To assign a real live broker (oops, financial consultant) to a client who keeps too low a Number is tantamount to Safeway assigning a personal shopper to anyone who comes in to buy a quart of milk. Still, there are profitable ways for financial services firms to serve smaller customers: the telephone, assuming they can keep the calls short and to the point and, better still, the online channel, where self-service is highly cost-effective. This is not to say that firms aren't happy to see you walk into their investment centers for a quick hello and a fill-out-the-papers session. They'll shake your hand, put an arm around your shoulder, even pour you a cup of coffee. After that, the more you manage your own modest Number, the better for them and the more cost-effective for you.
The next segment up from mass affluent
is where the action gets white hot. This parking
level belongs to those designated as high net
worth individuals (or HNWIs). There are no universal criteria
here. Generally, HNWIs have invested assets of
at least $1 million, although some companies also
target younger households with healthy six-figure
incomes, knowing that their net worth is likely
to reach target levels in the near future. Right
now there are well over 7 million high net worth
households in the United States, with a forecasted
growth rate of 16 percent a year and projected
assets of $32 trillion. Yum.
If their marketing efforts are any indication, Wall Street firms see HNWIs as the happiest people in the world, no matter that so many of them are, rightly or wrongly, distressed over their long-term prospects. Distress is not what's pictured in the ads. The ads are filled with images of zippy seniors who flash large white teeth and incredibly healthy gums. They dance. They jog. They bike. They fish. They golf. They snuggle. According to the ads, life is a theme park expressly designed for the middle-aged. Graying boomers waltz across their living rooms, raise glasses to one another on the decks of ocean liners and exchange smiles secure in the knowledge that a surefire blue-steel erection is just a pill away. These ads remind us that we are living in the Golden Age of Aging. Not only are we younger and healthier than middle-aged people used to be, many of us would probably have been blind, disabled or dead by now had we had the bad luck to have been born just a tiny bit sooner.
If you've made it onto the top levels of the ramp -- say you have at least $5 million in investments -- you are deemed to be an ultra high net worth individual (or UHNWI). This is a very nice position to hold in life, all the sweeter thanks to recent federal tax cuts. People earning $10 million a year hand over a smaller percentage of their income to the government than those earning a tenth of that and -- to a great degree -- escape the "gotcha" snare of the alternative minimum tax, according to The New York Times.