First there were the Yuppies (young urban professionals), and then there were the Dinks (dual incomes, no kids). Now, here come the affluent millennial Henrys (high earning, not rich yet).
While most millennials may have yet to hit peak buying power, the Henrys among them have emerged as a subgroup with significant financial sway: According to a recent Goldman Sachs study, millennial households already control financial assets worth more than $1 trillion.
Here, then, is everything you need to know about millennial Henrys:
So where did “Henrys” come from?
The term Henry is not a new one. It’s marketing jargon, first used by Fortune in 2003 to categorize high earners on the cusp of getting rich, running households with annual incomes between $100,000 and $250,000. Henrys transcend generational confines. But increasingly, their numbers include millennials.
What makes millennial Henrys different from their predecessors?
Where Henrys of previous generations may have aspired for a house, or a car, millennial Henrys go after experiences, according to Jamie Gutfreund, CMO of agency Deep Focus. “Gen-Xers thought it was societally unacceptable to move back home, but it’s not looked down upon among millennials, many of whom have saved up and accumulated wealth by moving back home,” she said. “What unites them is their desire for a better lifestyle and enriching experiences such as travel.”
Why do brands need to pay attention?
Millennials came of age during a great recession. The economy gradually improved as they entered the workforce: A recent report by the U.S. Chamber of Commerce put their annual purchasing power at approximately $200 billion directly and $500 billion indirectly, due to the influence on the spending of their mostly baby boomer parents.
“I don’t know why brands have been ignoring this category, because given the longitudinal history of previous generations, they should have been able to predict their emergence,” said Yashoda Sampath, head of research at Huge.
Aside from experiences, what are they into?
Millennial Henrys seek out quality, craftsmanship and authenticity -– not necessarily brand names. This has not been good news for affordable luxury brands that have become increasingly commoditized, such as Michael Kors and Coach. “Luxury retailers in particular need to reevaluate their approach,” said Megan Hartman, strategy director at Red Peak Youth, a unit of Red Peak Branding. “We’re seeing that even high-net-worth millennials who can afford luxury brands are still swayed by brands like Zara and TopShop, which are able to cater to trends more quickly. Henrys are the same way; they will be just as willing to shop at Zara as they are to buy from luxury brands.”
How do they manage their money?
The brands catering to this segment well, according to the Goldman Sachs report, are wealth management companies like Wealthfront and Betterment. These two are the largest automated advisers and are attracting this group with their technology making wealth management easier. Big firms like Schwab and Vanguard need to act fast to earn their loyalty now.
“We’ve seen that millennials, regardless of how much income they earn, want to be in control of their finances,” said Hartman. “ The banks that provide useful tools for them to manage their money and educate them along the way will be the ones to earn their loyalty for life.”