Earning six figures doesn’t equal financial security.
Nobody understands this better than individuals classified as high earners, not rich yet (HENRYs), who struggle to build wealth despite earning a substantial income.
This also makes them prime candidates for financial guidance.
Financial professionals who tap into this demographic of prospects are positioning themselves to cater to a growing market of high-net-worth clients. But first, let’s gain a deeper understanding of HENRYs’ mindset and behaviors in order to identify the strategies that will support their success.
Defining HENRYs: 3 Key Characteristics
First coined in a 2003 Fortune article, the term HENRYs typically refers to individuals in their 30s and 40s earning between $250,000 and $500,000 but aren’t currently leveraging their money to build wealth.
#1: High Income
HENRYs typically work in lucrative fields such as medicine, law, technology, and finance, placing them among the top 10% of earners. However, since they’re in the top tax bracket, they face the brunt of high taxes.
While they have strong earning potential to become high-net-worth individuals in the future, many HENRYs currently have limited savings and investments.
#2: High Spending
HENRYs are estimated to account for 40% of household spending. They also frequently purchase luxury goods and services, and some believe these spending habits are driven by their aspirations to be ultra-affluent in the future.
It’s not all luxury spending, though, as many HENRYs are in a phase of life that might require significant financial commitments, such as childcare and mortgages.
#3: Significant Debt
Many HENRYs carry substantial debt that limits their ability to save and invest effectively. To put it into perspective, the average HENRY has approximately $80,000 in student loan debt.
They may also have mortgages in high-cost-of-living areas, auto loans, and steep credit card balances.
The Importance of Engaging Tomorrow’s Wealth Builders Today
HENRYs present a unique opportunity for financial advisors because they:
- Have high-income potential: Considering HENRYs’ continued career progression, their wealth-building capacity is strong. With the right direction, they can transition into high-net-worth clients in the future.
- Need financial guidance: HENRYs lack structured financial plans. Aside from their steep financial commitments, they’re also the prime target consumers for mass-market and luxury brands, and they may face pressure to maintain a particular lifestyle—even if it’s one they can’t yet afford.
- Are in a vital planning stage: Advisors who engage with HENRYs now are building lifelong client relationships as they accumulate more wealth over time.
- Are open and receptive to financial guidance: HENRYs recognize the importance of wealth management but may not have the time or expertise to create a structured financial plan on their own. Financial professionals who understand the needs and preferences of this demographic may find their marketing efforts well-received.
Related: Next-Gen Wealth: 7 Things You Should Be Doing Now
Tailored Financial Strategies for HENRYs
Given their income level but lack of significant wealth, HENRYs benefit from tailored financial strategies. Here are a few to consider exploring:
#1: Developing Better Spending Habits
- Create a structured budget that prioritizes savings while maintaining a sustainable standard of living
#2: Increasing Savings and Investments
- Maximizing contributions to retirement accounts such as 401(k)s and IRAs
- Establishing an emergency fund to cover at least six months of expenses
- Exploring diversified investment options beyond employer-sponsored plans
#3: Tax Strategies
- Leveraging deductions and credits to reduce taxable income
- Utilizing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) for tax-advantaged healthcare savings
#4: Reducing Debt
- Refinancing student loans to secure lower interest rates and reduce repayment burdens
- Accelerating mortgage payments when feasible to build home equity faster
- Managing credit card debt effectively to avoid high-interest accumulation
Building Trust with HENRYs Through Targeted Content
HENRYs behave similarly to high-net-worth millennials: They’re highly influenced by technology and social media. Being active on LinkedIn can be a great way to engage with young professionals, but the question is, what type of content should you create?
To position yourself as a thought leader, consider publishing educational content through blogs, webinars, and white papers that address key challenges HENRYs face (debt, investments, or tax strategies).
Not only will it help you attract prospects in this demographic, but it’ll also establish credibility with those who research your profile before working with you—and let’s be honest: a millennial prospect will likely research your firm thoroughly before booking an appointment.
Related: How to Use Video Marketing to Build a Stronger Financial Brand
Final Thoughts
HENRYs may not be wealthy yet, but they have the potential to be.
By proactively engaging with this demographic today, financial professionals can establish long-term relationships that grow alongside their clients’ financial success. Through strategic planning, debt management, and investment guidance, advisors can help HENRYs shift from high earners to high-net-worth clients, a win-win.
