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Is it Really True That One Out of Every 12 Households is Worth a Million Dollars?

The number of U.S. households with a net worth of $1 million or more, excluding primary residence, set a second-consecutive record in 2005 – rising to 8.3 million, according to Chicago-based Spectrem Group’s Affluent Market Insights 2006 report.

Spectrem is a strategic consulting firm specializing in the affluent and retirement markets. Spectrem conducted mail and online surveys about household wealth with roughly 1,000 people.

This gain of 800,000 net new millionaires, Spectrem said, represents an 11% increase over the 2004 millionaire total of 7.5 million.

Can this be true?

According to the Capgemini World Wealth Report, published each June by the Paris-based IT services and consulting company, that number is grossly inflated.

The 2006 WWR, using 2005 statistics, reports that the U.S. HNWI population (individuals with $1 million in investable assets) totaled 2.67 million, an increase of 6.8 % over the roughly 2.5 million in 2004. Capgemini says the global HNWI population stood at 8.7 million people at the end of 2005, a 6.5% increase from 8.2 million people in 2004.

So, who’s right?

According to Ben Kepple, a New Hampshire journalist and former reporter/writer for Investor's Business Daily , Heterodoxy , and FrontPage Magazine , and publisher of the online blog, Benjamin Kepple’s Daily Rant ( http://bjkinnh.blogspot.com/), “ the (Spectrem) numbers don't make empirical sense.”

Kepple cited Spectrem's research, which claimed the number of millionaire households jumped 11 percent compared to the prior year, while the number of "ultra high net worth" households (those with more than $5 million) grew 26 percent, to 930,000.

Capgemini, which classifies “ultra high net worth” as individuals with more than $30 million in net financial assets, says the number of Ultra-HNWIs worldwide represents 1% of the HNWI population, or roughly 87,000 people. There are approximately 26,700 Ultra-HNWIs in the U.S.

 “That’s quite a statement,” says Kepple, referring to Spectrem’s numbers.

“Spectrem says there are 8.3 million American households worth more than $1 million —excluding the value of their primary residence. But with 105 million households in the U.S., that would mean 8 percent — or one out of every 12 households — are millionaires. Furthermore, if Spectrem is right, just under one out of 100 U.S. households is (worth) more than $5 million.

“The numbers just seem awfully high,” says Kebble.

What do you think?