In the UK, “High Earners, Not Rich Yet”(HENRYs) are on the rise. This demographic, characterised by high incomes and relatively low accumulated wealth, is reshaping financial landscapes. What are HENRYs, what do they mean for the economy and how could they benefit from financial advice?

What are HENRYs?

HENRYs are typically professionals in their 30s and 40s earning over £100,000 a year. Despite their substantial incomes, they often struggle to build their wealth due to high living costs, student loans and lifestyle inflation. Approximately 10% of the UK population are HENRYs, with a significant concentration in major cities including London, Manchester, and Edinburgh.

Economic impact

HENRYs have several implications for the UK economy:

• Consumer spending: HENRYs are major contributors to consumer spending, particularly in luxury goods, travel, and dining. Their spending habits drive demand in these sectors, influencing market trends and business strategies.
• Housing market: With their substantial incomes, HENRYs are active in the housing market, often seeking properties in desirable areas. This demand can drive up property prices, impacting affordability for other demographics.
• Investment trends: HENRYs are increasingly turning to investment opportunities to try and grow their wealth. This includes traditional investments like stocks and bonds, as well as alternative, often riskier assets such as cryptocurrencies.

Challenges faced by HENRYs

Despite their high earnings, HENRYs face unique financial challenges, including:

• High living costs: Living in big cities can cost big money, from housing to childcare, which erodes disposable income.
• High taxes: As HENRYs tend to earn over £100,000 a year, they’re either higher-rate or additional-rate taxpayers, which reduces how much money they have available for spending and investing. These higher tax brackets can also delay life milestones such as buying a home or starting a family. High taxes in the UK have led many HENRYs to relocate (or look to relocate) to countries with more favourable rates, which has a knock-on effect on the UK economy.
• Student debt: Many HENRYs are still paying off substantial student loans, delaying their wealth accumulation.
• Lifestyle inflation: As incomes rise, so do lifestyle and spending habits, making it difficult to save and invest for the future.

The Financial Adviser’s role

Financial Advisers are primed to help HENRYs navigate their financial challenges and build long-term wealth in the following ways:

• Goal setting: Financial Advisers can help HENRYs clearly identify and prioritise what they want in life, offering guidance and expertise to help them get there, whilst taking ongoing circumstances into account.
• Budgeting and saving: Financial Advisers can help HENRYs implement and track stringent budgets and prioritise savings, ensuring they manage high living costs to build wealth over time.
• Cashflow planning: Financial Advisers can use advanced cashflow modelling to show the impact of lifestyle choices on long-term wealth, including early retirement, saving and spending habits.
• Tax optimisation: Financial Advisers can help HENRYs navigate complex tax situations and changing legal landscapes, ensuring they avoid any tax traps and maximise the opportunities available to them.
• Retirement planning: Financial Advisers can help HENRYs arrange and manage retirement goals and timelines, guiding them on the path to success.
• Investment management: Financial Advisers can help HENRYs diversify their investments across different asset classes, mitigate risk and maximise opportunities for returns in line with goals and objectives, personal circumstances, risk tolerance and their own preferences.
• Debt management: Financial Advisers can build and implement strategies to help HENRYs pay down immediate high-interest debts, such as credit cards and student loans, freeing up income for long-term wealth accumulation.

Conclusion

The rise of HENRYs in the UK reflects broader economic trends and highlights the challenges of wealth accumulation in a high-cost environment. We can help HENRYs navigate on their journey towards significant wealth and security, financially and emotionally, through carefully considered, qualified financial guidance and support. You can discuss how we can help with your Courtiers Financial Adviser, or Contact us if you wish to know more.