Expert: Niall Buggy Facilitator: James Howick
- Mass Affluent is a difficult segment to define and target
- Upgrading is much easier than downgrading
- Buying a book of mass affluent clients can come with hidden consequences
Whilst the term ‘mass affluent’ was well known across the group, it had very different connotations for the attendees.
Depending on the firm’s viewpoint this could be £50k of investable assets / income of £75k all the way to £1m of investable assets or £250k of income. This led to a very robust conversation about some of the metrics presented around the segment
The group also had varying experiences in the mass affluent segment, with some attendees deeply immersed in it while others had far more experience in the HNW segment.
The discussion was centred around the onboarding and offboarding of clients and the need to have:
- Clearly defined processes
- Definitions of qualifying v non-qualifying
- Communication with clients
That said, it was also very clear that some firms allow a certain amount of local discretion when it comes to non-qualifying clients.
The discussion then moved onto whether buying an existing book of clients (as opposed to a business that runs it) was a good option. The points to be aware of in this scenario are that while you may have a large swathe of mass affluent, as well as a few high net worth, crucially you may well be picking up a lot of mass market customers.
If this is an outcome, the cost to serve of these customers is going to be very high and income derived much lower. With this in mind it would be imperative to have off-boarding procedures in place (this was demonstrated by one of the attendees who had gone through this process).
We also discussed how not only are the definitions blurred in this scenario, but the offerings are too. We
spoke through various competitors and how they approached the segment and looked at high street banks, neo banks as well as new digital platforms aimed at mass affluent but with no label.
The consensus was that this is a difficult segment to navigate through and, as mentioned, a clear offering is key to winning. That said, there were several examples of a flexible approach bearing dividends, remembering that most wealth clients were once mass affluent and have a model that allows the proposition to change as client needs become more complex, which is a positive way to approach the segment.
Having discussed the different offerings / views of the marketplace we looked in detail about what mass affluent clients want. We broke this down into a few key areas – financial guidance and education, low cost, flexible and medium to low-risk products – in other words a digital wealth / wealth lite option.
We talked through an opportunity to brand / create a digitally enhanced proposition that would naturally lead to Wealth Management service if required by the client and right for the firm.
The group very much felt that they need to build smooth and engaging transactional relationships and when the time comes for advice ensure that the FIRM has built a relationship with the client as opposed to it being adviser led (as is the case for many firms today).
- While a very interesting and engaging topic and one that needs to be explored further, data shows that a large majority of wealth clients were once mass affluent
- Trying to build a relationship once clients are wealthy is a lot harder than building a relationship when they are starting out