MILLIONAIRES ONCE AGAIN ON THE RISE REPORTS NEW STUDY FROM TNS
New York, NY, September 28, 2005 —For the third consecutive year, the number of households with
more than one million dollars ($1MM) in net worth (excluding primary residence) has risen, according to new research released today by TNS Financial Services, a division of TNS, one of the world’s largest market information companies.
Based on the latest Affluent Market Research Program (AMRP), TNS’ annual survey of wealthy U.S.
households, the number of millionaires increased 8 percent over last year to 8.9 million as of May 2005.
Unlike 2004, year to date stock market growth did not fuel the increase in millionaire households. The Standard & Poors 500 and NASDAQ posted no significant gains during the time period measured, and the Dow Jones Industrial Average posted only a 4% gain. In fact, while ownership of stocks and bonds is up (72% of millionaires own individually held stocks and bonds, up from 63% in 2003), the average balance invested is down. Ownership of mutual funds is flat and the average balance also fell, dropping about 20% (mean among mutual fund owners in 2005 was $283,000 versus $355,000 in 2004.)
The influx of new millionaires represents long-term wealth accumulation, rather than new wealth creation.
“These households did not become rich overnight,” says Jeanette Luhr, manager of the research study.
“They have, however, benefited from economic changes in the past several years, and taken advantageof them.” For instance, debt has decreased substantially from last year. In 2004 the average debt was $179,000. This year that number fell to $165,000, an 8% decrease. “The growth we’ve seen this year is largely due to measured planning and active reinvestment.
Though we’ve seen some product shifts, overall the asset allocation of these households has not changed significantly,” Luhr said. “When asked about their investment approach over the past year, 61% of millionaires said their approach has changed very little, indicating they have a strategy and they are sticking to it.”
Nor is real estate and its famed “bubble” a driving force behind the increase in the number of millionaires.
In fact, ownership in investment real estate is down from 2004. That year, 50% of millionaires owned
some kind of investment real estate, including second or vacation homes, compared to 44% in 2005.
Though real estate continues to be a staple in their investment portfolios, these households are not
becoming wealthy solely based on their real estate investments.
Emerging affluent households, those with $100K-$500K net worth, excluding primary residence, have also increased in the past year, from 23.9MM in 2004, to 24.5MM in 2005. “More and more we are seeing financial institutions offer planning services designed specifically for the emerging market. As these households continue to take advantage of these tools, we’re seeing their numbers increase,” Luhr adds.
In addition, confidence seems to be increasing. Over three-quarters of high net worth households feel they will be financially prepared for retirement.
About the TNS Financial Services Affluent Market Research Program
The Affluent Market Research Program (AMRP), offered exclusively by TNS Financial Services, is the
“gold standard” syndicated study of the U.S. wealth markets. AMRP is based on a representative national sample of over 1,800 households with a net worth of $500,000 or more, excluding primary residence.
The mail-based survey includes additional interviews of households with $1 million or more in investable assets; Hispanics, African Americans and Asians; and the emerging affluent.
TNS is one of the world's leading providers of market information. The company delivers strategic market measurement, analysis, insight and advice to many of the world's largest organizations and most recognized brands. TNS' research helps its clients better understand the needs and wants of their customers, and its capabilities span market segmentation, advertising and communications, new product development, brand performance and stakeholder management. The company is also one of the leading providers of social and political polling. From its global network that spans 70 countries who together conduct research in more than 110 countries, TNS allows for local expertise and knowledge to be combined together with internationally consistent information and analysis.
TNS is listed on the London Stock Exchange (TNN) and is a trademark of Taylor Nelson Sofres plc.
Further information can be found on http://www.tns-global.com