Nearly every day of the work week, a new set of numbers get released from the federal government or from interested economic researchers to indicate the direction of the economy.
Every new indicator produces a slew of reporting from business journals and electronic financial media to explain why the new numbers matter, or why they don’t. It gets confusing to know which economic indicators indicate good news, which indicate bad news, and which don’t help at all in understanding what is going on with money in America.
But sometimes numbers say exactly what they mean. Or they mean exactly what they say.
According to Spectrem’s annual report on the size of the affluent market in America, there are more people with more money than there were one year ago. There are more people with a net worth over $100,000, there are more Millionaires, and there are more people with a net worth over $25 million.
For advisors and providers, this means there are more people in need of financial advice and assistance.
Here are the numbers, according to Spectrem’s Market Insights 2019:
- There were 31.2 million Mass Affluent households with a net worth between $100,000 and $1 million, not including the value of their primary residence (NIPR). That is an increase of 200,000 households from 2017, and an increase of seven million households since 2007, when the Great Recession reduced the number significantly.
- The study segments households with a net worth between $1 million and $5 million and designates them as Millionaires. The total number of Millionaire households climbed to 10.23 million, an increase of 250,000 from one year ago. The number of Millionaires has almost doubled since 2008, when there were 5.9 million Millionaire households.
- The segment of investors with a net worth between $5 million and $25 million are the Ultra High Net Worth investors, and in 2018, the number of those households grew to 1.4 million, an increase of 50,000 from 2017. Like the Millionaire segment, the total has almost doubled since 2008, when there were 760,000 UHNW households.
- There are now 173,000 households with a net worth exceeding $25 million, an increase of 1,000 households from the previous year.
Adding the Millionaires, UHNW and $25 million plus population, there are 11.8 million households in America with a net worth of $1 million or more.
Since the moment the United States began its recovery from the Great Recession, the number of wealthy households has grown. That’s a full decade of increasing numbers of affluent and wealthy investors, and that is good news for anyone in the financial advisory industry.
The report contains one slight negative indicator. The difference between the growth in 2017 and 2018 is notable. The number of Millionaires grew by almost 600,000 in 2017, but only grew by 250,000 in 2018. Similarly, the growth among UHNW investors dropped from 90,000 to 50,000, and the number of $25 million plus investors dropped from 16,000 to just 1,000, and extremely significant decrease in growth.
The global economy plays a role in the growth of wealth in America, and in 2018, the global economy was a mixed bag of successes and setbacks. A majority of investors today are invested in global markets, either in direct investment in foreign companies or by investing in foreign or international mutual funds. Attentive investors wake every morning before the American stock market bell to see what occurred in the Asian markets, knowing that there is a direct correlation between how the business world half a world away is reacting to international trade matters.
Market Insights 2019 includes details from the entire year of Spectrem research with affluent and wealthy investors, but the reduced growth among wealthy investors from 2018 brings about one key question:
“I wonder what growth will look like when the 2020 Market Insights report comes out?"
© 2019 Spectrem Group