Packaged Facts: Why Banks and Creditors Can Bet on Affluent, High Net Worth Consumers Even During Recession

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Jun 06, 2019, 08:52 ET

ROCKVILLE, Md., June 6, 2019 /PRNewswire/ -- Post-recession trends have been good for affluent and high-net worth families, according to market research firm Packaged Facts in the recent report Affluent and High Net Worth Market: Wealth, Banking, and Payments Trends, 8th Edition.

From 2010 to 2019, the number of affluent households has risen by 90%, and average affluent household net worth has risen 12%. Meanwhile, there are an estimated 16.2 million high net worth households, up 47% from 2010. On average, these households have $5.2 million in wealth. A seismic generational shift is underway. While affluent Baby Boomer households still control the most wealth, growth is on the side of Generation X, which has seen aggregate affluent wealth almost double in 10 years. While Millennials are important marketing targets, marketers seeking their wealth must be patient: As of 2019, Millennial households contribute only 2% of aggregate affluent household wealth. For more immediate gratification, marketers can target $5 million+ net worth households, which have a whopping $82 trillion in wealth.

But what about the next recession? As prognosticators attempt to call the beginning of the next recession, one thing is fairly certain: Affluent and high-net worth families are a decent recession bet.

Consider credit cards. By volume, credit cards comprise 40% of $200K+ HH income consumers' payments and 30% of those made by $100K-$199K HH income consumers—huge percentages that translate to a respective 370 and 183 credit card transactions annually—and significant interchange and related fee revenue generated by each transaction. While spending rates would likely decline in a recession, they would still generate sizable purchase value and less risk.

Part of this is because—as suggested by Packaged Facts data—compared to the average household, affluent households are less apt to spend beyond their immediate means (most do not spend more than they earn in income), which means they are more apt to have ready, liquid funds to meet everyday obligations, including lending obligations. Moreover, when faced with financial emergencies that put those obligations at risk, roughly 80% of affluent households say they would tap savings/investments to meet them, and only 6% would choose to borrow. These households have ready means to meet those obligations and would not seek methods that add debt—and greater risk to lenders—to solve the problem. And only 11% of high-net worth credit card holders revolve unpaid balances on the card they use most, and they are even less likely to revolve balances on the rest. While this translates to less interest income for card issuers, it also translates to a stable recession play, given the ample assets on hand to pay for expenses.

About the Report

Affluent and High Net Worth Market: Wealth, Banking, and Payments Trends, 8th Edition segments affluent and high-net worth consumers and households, drilling down into their household finances, banking relationships and financial products and services usage and attitudes, digital engagement, payment usage and preferences, and credit card usage and preferences. The report emphasizes 5-year and 10-year trends over time, including market sizing, attitudes, usage, and other metrics.

Throughout the report, affluent and high-net worth consumers and households are segmented as follows:

Base affluent ($150K-$249K HH income)
Middle/upper affluent ($250K+ HH income)
Upper affluent ($1MM+ HH income)
High-net worth (at least $1 million net worth)
The Top 2% (at least $5 million net worth)

View additional information about Affluent and High Net Worth Market: Wealth, Banking, and Payments Trends, 8th Edition, including purchase options, the abstract, table of contents, and related reports at Packaged Facts' website: https://www.packagedfacts.com/financial-services-market-c83/.

About Packaged Facts

Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased at our company website and are also available through MarketResearch.com.

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SOURCE Packaged Facts