Thursday, October 04, 2007

We Seem to Have Countless Millionaires

According to a Boston Consulting study cited in the WSJ Wealth Report blog, the United States boasts more than four million households with $1 million or more of investable assets.

Other surveys come up with a higher total. TNS estimates the number of U.S. households with $1 million or more, excluding primary residence, at 9.3 million.

In a June 10 column no longer available online, Julie Jason reports on a similar total from a Spectrem study:
Today, 9 million U.S. households have wealth of $1 million or more, according to Spectrem Group, a consulting firm specializing in the affluent and retirement markets. "Wealth" excludes the value of the home. This represents about 8 percent of all U.S. households, according to the U.S. Census Bureau.

Who are the true "millionaires" of today? Probably the ultra-wealthy - the 1 million households that have more than $5 million of wealth excluding their homes, representing less than 1 percent of U.S. households.

The number of ultra-wealthy has jumped over the past 10 years. In 1996, only 250,000 households had net worth over $5 million, according to Spectrem.

In three short years, by the end of 1999, at the height of the stock market, 590,000 ultra-high net worth households were counted by Spectrem. That number dropped to 480,000 in 2002 when the market bottomed.

Since then, the number of households with $5 million or more in wealth steadily increased, to 1.14 million by the end of 2006, according to Spectrem.

Who are the ultra-wealthy? According to Spectrem, 22 percent are senior corporate executives. Fifteen percent are business owners and 11 percent are physicians or dentists.

Their average age is 65. More than half (56 percent) are retired, and 36 percent plan to retire within the next five years.
Whose millionaire-household figures are right? I lean toward the higher number. If somebody with "only" $1 billion can't make this year's Forbes 400, we must have more than four million households with at least $1 million.
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You can probably expect to see more wealth managers among the ultra-wealthy, especially if they're working off shore. Boston Consulting notes that business is booming:
Wealth managers in BCG's benchmarking survey had a median pretax profit margin of 34.7 percent, and fewer than 5 percent of participants reported a loss. The survey uncovered broad patterns of profitability across regions and business models. The median pretax margin of North American brokers, for example, was less than one-third that of European offshore players

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