2017 was a good year for many investors. The market was up. The economy was taking off. Jobs were more available. It was also a good year for Millionaires. In fact, 2017 created another 600,000 Millionaires. According to Spectrem’s annual wealth market analysis, the number of Millionaires (those with $1 million to $5 million of net worth, not including their primary residence) grew from 9.4 million households at the end of 2016 to 9.98 million households at the end of 2017.
Of course, Millionaires weren’t the only households that increased in wealth in 2017. Mass Affluent households (those with $100,000-999,000 of net worth, not including primary residence) also grew by 500,000. At the end of 2016 there were 30.5 million Mass Affluent households. At the end of 2017, that number had grown to 31 million households.
Spectrem also tracks the number of households with $5 million of net worth to $25 million of net worth. That number grew from 1,260,000 households to 1,348,000 and increase of more than 84,000 households in the past year. Similarly, the number of households with more than $25 million of net worth grew from 156,000 in 2016 to 172,000 at the end of 2017, an increase of 16,000.
The reason for the growth of Millionaires in 2017 is relatively obvious. Because the largest portion of most wealthy households total assets is their investable assets, which compromise almost 60% of total assets for Millionaires, the record stock market has increased the net worth of most of these households. Even Mass Affluent households have felt the impact of the market. Many will have investable assets and similarly most are invested in a 401(k) plan or other employer plan – and these investments have also benefitted from the market.
This provides plenty of opportunity for financial advisors. The U.S. Census Bureau indicated in 2015 that there were more than 300,000 financial advisors. With millions of Millionaires looking for advice, financial firms should be reaching out to investors. While more than 60% of investors generally have a financial advisor (this percentage varies by wealth, age and other factors), there is still opportunity with those who do not have advisor. Generally, as the level of one’s assets increases, so does their likelihood to reach out to an advisor.
Spectrem’s research shows that investors have varying beliefs regarding how long the bull market will last. While 34% believe the market will stay positive for at least 1 to 2 more years, 26% think it’s going to crash in the next 12 months. In contrast, 18% believe it will last 3 to 5 years or more. Spectrem’s research shows that the number of wealthy households has grown steadily since the crash in 2008. Hopefully the number of Millionaires (and other wealth segments) will continue to grow.
© 2018 Spectrem Group