Identifying the Emerging Affluent to Start Lifelong Relationships

A Financial Marketer’s Guide to Mass Affluent Millennials

All data referred to in this report is sourced from IXI Services WealthComplete®, MarketMix™, and Financial Cohorts®, which includes data from GfK MRI.

The emergence of the Millennial generation has many financial institutions eager to form lasting connections with these younger consumers, who now are entering financial independence. Millennials have just under $1.5 trillion in aggregate investable assets, or a little more than 5% of the U.S. total. In relative terms, this is a small portion of the total investable assets, but it represents a group of customers that by virtue of their age will be around for a long time with assets that are expected to grow.

But Millennials look and behave uniquely. They differ dramatically from past generations in their preferences, media consumption behaviors, and how they respond to certain types of marketing messages. Financial marketers cannot simply employ the same playbook that worked for Baby Boomers and Generation X.

Here, we’ll take a deep look at the Millennial generation and how its financial profile differs from prior generations, how different groups of Millennials differ from one another, and then tackle some of the best tactics marketers should employ for reaching this generation.

Some Definitions:

If you’re marketing to Millennials, you need a new playbook

Millennials

For the purpose of this report, the term “Millennial” refers to any consumer born between 1980 and 2000. Using this line, there are approximately 17.6 million households headed by Millennials in the U.S. Because many Millennials are not yet heads of household, but are still part of their broader family units, these numbers likely represent lower, more conservative estimates.

Wealth Tiers

When discussing wealth tiers, IXI Services divides consumers into three tiers: mass market, mass affluent, and affluent. Those tiers are defined as follows:

■■ Mass Market: Households with less than $100,000 in total investable assets.

■■ Mass Affluent: Households with $100,000 up to $1 million in investable assets.

■■ Affluent: Households with more than $1 million in investable assets.

Investment portfolios of Millennials Millennials hold only 5.4% of all the financial assets in the U.S. — about $1.5 trillion — and have more money in deposits than any other generation, at 31%. But drill down to the different asset tiers, and you’ll find that not all Millennials are the same. Affluent and Mass Affluent Millennials look quite different from their Mass Market Millennial peers, and, in some cases, their financial profile resembles that of Baby Boomers.

Affluent Millennials have 21% of their money in deposits, and 63% combined in stocks and mutual funds, much like Baby Boomers.

Mass Affluent Millennials take on different characteristics, with portfolios that are heavier in mutual funds (37%), but close to one-third in deposits (32%).

And Mass Market Millennials look very different. Nearly 60% of their assets are in deposits, with 34% in stocks and mutual funds, and just 1% residing in bonds.

Banks and financial marketers targeting Millennials can’t build a strategy around the idea that the entire generation is the same. Instead, they need to look at different tiers and strategize around different kinds of consumers.

Affluent$1M+

Average household assets: $3.8MNumber of U.S. households: 188K

Mass Affluent$100K - $1M

Mass Market<$100K

Average household assets: $270KNumber of U.S. households: 2M

Average household assets: $15KNumber of U.S. households: 15.5M

Deposits Mutual Funds Stocks Bonds Other

8%

8% 1%

24% 59%

32%

21%

31% 32%

9%

7%

37%

19%

3% 9%

Source: IXI Services WealthComplete®, 2014

Perhaps no segment of the Millennial population is more important to financial marketers than the Mass Affluent. This group has started to amass wealth when compared to their Millennial peers in the Mass Market tier. Income, spending, and credit balance are higher for these folks, roughly on the order of a 2:1 ratio. For the Mass Affluent, the higher levels of spending and credit can be supported by a foundation of assets that is roughly 30 times higher than the Mass Market.

These consumers are much more likely to move into the Affluent tier over the course of their lives than Mass Market consumers, so, it’s within a marketer’s best interest to consider them the “emerging affluent.” Therefore, marketers will likely want to build relationships early, cementing a bond that will last as the Mass Affluent become heads of the household and progress into the Affluent tier.

Assets

Income

DiscretionarySpending

CreditBalance

Mass Af�uent Millennials Mass Market Millennials

$269,937

$14,697

$109,717

$55,252

$76,490

$132,196

$65,507

$35,586

Source: IXI Services WealthComplete®, Income360®, Discretionary Spending Dollars™, and CreditStyles® Pro, 2014. Credit Balance includes mortgage. Discretionary Spending reflects the amount the household likely spends on discretionary items after accounting for the fixed expenses of life (housing, utilities, public transportation, personal insurance and pensions).

Looking for emerging affluent Millennials? Focus on the Mass Affluent.

Comparison of Mass Affluent and Mass Market MillennialsEstimated Annual Household Economics

Mass Affluent Millennials are ambitious, with an appetite for advancing their careers.

What are they like?When it comes to their professional lives, Mass Affluent Millennials can be described as ambitious, with an appetite for advancing in their careers and assuming leadership positions.

While the prevailing consensus of the Millennial generation is that many members of the generation are slow to start their careers, the Mass Affluent go in the opposite direction, and are keen to begin working toward the future. They have a propensity for jobs that they consider careers, and may view their current industry as one they will remain in for a considerable amount of time. It should come as no surprise that Mass Affluent Millennials are also an educated group, indexing highly for a bachelor’s or post-graduate degree. And, despite being relatively young, they index highly for leadership and supervisory positions.

This is a generation that also wants to keep working. Many Mass Affluent Millennials feel they would continue working even if they won the lottery, and also express a goal to make it to the top of their profession.

Finally, Mass Affluent Millennials are very materially driven, with a belief that material possessions and wealth are very important to them. This perhaps ties back to their ambition and drive to succeed in their careers.

