By Michael Vandenburg, CFP®

As a constant student of wealth and current trends of the wealthy I am not at all surprised that Orange County ranked 3rd in the country for the most millionaires with 113,299. Los Angeles was #1 with more than double the OC at 267,800. San Diego was also on the list at #5 with 100,030, according to the 2006 annual report by TNS Financial Services. The study also found that there are 8.9 million households in America with liquid assets (excluding real estate) in excess of $1 million. There are as many as 14 million households with a total net worth of $1 million or more. The number of affluent households in America has reached an all time high, and with numbers like that, it’s no wonder that there has been explosive growth and popularity in the area of wealth management. Along with the growth in this field, and Wall Street’s desire to profit from it, there have been numerous studies on the financial habits and trends of affluent Americans. 

One interesting trend with the wealthy is that the average age of affluent Americans has been declining and now stands at 56. Sixty-eight percent are either still working or semi-retired, 89% are married and 91% have a college degree (Spectrem 2006). 

As American investors accumulate more and more wealth, they are finding that their needs have been becoming increasingly complex, and the choices of what to invest in and who to trust is even more confusing. While the large wire-house firms (Merrill Lynch, Smith Barney, etc.) still control the lions share of high net worth households, about 30% of affluent investors, wary of their objectivity, have been increasingly migrating to independent advisors and wealth managers. (Accountants will appreciate the fact that for many years they have been thought of as the most trustworthy and objective advisor for affluent households.) The 2006 affluent market insights study by the spectrum group also shows that when looking for experts in managing their wealth, affluent households believe that independent investment advisors will serve them best.

When it comes down to what is most important to affluent investors, not surprisingly investment performance still ranks as one of the top priorities but not nearly as high as trust, personal service and communication. In fact, clear and frequent communication was the top priority for 67% of affluent households. Investment performance is still expected by the affluent and 90% of affluent households are more concerned with building their wealth then they are with preserving it (hnw 2004). 

Another interesting fact from the spectrem study is that 74% of wealthy baby boomers still currently working do not intend to retire when they reach the normal retirement age. Most of them said they would slow down or start a new business, but 10% said they have no plan to retire at all. These are not the baby boomers who never saved for retirement…the people in this study were all considered to be affluent or wealthy. 

When looking at trends in wealth it is almost impossible to ignore how technology has changed the way investors manage money and gain access to their investments. One recent study shows that 70% of affluent households consider themselves “heavy internet users” are spending at least 8 hours per week or more online (hnw 2004). Internet access to your accounts is just expected these days and there are very few investors, affluent or not, that are not at least checking their investments online. High net worth investors are attracted to the abundance of financial tools available online and use them mainly to stay informed about their investments as well as conduct research for new investments. 

Even though email is a preferred method of contact for many affluent households, having a personal relationship with an advisor and being able to meet face-to-face was something that very few were willing to give up. It is comforting to know that even though we are immersed in technology, and sometimes practically attached to our cell phones, that we are still a community and value personal relationships. 

As we sit here in the middle of one of the wealthiest areas in America, just below our even wealthier neighbor to the north (L.A.), and our almost as wealthy neighbor to the south (S.D.). It is interesting to see that the major trends in wealth are not just a bunch of facts and numbers, but are occurring all around us, making it is easy to see and compare where we fit in. With almost 114,000 millionaires in Orange County, you may or may not be one yourself, but I’d be willing to bet that you know several that are. b