others enjoy domestic travel and save wherever they can, opting for budget hotels over luxury suites and road trips over first-class air travel.

Some want to save money for their children’s and grandchildren’s futures, while others are “power couples” who have no children but are still growing their wealth through diversified investments.

Still, others are dedicated philanthropists who want to focus on community services and charitable giving.

What can credit unions do for the mass affluent?

Credit unions are uniquely positioned to give these consumers a financial experience they can’t find anywhere else. Currently, many of them admit they prefer bigger banks to smaller financial institutions. But they also want a personalized approach to their money management.

They want good customer service, individualized attention and, critically, no high fees. In fact, 25 percent of high-income earners and millennials regularly switch banks, and the most common catalyst is a better rate or rewards program found elsewhere, according to a Mercator Advisory Group study.

“Consumers want their financial institutions to know them, remember what they told them, help them to make better financial decisions, and reward them with better offers,” according to Karen Augustine, the author of the Mercator Advisory Group report.

Beyond great customer service, low fees and exciting rewards programs, the mass affluent carefully choose their financial institutions based on a bank or credit union’s product offerings.

According to The Financial Brand, the high-net worth and the high-asset members are both looking for wealth management services as well as deposit products. Meanwhile, the low-asset consumer seeks out a beneficial savings account. Finally, high-debt consumers put high importance on finding a financial institution with someone who can advise them on how to invest well.

With such diversity among a group that is typically viewed as one homogenous class, it can be intimidating for a credit union to come up with marketing that reaches enough of the mass affluent. But to ignore this segment of the population would be a mistake. The mass affluent makes up approximately 11 percent of U.S. households and is in control of more than $7.5 trillion worth of investable assets.