The views presented here do not necessarily represent those of Advisor Perspectives.
While the mass affluent market may not be feeling the brunt of inflation woes or the rising cost of living, its financial planning is still being impacted by current economic headwinds.
Chelsea Ransom-Cooper, co-founder and chief financial planning officer at Zenith Wealth Partners, says she is seeing more economic pressure on clients in the mass affluent income range, particularly those who work in the tech industry where there have been mass layoffs in recent years.
“You need a nest egg, because you never know when the layoffs are happening,” Ransom-Cooper said. “We’ve had several clients who’ve been laid off for six to 12 months. You need to have as much savings set aside for as long as you’ll be applying, because it’s been such a competitive job market.”
At Zenith, many of their clients are first-generation wealth builders — high earners who, on average, have between $150,000 and $500,000 in annual household income.
While there were many public sector layoffs last year under the government’s DOGE cuts, Ransom-Cooper has more recently seen job insecurity increase in the private sector. As such, she often works with clients to build larger emergency funds and chip away at any high-interest debts. She also recommends that clients take advantage of any company benefits that can provide a financial cushion, if their employment status changes.
“It depends on where people are working, but we want to prioritize paying off any high-interest debt, where they may not be able to make those payments if they are laid off,” she said, adding that zero interest balance transfers on credit cards have been good options too for paying down debt.
“For people who are working in companies in tech, they may offer accelerated vesting. So instead of just looking at your personal investing account, we can look at whether that is something we want to sell,” in case of layoffs or unexpected job changes.
Accelerated vesting allows employees to access their equity compensation faster than the standard vesting schedule, in certain circumstances where employment milestones or performance targets are hit, or company mergers or acquisitions occur.
Other economic pressures hitting high earners are often related to housing and childcare rates, Ransom-Cooper shared.
“They may have bought their starter home at a 2.5% interest rate, but maybe they can’t get their forever home, which might be at a 6% interest rate today,” she said. These costs, along with childcare, are meaningfully impacting the finances of the mass affluent.
“Childcare is like a mortgage payment in itself,” she said.
Advice Gaps in the Market
Looking ahead to 2030, asset and wealth management firms that are serving the needs of the retail and mass affluent market will be better positioned, or “future fit,” for client asset growth, an April report by PwC predicted. The global survey included findings from 264 asset and wealth managers.
“Leading firms are also shifting sharply towards growth in the retail and mass-affluent segments as they look to capture projected CAGR of 5.7% by pursuing scalable, digital-first distribution and solution-oriented offerings,” the PwC report states. “In fact, future-fit firms are 1.8 times more likely than all other respondents to identify retail and mass-affluent investors as a primary revenue driver over the next five years.”
Ransom-Cooper shared that first-generation wealth builders, her main client demographic, are often not being served in the marketplace.
“These individuals are now seeing significant wealth transfers start. And they often aren’t staying with the advisors of their parents,” she said.
One client of Zenith previously received a six-figure stock payout from her employer, and ended up leaving the advisor who was working with her family at the time.
“Her dad’s advisor told her to keep the money in a savings account because it wasn’t enough to invest,” Ransom-Cooper said.
For many mass affluent individuals, “the wealth transfer is happening today,” she added. “Even some high-net-worth parents are realizing they can be a part of the education of making sure their children are making proper decisions with that money. We are starting to see the wealth transfer happen sooner.”
Because of this, Ransom-Cooper recommends that wealth firms have an advisor team with diverse perspectives, especially when advising families going through wealth transfers.
“Having a client advisor that is next generation themselves, or who can provide a different perspective than an advisor on their parents’ current team,” is a good strategy, she said.
Other shifts that Ransom-Cooper is noticing in the mass affluent market is the demand for extremely personalized advice.
“It depends on the kind of advisor, but (if they are) at an RIA, we are going to be in a position where everything is going to be incredibly personalized,” Ransom-Cooper said.
PwC’s report found that “future-fit” firms are 1.8 times more likely to automate product or portfolio “hyper-personalization” in the coming years.
Ranson-Cooper says this demand among the mass affluent crowd ”isn’t just personalization when managing their portfolios, but leaning into technology, like AI, and personalization in how you’re educating a client on an investment you may be recommending to them.”
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.