Mass Affluent in the UK: Who They Are and What They Do

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Approximately 19% of the UK population is considered mass affluent. These individuals are wealthier than the average person but do not fall into the ultra-wealthy category. As the economy evolves, this group continues to grow, attracting attention from financial institutions eager to serve their needs.

But who exactly are the mass affluent, and how do they earn and invest their wealth?

Who are the mass affluent in the UK?

In the UK, mass affluent individuals typically have investable assets between £50,000 and £5 million. These assets may include:

Cash and savings accounts
Mutual funds and direct equity investments
Other liquid investments

Liquid assets vs. fixed assets

The term “mass affluent” is usually defined by liquid assets, excluding property wealth. This distinction is important, as some individuals may have substantial property holdings but limited investable assets, placing them outside this category.

How the definition compare globally

UK: In the US, mass affluent individuals have investable assets between £50,000 and £5 million
US: Household income over $75,000 and liquid assets between $100,000 and $1 million

Mass affluents come from various backgrounds, including business owners, professionals, and executives. Their financial goals, needs and lifestyles can vary significantly. Someone with £50,000 in investments may have different strategies than someone with £5 million, but both fall within this category.

The size and impact of the mass affluent group

According to Royal London, approximately 13.1 million individuals fall into the mass affluent market in the United Kingdom (around 19% of the population).

The mass affluent group plays a crucial role in the UK economy, with their wealth significantly impacting financial markets. As of the end of 2022, mass affluent assets accounted for around £3.8 trillion, making up approximately 67% of the UK’s investable wealth. Of this, £3 trillion is held in liquid assets.

Where is the term “mass affluent” used?

The term “mass affluent” is commonly used in the financial services, banking, and marketing sectors to describe financially well-off individuals. It is used by:

Financial services: To identify clients with investable wealth who require tailored investment products and financial advice.
Banking: To target customers with substantial savings and investment potential, offering specialised services and products.
Marketing: To segment the market for targeted advertising and offerings, particularly for wealth management and luxury products.

The term “mass affluent” is not commonly used in everyday language. A more familiar term would be “upper-middle class,” though the two are not exactly the same.

While the “upper-middle class” generally refers to individuals with private education, high-paying jobs and a comfortable lifestyle, the “mass affluent” group focuses more on people who have significant wealth, often built through savings, investments, and assets. While some individuals in the upper-middle class or even middle class may qualify as mass affluent, this is not always the case. Whether someone is considered mass affluent depends largely on their investable wealth, not just their income or social class.

What’s the difference between the mass affluent and HNWI?

The main difference between mass affluent individuals and high-net-worth individuals (HNWIs) lies in the scale of their wealth. Mass affluents typically have liquid assets ranging from £50,000 to £5 million, while HNWIs are on the higher scale of the mass affluent category, with liquid assets between £1 million and £5 million.

Here’s a quick comparison:

Mass affluents: Often rely on banks and financial advisers to manage their personal finances. Their investments typically include mutual funds, stocks, and direct equity investments.
HNWIs: Tend to have more complex financial needs and often work with family offices, wealth managers or private banks to manage their wealth. They may engage in more sophisticated investment strategies and have access to exclusive financial products.

Both groups enjoy financial stability, but HNWIs often require more advanced financial management services. Unlike mass affluent individuals, HNWIs are typically categorised by net worth, which includes both the value of their liquid assets and fixed assets such as real estate and business ownership.

How the mass affluent earn and manage their wealth

The mass affluent earn their wealth from various sources, influencing how they manage their finances. Common income streams include:

Business interests: Many mass affluents built their wealth through business ownership or investments in private equity.
Careers: High-paying jobs, often in the legal, financial, or other professional sectors.
Investments: They may also generate income from investments in stocks, bonds or mutual funds.

They often use a combination of traditional and modern financial products. Many rely on digital banks for day-to-day banking, but they also seek guidance from financial advisers when making more complex decisions, such as tax planning or retirement savings.

Given their growing wealth, many are focused on protecting their assets through diversified portfolios, including insurance products, which can help mitigate risks.

Future outlook for the mass affluent segment

The mass affluent segment in the UK is poised for growth, largely driven by the great wealth transfer. It’s estimated that around £5.5 trillion will be transferred between generations in the UK by 2050. This massive shift of wealth from older generations to younger ones will significantly expand the affluent market size in the country.

At the same time, economic uncertainties, such as the effects of Brexit and inflation, are prompting many in the mass affluent group to become more cautious with their investments and savings strategies. As a result, there is an increased demand for financial advice, with many individuals seeking trusted advisers to help them navigate complex financial environments and make informed decisions for the future.

Conclusion

The mass affluent segment plays a vital role in the UK economy, with investable assets ranging from £50,000 to £5 million. Their influence on financial markets is substantial, and their numbers are expected to grow due to generational wealth transfers and changing economic conditions.

For financial institutions, serving the mass affluent requires tailored investment products, financial planning services, and digital banking solutions.

For individuals in this category, working with a trusted financial adviser and staying informed about economic trends is crucial for ensuring long-term financial security. With the right strategies, they can protect and grow their wealth in an evolving financial landscape.