The financial services sector is growing, with independent insurance agents about to reach a pre-2008 employment peak and more and more agents and brokers diversifying their offerings through financial planning certification.
With such a large influx of workers, competition among financial advisors for the very wealthiest of clients will intensify. While only some will succeed with the “one percent,” however, there remains an enormous, and largely marginalized, opportunity in the middle market.
Nearly three-fourths of all middle-market households in the workforce are actively saving for retirement, LIMRA Secure Retirement Institute research finds. However, despite few barriers to enter the market, many financial advisors do not actively cultivate this client base.
“This group represents a big opportunity because most of these households are 10 or more years away from retirement,” LIMRA SRI said.
Indeed, just 28% of middle-market baby boomers are fully or partially retired, leaving 72% of households still working and expecting to remain economically productive for quite some time.
The research tallies with that of the National Association of Insurance and Financial Advisors (NAIFA), which released two studies entitled “Advisor 2020” earlier last month. The NAIFA research envisions the financial advisor market in 2020, and comes to much the same conclusion: middle-market clients will present the greatest opportunity for advisors in the near future.
This means working with clients who may not have the estate planning needs or investment advice of a wealthier individual, but who will need greater education to become financially literate.
“Counseling on how to save for retirement, college planning and disability insurance—these are all going to play a critical role as we move forward,” commented NAIFA President John Nichols.
Indeed, LIMRA sees this less demanding, densely populated market as a blessing to advisors despite their more limited assets.
“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,” LIMRA said. “Everyone wins.”
Of course, the middle market is not entirely without its charms. According to LIMRA, middle-market households own $2.1 trillion in financial assets with an average net worth of $447,500 and financial assets averaging $160,900.
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