America's Affluent: Understanding the Evolving Needs of the Emerging Mass Market 2000–01 Affluent MacroMonitor Report
| Executive Summary Table of Contents |
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Executive Summary
In the past decade, financial institutions have faced the challenges of the information technology revolution, a changing regulatory environment, and intense competition from companies within and outside the financial industry. The creation of new wealth and the subsequent increase in the number of Affluent households bring to the fore a new challenge: how to adapt to the changing profile of the Affluent customer.
The prolonged economic expansion of the 1980s and 1990s and the largest adult demographic segment's—the Boomers'—reaching its peak income-earning years have set off a significant increase in the number of Affluent Americans. The expansion of the Affluent market brings with it enormous opportunities for financial institutions. But along with it come the challenges of dealing with a more complex market. The new Affluent customers come in various shapes and sizes: different demographics, different life stages, and different financial personalities. Some Affluent customers are increasingly sophisticated and self-directed; others need personalized relationships and trust; still others appreciate some handholding.
This 200001 MacroMonitor Affluent analysis volume provides a unique perspective on the financials, personalities, capabilities, and mind-sets of the 16.9 million U.S. households that qualify as Affluent. By providing key indicators of financial needs and attitudinal and demographic data, this report may be used as a guideline by financial marketers so that they can identify and serve the different Affluent segments profitably.
The first section focuses on the emergence of the Mass Affluent, the bulk of the new Affluent market, consisting of Affluent households with less than $1 million in net worth. It provides a demographic profile of these households and discusses their financial needs on the basis of their life stages. More important, we cross-referenced our MacroMonitor data with SRI Consulting Business Intelligence's (now Strategic Business Insights') VALS™ consumer psychographic segmentation system to complete the Mass Affluent profile. We therefore provide financial marketers with a more comprehensive view of this important market by defining the customers, their financial needs, and how to market to these customers on the basis of their consumer buying behavior.
How financial attitudes of Affluents may have changed, or not changed, and which Affluent segments have been most affected by the stock market's downward slide are the focuses of the second section. Affluents as a whole remained unperturbed by the "transitory" bursting of the stock market bubble. But the attitudes of certain segments—those whose wealth is heavily concentrated in financial assets relative to their real estate assets and the young emerging Affluent with limited past exposure to a bear market—have dramatically shifted, revealing a decline in their financial self-confidence. Although the more sophisticated and experienced do-it-yourself segment remains self-confident and will continue to be in control of its financial affairs, the volatility of the markets has indeed opened an opportunity for financial institutions to expand and emphasize their advisory services among certain Affluent segments.
The final sections of the report provide trend data for the Affluent market as a whole and discuss in detail the six Affluent segments on the basis of the CFD segmentation algorithm. Incorporating demographic, psychographic, life-stage, and behavioral variables to select, cluster, and assess household behavior, these segment profiles provide financial marketers with additional perspectives on how to meet the needs of this new and evolving Affluent market.
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| TABLE OF CONTENTS |
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| Executive Summary | 1 | ||
| Targeting the Mass Affluent | 3 | ||
| Who the Mass Affluent Are | 5 | ||
| Financial Needs of the Mass Affluent | 5 | ||
| Transactions | 6 | ||
| Credit | 7 | ||
| Protection | 8 | ||
| Savings and Investments | 9 | ||
| How to Market to the Mass Affluent | 12 | ||
| The Affluents' Response to a Market Downturn | 14 | ||
| Confidence in the Market | 15 | ||
| Need for Advice | 18 | ||
| Searching for the Holy Grail: True Customer Relationship Management | 20 | ||
Segment Profiles |
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| Total Affluent | 22 | ||
| Demographic Profile | 22 | ||
