Are you a H.E.N.R.Y in need?

I made the same face when I first read that

No I didn’t call you Henry. I realize that isn’t your name (unless you’re one of the 482,000 people named Henry). It’s actually a financial term that was created back in 2003 and I learned more about them when interviewing Nate Hoskin with Hoskin Capital. It stands for High Earners, Not Rich Yet and while they might not be struggling to make ends meet, they’re not exactly thriving financially either.

HENRYs typically earn a higher than average income ($100,000 to $500,000) and don’t have much left over after expenses and discretionary purchases. This group really needs a bit of guidance on wealth building and becoming rich instead of LOOKING rich.

This is where taking financial advice can most likely make the biggest impact and if you find the right advisor like Frank Garcia or Nate Hoskin, you don’t have to worry about the painful 1% Asset Fee.

Creating Wealth VS Managing Wealth

I first experienced Financial Advising as a college student with very little money. I still ended up saving up some cash with my first job and placed it in a managed IRA for 1%! At first I didn’t think anything of it because that’s what so many of my friends and family did. Then I started earning more income and realized (as most advisors share now a days) that most advisors don’t even beat the market. So if I placed my stock portion of my portfolio in things like Vanguards High Yield ETF and the S&P 500 Index I would see similar performance for an eighth of the cost.

I was a HENRY. I was earning more income and needed direction. Eventually I place money in real estate investments, my self managed brokerage, and other investments I did my own research on. I still had a CPA to help, but I strayed away from the 1% portion of my entire managed portfolio if I could do it myself.

Some people really want hands on management (and that’s okay), but for the clients that don’t have much invested and need some more direction with CREATING wealth, a flat fee makes so much more sense. Those same advisors also help MANAGE your wealth once you get to a certain point and it’s still for a flat fee. Brilliant.

A flat fee arrangement promotes wealth building and management if you find the right advisor vs starting with management that you might be able to do on your own.

The HENRY profile

Since luxury brands have started incorporating these HENRYs into their marketing strategy, it’s only fair to share what this profile actually is.

– As mentioned already yearly income is over the median income of $70,000 from $100,000 to $500,000.

– This group is the working rich because their rich status is attributed to the working income not their accumulated wealth.

– Most of the income is allocated to expenses (housing, cars, discretionary items) as this group is an aspirational buyer (expenses on things they might be overextending on).

– Age is under 50 years old.

– Average amount of student loan debt for a HENRY at $80,000.

– This group has a high chance of being wealthy in the future if the right moves are made.

– The simple changes (lol) of reducing debt and increasing savings can begin moving this class to wealth accumulation. 

For those aspiring HENRYs or those not there yet

Being a HENRY is a good spot to be in. Making over the median income is a big deal and you’re already way head of others (so keep some perspective). For those that are well off of that income that’s okay too. You’ve got things you can do too. Here are some things that helped me and some pointers from advisors.

– I found myself a CPA. When you start earning money the CPAs can help you manage your tax burden each year and reduce your AGI with direction around where to invest.

Begin having conversations with wealth advisors especially if you’re diversifying your holdings. This will also help with long term strategy like debt reduction.

– I bought myself some expensive cars. Now I look back and realize I probably could have gone without the extra one. Take a look at the expenses and really think about why you’re buying it. If I was buying something or doing something for someone else it was easier for me to walk away from it.

– If you’re not a HENRY yet, see where you can honestly earn more income with the time you have available (you could write about your story for The Investing Circle), find a way to increase your W2, and figure out creative ways to cut expenses. 

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