Why Are American Millionaires on the Decline?

Why Are American Millionaires on the Decline?

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America used to be the land of plenty, but tell that to the former ranks of American millionaires, a club whose membership is dwindling in 2012.

A new study shows that U.S. millionaires are in decline.


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Nobody is saying that wealthy Americans are hitting the soup lines, or are lining up for jobs at McDonalds. And nobody is saying that someone who is worth $950,000 isn’t better off than a guy flipping burgers for a living.

What is interesting is that the number of U.S. millionaire households is declining just as the ranks of millionaires overseas are swelling.

Wealth, it seems, is another precious commodity being exported by the U.S. these days.

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The data comes from a Boston Consulting Group study. The BCG study, entitled “Global Wealth 2012: The Battle to Regain Strength,” says the U.S. lost 129,000 millionaires in 2011, while total private wealth fell 0.9%, to $38 trillion.

Other countries are picking up the slack. Singapore, for example, has the highest density of millionaires, at 17% of the population, and among its elite is one very notable Facebook founder, Eduardo Saverin, who recently announced he would be giving up his U.S. citizenship altogether. The non-U.S. countries added 175,000 millionaires in 2011.

The BCG report says the Pacific Rim is a hot bed of millionaire growth. The report estimates that the rate of growth for millionaires in the region is pegged at 6% annually going forward.

There is some good news for the U.S.: All those hotbeds of nouveau rich are still playing catch-up to the U.S. The BCG report says that America still has more millionaires—5.1 million—than any other country. Japan, at 1.6 million, and China, at 1.4 million, clock in at second and third, the study says.

What’s behind the mild purge of U.S. millionaires? BCG concludes the weakening stock market is to blame. The report says that North Americans lost 3.6% in equity losses in 2011, a number that 2012 is likely to match, or even surpass, given the dour numbers coming out of Wall Street so far in 2012 and the Dow Jones Industrial Average dipping into the negative for the year as of Friday latest's market plunge.

Those losses also could change the dynamic between wealthy Americans and their banks and financial advisors, and cause some friction.

"We do see a general recovery in equity markets as likely," explained Peter Damisch, a co-author of the report. "But wealth managers will still need to continue their cost-cutting and pricing initiatives, refocus on client discovery, master the ever-shifting regulatory environment, bolster risk management and find ways to use alternative business models to their advantage."

Even that may not enough to protect America’s suddenly threatened millionaire class. According to the BCG study, the fastest rate of wealth  accumulation that is occurring outside the U.S. may be part of that “new millionaire normal.”

“We are in a two-speed world,” said the report. “All of the growth is being driven by developing markets.”

Pity the 1%--at least, those stuck within U.S. borders.

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