Mass Affluent

By: Martin M. Shenkman, CPA, MBA, JD

Mass Affluent is a term used by some to describe investors with $500,000 to $3 million of investment assets. Although it is at best a generalization it might be safe to assume that these investors typically have estates valued at between $1 million to $5 million. From an investment perspective people in this class reach the point where they might want more tailored and personal investment planning than just mutual funds used by the mass public. Often at this range investors are into the minimum levels of investment assets which financial planners, wealth managers and private banks will personally manage and tailor a portfolio. From an estate planning perspective, these investors should evlaute hiring more specialized estate planners, consider by pass and other trusts, comprehensive powers of attorney to permit gifts and more sophisticated investment decisions, and insurance trusts. At this stage of wealth a larger term insurance policy, which is likely to be common for younger families in this wealth range, might be enough to trigger a state and even federal estate tax. So the ownership of insurance by a properly structured insurnace trust can be very important. At this stage of wealth, the "mass affluent" should be certain that they have a substantial umbrella, or personal excess liability, insurance policy. Consumers below this threshold often don't, and the mass affluent has more asstes to risk and the mass market often relies on 1-800 or other standardized insurance providers, which is not sufficient for the mass affluent. The challenge for the mass affluent investor in all these areas is that the services, products and decisions needed are more complex and different that the vast majority of the population, but they are just below the threshold of wealth which many of the higher end professionals and advisers have focused on.

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