The segment of the American public that has been oversold and underserved can be defined as the mass affluent. This group has unique characteristics. Do you fit the profile of this group?
The mass affluent are people who:
• Save more than they spend.
• Seek to invest for the future.
• Worry about funding their children’s college education, but in most cases won’t impoverish themselves because they can cover costs through savings strategies, loans or personal income. In addition, many are not opposed to their children paying some part of their education costs.
• Worry about how they will replace their paychecks when retirement approaches, but in most cases will need to be encouraged to spend more money in retirement.
• Desire to leave a legacy to their children, not to charity.
• In retirement, seek to spend between $4,000 and $10,000 per month.
• Will have between $500,000 and $1.5 million in investable assets upon retirement.
• Would never consider calling themselves high-net-worth investors or millionaires.
Consider the following research: Russ Allen Prince and Associates just published a book entitled The Middle Class Millionaire, based on surveying middle-class Americans with investable assets between $1 and $10 million.
The mass-affluent community seeks advice on a wide array of planning issues. While they generally have investable dollars, they also want to explore how their money will affect their lives. However, many of the financial relationships they maintain are built on investment strategies, performance comparisons, technical analyses and tactical repositioning. These people feel the planning element of the relationship is missing, yet they struggle to articulate it, since their current advisor calls the existing narrow relationship financial planning.
Too many of these people visit our office with stories of how they felt like small fish in a big pond. They felt an initial sense of security aligning with a big-name firm, but when it came to having their financial planning needs addressed, the relationship would fall short.
The mass affluent seem to be stuck in a world where they want financial planning advice, yet what they buy is primarily investment advice.
Over my lifetime, I have been “blessed” with many adverse situations. Yes, blessed, because in each situation I learned valuable lessons that molded me into who I am today. My parents were great mentors who encouraged me to “never give up.” I studied and watched the “successful” people that came across their life, and, I found one common thread…they never quit.
Well, there was a great poem, written long ago, on the subject of not quitting. I am sure you are familiar with it. Here is a short video of the poem…I think you will find it rewarding.
Russ Prince and Lewis Schiff, authors of The Middle Class Millionaire, purport to have uncovered the rise of new class of wealth that is changing the face of America: These 8.4 million households [with $1 million to $10 million in net wealth] make up a new generation of millionaires who began to emerge from the middle class in the late twentieth century. As their wealth has grown, so have both the cost of maintaining their lifestyles and their need for products and services that make their lives run smoothly. This group is helping to bring about momentous changes throughout American society.
Tom Stanley, author of The Millionaire Next Door showed his millionaires were almost retro middle-class, even for the ‘80s. They owned and operated small business-dry cleaners, gas stations, or cement companies. They stayed married to their wives, drove non-descript station wagons into the ground, bought their clothes more often off the shelf than off the rack, and went to church. They worked hard, sent their kids to college, avoided debt, and saved their money. In a word, they were the total opposites of the 1980’s high-flying executives-overspending, conspicuously consuming individuals.
But a funny thing happened over the past 20 years. The Reagan/Bush/Clinton/Bush economic boom (undeterred by the bond and stock market corrections of ’87, the recession of ’92, or the dot.com crash of 2000), fueled by the low interest rates, low taxes, and almost non-existent inflation has, among other things, replaced Tom Stanley’s retro millionaires with a new generation of small business owners who are, if anything, more driven to attain success, far more socially liberal, and cutting-edge consumers of the first order. Prince and Schiff’s book is a study of what it takes to get into that class today.
The authors identify four characteristics that dramatically separate today’s middle-class millionaires from their less successful classmates:
Hard work. While nine out of 10 of respondents to Prince and Schiff’s survey believe that “anyone can become a millionaire if he or she works hard enough,” the average middle-class head of household works 41 hours a week while the average middle-class millionaire puts in 70 hours. The millionaire is also five times more likely to be “always available” via e-mail (76% vs. 16%), four times more likely to work nights (52% vs. 12%), and three times more likely to be in the office or store on weekends (67% vs. 21%).
Networking. Although most middle-class millionaires dislike the smarmy connotations of the term, 62% of them believe knowing many, many people is very important to achieving financial success (vs. 43%), and they are three times as likely to cite networking as a way to connect with people they can turn to for information (83% vs. 29%).
Never giving up. Nine out of 10 of all middle-class survey respondents admitted to having “made a major career or business decision that has a very bad outcome,” but middle-class millionaires averaged 3.1 such incidents vs. 1.6 for the rest of the middle-class. More importantly, the millionaires were five times more likely to follow up a bad business outcome by trying again in the same field, rather than changing fields or focusing on other projects (77% vs. 14%).
Going where the money is. Eighty percent of middle-class millionaires either own their own business or are in professional partnerships. In fact, two out of three of them (65%) consider an ownership stake to be “very important” to financial success, vs. just 28% of other folks in the middle class. That pretty much says it all.
At times, in every day, we all come across events that make us want to quit. Events transpire around us each day of which we have NO control.
Our attitude toward these events determine the outcome. If you have a negative attitude then things will probably come out bad for you. If you have a strong positive attitude then, in most cases things come up “roses.”
I have been blessed and gifted with wonderful coaches in my sporting career and mentors in every aspect of my life. My parents instilled in me a stone wall discipline to never quit…to keep going.
I want to share a clip from a great movie “Facing The Giants.” Maybe you have seen the movie. Nonetheless I have a section that portrays the theme that your abilities are way beyond what you think they are. In everything that you do each day many people are watching you, as you are an inspirational teacher to them, and most of the time you do not even know it. So keep on… Keeping on.
For those of you that played football you will remember the “death crawl” drill (I hated it). Well it is portrayed here and I encourage you to watch it again and again. So if you are having a tough day… think about this clip and… don’t quit!
Countless times I have heard people say to me… Gosh, that was a Long Day. With my “irksome” humor I always say…how could it be any longer than any other day? They are all 24 hours long! They retort…, you know what I mean.
Well, over the past year or so the economy, housing market and stock market has been in a severe downturn. Businesses and individual lives have been changed forever. For them each day has been a real long day(s).
In September and October 2008 I saw things begin to go off a cliff. In trying to keep my team, business associates and friends motivated and moving forward I thought of the movie…The Longest Day. It was filled with countless stars as they depicted the events of June 6, 1944… D-Day.
One scene came to my mind, the scene with Robert Mitchum, who played General Norman Cota and his adjutant played by Eddie Albert, of “Green Acres” fame. They were pinned on the beaches of Normandy and their division was getting hammered. Rather than retreating Mitchum says his famous lines… “There are only two types of people who will be on this beach…those that are dead and those that are going to die. We are moving in land.”
With the present economic situation on top of all of us we can sit around, moan and “die” or we can move ahead. If you will get up and do something I can assure you things will start to get brighter.
Watch this short excerpt of the “Mitchum” character: