Its not just the top 1% anymore. Around 20% of U.S. adults now fall into what is being called the new rich, according to new research.
This label, which denotes households with annual income of $250,000 or more at some point in their working lives, tends to be made up of mostly older professionals, working married couples and more educated singles.
One key difference: Unlike many ultrahigh-net-worth individuals and families, the new rich rely primarily on income from their jobs for their wealth.
The findings come from survey data compiled for a new book -- Chasing the American Dream, by Mark Rank, a professor at Washington University -- and analysis by the Associated Press-NORC Center for Public Affairs Research at the University of Chicago. The book will be published in April by Oxford University Press, and details of the research were reported by the Associated Press.
Characteristics of the new rich include a sense of economic fragility and an unorthodox mix of conservative and liberal views, according to Jennifer Benz, a senior research scientist at the Center for Public Affairs Research.
Unlike the top 1%, the new rich are more prone to deal with the risk of economic vulnerability because of their reliance on fluctuating incomes, according to Rank's book.
IMPLICATIONS FOR ADVISORS
To serve this market, the most important things financial advisors can do are to make sure clients establish automated investing programs, max out their 401(k)s, make sure they have appropriate life insurance policies and make monthly contributions to 529 college savings plans if they have children, says David Edwards, president of Heron Financial Group/Wealth Advisors in New York City.
Heron's clients tend to fall heavily into the "new rich" profile. The firm specifically targets executives and small business owners who head a family, make between $250,000 and $1 million annually, and are stressed for time.
This is a group that has a problem that needs to be solved," Edwards says. In additions, these clients are "often facing a critical event that demands professional advice for the first time, he adds.
The good news for advisors, he adds, is that the market is still relatively untapped, and prospects are usually eager to sign on. Weve found that the sales cycle is often only a month long, Edwards says.
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