| Balance Sheet | 24 | ||
| Attitudinal Profile | 26 | ||
| Balanced Builders | 29 | ||
| Highlights | 29 | ||
| Demographic Profile | 30 | ||
| Balance Sheet | 32 | ||
| Attitudinal Profile | 34 | ||
| Demographics | 36 | ||
| Savings and Investments | 37 | ||
| Credit | 39 | ||
| Protection | 39 | ||
| Transactions | 40 | ||
| Information and Advice | 40 | ||
| Personal-Computer and Internet Use | 41 | ||
| Marketing Implications | 42 | ||
| Focused Builders | 43 | ||
| Highlights | 43 | ||
| Demographic Profile | 44 | ||
| Balance Sheet | 46 | ||
| Attitudinal Profile | 48 | ||
| Demographics | 51 | ||
| Savings and Investments | 52 | ||
| Credit | 54 | ||
| Protection | 54 | ||
| Transactions | 54 | ||
| Information and Advice | 55 | ||
| Personal-Computer and Internet Use | 56 | ||
| Marketing Implications | 57 | ||
| Real Asset Builders | 58 | ||
| Highlights | 58 | ||
| Demographic Profile | 59 | ||
| Balance Sheet | 61 | ||
| Attitudinal Profile | 63 | ||
| Demographics | 66 | ||
| Savings and Investments | 68 | ||
| Credit | 70 | ||
| Protection | 71 | ||
| Transactions | 72 | ||
| Information and Advice | 72 | ||
| Personal-Computer and Internet Use | 73 | ||
| Marketing Implications | 74 | ||
| Emerging Affluent | 75 | ||
| Highlights | 75 | ||
| Demographic Profile | 76 | ||
| Balance Sheet | 78 | ||
| Attitudinal Profile | 80 | ||
| Demographics | 82 | ||
| Savings and Investments | 83 | ||
| Credit | 85 | ||
| Protection | 87 | ||
| Transactions | 89 | ||
| Information and Advice | 90 | ||
| Personal-Computer and Internet Use | 92 | ||
| Marketing Implications | 94 | ||
| Wealthy Retired | 95 | ||
| Highlights | 95 | ||
| Demographic Profile | 96 | ||
| Balance Sheet | 98 | ||
| Attitudinal Profile | 100 | ||
| Demographics | 103 | ||
| Savings and Investments | 105 | ||
| Credit | 107 | ||
| Protection | 108 | ||
| Transactions | 108 | ||
| Information and Advice | 109 | ||
| Personal-Computer and Internet Use | 110 | ||
| Marketing Implications | 112 | ||
| Entrepreneurs | 114 | ||
| Highlights | 114 | ||
| Demographic Profile | 115 | ||
| Balance Sheet | 117 | ||
| Attitudinal Profile | 119 | ||
| Demographics | 121 | ||
| Savings and Investments | 123 | ||
| Credit | 125 | ||
| Protection | 125 | ||
| Transactions | 126 | ||
| Information and Advice | 126 | ||
| Personal-Computer and Internet Use | 127 | ||
| Marketing Implications | 129 | ||
Tables |
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| Some VALS™ Guidelines for Reaching the Mass Affluent | 14 | ||
| Real Asset Builders: Median Balance in Savings and Investment Products | 69 | ||
| Wealthy Retired: Estimated Mean Number of Annual Financial Transactions | 109 | ||
Figures |
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| Growing Affluent Market | 1 | ||
| Total Affluent: Mass Affluent versus High Net Worth | 4 | ||
| Distribution of Affluent Households, by Net Worth | 4 | ||
| Distribution of the Mass Affluent, by Age Cohort | 5 | ||
| Distribution of the Mass Affluent, by Life Stage | 6 | ||
| Mass Affluent: Use of Online Financial Transactions | 7 | ||
| Mass Affluent: Credit Incidences | 8 | ||
| Mass Affluent: Ownership of Life Insurance | 9 | ||
| Mass Affluent: Ownership of Savings and Investment Products | 9 | ||
| Mass Affluent: Goals for Saving and Investing | 10 | ||
| Mass Affluent: Most Important Goal for Saving and Investing | 11 | ||
| Mass Affluent: Ownership of Retirement Accounts | 11 | ||
| Mass Affluent, by VALS™ Segments | 12 | ||
| Nasdaq Composite Index, Daily Closes | 15 | ||
| Most Important Factor in Determining Placement of Savings and Investments | 16 | ||
| The Stock Market is too Risky for Me | 17 | ||
| I Feel Qualified to Make My Own Investment Decisions | 19 | ||
| I Do Not Need Advice about Investment Options | 20 | ||
| Total Affluent: Savings and Investment Orientation | 26 | ||
| Total Affluent: Behavior toward Financial Institutions and Delivery of Services | 27 | ||
| Total Affluent: Attitudes toward Professional Financial Advice | 28 | ||
| Balanced Builders: Savings and Investment Orientation | 34 | ||
| Balanced Builders: Behavior toward Financial Institutions and Delivery of Services | 35 | ||
| Balanced Builders: Attitudes toward Professional Financial Advice | 35 | ||
| Balanced Builders, by Age Cohort | 36 | ||
| Balanced Builders, by Life Stage | 36 | ||
| Balanced Builders: High Net Worth versus Mass Affluent | 37 | ||
| Balanced Builders: Ownership of Investment Products | 38 | ||
| Balanced Builders: Ownership of Retirement Products | 38 | ||
| Balanced Builders: Median Balance in Retirement Products | 39 | ||
| Balanced Builders: Reliance on Professional Financial Advisors | 40 | ||
| Balanced Builders: Online Financial Activities | 41 | ||
| Balanced Builders: Use of Home Banking and Home Investing | 42 | ||
| Focused Builders: Savings and Investment Orientation | 48 | ||
| Focused Builders: Behavior toward Financial Institutions and Delivery of Services | 49 | ||
| Focused Builders: Attitudes toward Professional Financial Advice | 50 | ||
| Focused Builders, by Age Cohort | 51 | ||
| Focused Builders, by Life Stage | 51 | ||
| Focused Builders: High Net Worth versus Mass Affluent | 52 | ||
| Focused Builders: Median Balance Held in Stocks and Mutual Funds | 53 | ||
| Focused Builders: Ownership of Stockbrokerage Accounts | 55 | ||
| Focused Builders: Approach toward Financial Decision Making | 56 | ||
| Focused Builders: Acceptance of Need for Financial Advice | 56 | ||
| Focused Builders: Use of Home Banking and Home Investing | 57 | ||
| Real Asset Builders: Savings and Investment Orientation | 63 | ||
| Real Asset Builders: Behavior toward Financial Institutions and Delivery of Services | 64 | ||
| Real Asset Builders: Attitudes toward Professional Financial Advice | 65 | ||
| Real Asset Builders, by Age Cohort | 66 | ||
| Real Asset Builders, by Life Stage | 67 | ||
| Distribution of Mass Affluent Households, by Segment | 68 | ||
| Real Asset Builders: Ownership of Savings and Investment Products | 69 | ||
| Real Asset Builders: Likelihood of Making Retirement Account Transactions | 70 | ||
| Real Asset Builders: Incidence of Liabilities | 71 | ||
| Real Asset Builders: Online Financial Activities | 73 | ||
| Real Asset Builders: Use of Home Banking and Home Investing | 74 | ||
| Emerging Affluent: Savings and Investment Orientation | 80 | ||
| Emerging Affluent: Behavior toward Financial Institutions and Delivery of Services | 81 | ||
| Emerging Affluent: Attitudes toward Professional Financial Advice | 81 | ||
| Emerging Affluent, by Age Cohort | 82 | ||
| Emerging Affluent, by Life Stage | 83 | ||
| Emerging Affluent: Ownership of Savings and Investment Products | 84 | ||
| Emerging Affluent: Ownership of Retirement Products | 84 | ||
| Emerging Affluent: Risk Orientation | 85 | ||
| Emerging Affluent: Method of Paying Monthly Credit-Card Bills | 86 | ||
| Emerging Affluent: Credit Attitudes | 87 | ||
| Emerging Affluent: Incidence of Mortgage and Credit Insurance | 88 | ||
| Emerging Affluent: Life Insurance Attitudes | 89 | ||
| Emerging Affluent: Difference from Total Affluents in Average Number of Financial Transactions | 90 | ||
| Emerging Affluent: Financial Advice Preferences | 91 | ||
| Emerging Affluent: Likelihood of Obtaining Professional Advice in the Next 12 Months | 92 | ||
| Emerging Affluent: Online Financial Activities Currently Use | 93 | ||
| Emerging Affluent: Use of Home Banking and Home Investing | 94 | ||
| Wealthy Retired: Savings and Investment Orientation | 100 | ||
| Wealthy Retired: Behavior toward Financial Institutions and Delivery of Services | 101 | ||
| Wealthy Retired: Attitudes toward Professional Financial Advice | 102 | ||
| Affluent Households with Female Head of Household Only, by Segment | 103 | ||
| Distribution of Affluent Female-Head-Only Households, by Segment | 104 | ||
| Wealthy Retired: High Net Worth versus Mass Affluent | 105 | ||
| Wealthy Retired: Risk Orientation | 106 | ||
| Wealthy Retired: Ownership of Financial Assets | 107 | ||
| Wealthy Retired: Use of Professional Financial Advisors | 110 | ||
| Wealthy Retired: Use of Home Banking and Home Investing | 111 | ||
| Wealthy Retired: Top Online Financial Activities Currently Use | 112 | ||
| Entrepreneurs: Savings and Investment Orientation | 119 | ||
| Entrepreneurs: Behavior toward Financial Institutions and Delivery of Services | 120 | ||
| Entrepreneurs: Attitudes toward Professional Financial Advice | 120 | ||
| Entrepreneurs, by Age Cohort | 121 | ||
| Entrepreneurs, by Life Stage | 122 | ||
| Entrepreneurs: High Net Worth versus Mass Affluent | 122 | ||
| Entrepreneurs: Primary Financial Decision Maker | 123 | ||
| Entrepreneurs: Ownership of Investment Products | 124 | ||
| Entrepreneurs: Participation in Traditional IRAs | 125 | ||
| Entrepreneurs: Use of Professional Financial Advisors | 127 | ||
| Entrepreneurs: Top Online Financial Activities | 128 | ||
| Entrepreneurs: Use of Home Banking and Home Investing | 128 | ||
Boxes |
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| Background | 2 | ||
| The CFD Affluent Segmentation | 17 | ||
Appendixes |
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| A. MacroMonitor Survey Methodology | A-1 | ||
| B. Survey Weighting Procedures | B-1 | ||
| C. Affluent Segment Definitions | C-1 | ||