Where do they live?The areas with the highest concentration of Millennials are typically significant metro areas, such as New York, Los Angeles, Chicago, and Washington D.C. When the measure is adjusted to density of Millennials, the top 10 areas change slightly, becoming more heavily associated with college towns and university populations such as the University of Iowa, at Ames; Penn State; and the University of Illinois at Urbana/Champaign.

But if we really dive into the numbers and identify the top 10 metro regions with highest concentration of Mass Affluent Millennial households compared to the Millennial population, we start to see some trends. It is the usual list of significant metro areas, but the pure college towns are gone. The Mass Affluent are concentrated in the tech-heavy areas of California; the advertising/media/finance industries of the greater New York City area, including portions of lower Connecticut; the science and technology corridors of the Boston area, and the government and policy areas of Washington D.C. In general, Mass Affluent Millennials are in the “right” places to drive the economy and themselves forward.

Source: IXI Services MarketMix™, 2014

Rank Metro Region

Concentration of

Mass Affluent Millennials

Assets Annual Income

Annual Discretionary

Spending

1 San Jose-Sunnyvale-Santa Clara, CA 32.9% $288,139 $122,834 $73,080

2 San Francisco-Oakland-Fremont, CA 29.9% $296,420 $170,309 $89,843

3 New York-Northern New Jersey-Long Island, NY-NJ-PA 25.2% $294,735 $127,570 $106,736

4 Boston-Cambridge-Quincy, MA-NH 23.2% $282,081 $111,780 $73,363

5 Washington-Arlington-Alexandria, DC-VA-MD-WV 22.5% $264,915 $134,795 $104,526

6 Buffalo-Niagara Falls, NY 22.3% $245,890 $70,815 $41,802

7 Bridgeport-Stamford-Norwalk, CT 22.1% $304,028 $113,069 $60,035

8 Santa Cruz-Watsonville, CA 22.0% $302,410 $119,799 $80,698

9 Trenton-Ewing, NJ 21.2% $281,060 $112,775 $73,056

10 Napa, CA 19.8% $298,817 $118,646 $80,308

Top 10 Metro Regions with Highest Concentration of Mass Affluent Millennial Households Compared to Millennial Population

Promoting financial security is a great way to earn their trust as they build for the long term.

Tips for marketing to Mass Affluent Millennials

Messaging and themesMillennials have entered their careers right after the “great recession,” and it seems like every day there is a report about the challenges this generation faces, from low job prospects to huge student loans that make saving money very difficult. While much of the press forecasts doom and gloom, many younger consumers are taking life by the horns. We know that Mass Affluent Millennials are interested in starting careers right now, and that they are also very likely to hold leadership positions, or at least aspire to them. Marketing messages should reflect this optimistic outlook whenever possible.

Another theme closely tied to this is the idea of financial security. While this generation has lower rates of marriage compared to prior generations, they are expressing positive attitudes and aspirations about being married. In other words, Millennials want to settle down. Promoting financial security is a great way to earn their trust as they build for the long term.

Perhaps as another circumstance of these formative times, Millennials are also a generation that constantly looks for added value. Financial marketers would do well to promote and highlight benefits in their campaign messaging, including rewards programs, points and cash back offers. This kind of value-add is an important element that drives this generation’s choices and behaviors.

Finally, marketers need to remember that Millennials are a digital generation. Prior generations still value the personal connection of going to the bank and talking to a teller. This younger generation is adept at technologies and comfortable banking online from anywhere – 30% are likely to use a financial or banking application on their phone. They are looking for convenience, coverage, and the ease of electronic transactions. All marketing aimed at Millennials needs to reflect this mindset.

Channels and approachesThis digital inclination goes well beyond ad messaging, of course. Marketers need to take this always-online generation’s behavior into account with media planning as well.

Millennials are unique in that they move across channels fluently throughout the day. Nearly a third say they are likely to use phone to check websites for financial information, showing that this generation sees no distinction between desktop and mobile Internet access. Marketers need an omni-channel approach if they want to get a Millennial consumer’s attention and remain relevant.

Finally, marketers need to remember that they won’t be the only ones delivering a convincing message. Millennials are an open generation, one that shares insight and opinion about everything from financial products to movies or meals. Friends and family members are huge sources of advice, and Millennials are more likely to trust their friends more than financial advisers. In fact, a recommendation from a friend is more important to them than an institution’s financial security and history. By building easily digestible and shareable facts into ad creative, marketers make it easy for existing customers to share benchmarks and benefits with curious friends and peers.

Millennials are more likely to trust their friends more than financial advisers.

Start nurturing Millennial relationships now Financial marketers should always look for customers that represent high growth potential, and there is perhaps no better audience right now than Mass Affluent Millennials. This generation, which is just coming into its own in terms of saving, spending and accumulating wealth, is at the stage where it is looking to build relationships with trusted advisors. These financial relationships may be simple now, but as this generation moves toward affluence, its needs will evolve and become more complex. As that happens, there is a strong likelihood that Millennials will turn to the institutions that they have known and invested with in the past.

By using media strategies and creative that meet these emerging affluent consumers where they are interacting with media, financial marketers can begin to establish these long-term relationships today.

For more information, please contact:IXI Services 7927 Jones Branch Drive, Suite 400 McLean, VA 22102 info.ixiservices@equifax.com 800.210.4323 www.ixiservices.com

Equifax and EFX are registered trademarks of Equifax Inc. Cohorts, CreditStyles, Equifax, Income360, and WealthComplete are registered trademarks of Equifax, Inc. Discretionary Spending Dollars, Inform > Enrich > Empower, IXI, and MarketMix are trademarks of Equifax Inc. Copyright © 2015, Equifax Inc., Atlanta, Georgia. All rights reserved.

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