The recent stock market rally has been good for investors—and by extension advisors. But will it last?
The research firm Spectrem Group, based in Lake Forest, Ill., reports that the number of new millionaires rose by 400,000, to 8.99 million, in 2012 (Spectrem excluded primary residences from net worth).
The “comeback” continues for the fourth year, after millionaire households declined to 6.7 million in 2008, but the total millionaire population remains below the pre-recession peak in 2007 of 9.2 million, according to the firm.
The ranks of all affluent investors increased in 2012:
• Those with $100,000 or more in net worth not including primary residence climbed to 37.4 million from 36.7 million in 2011 and 31.2 million in 2008. All other wealth categories are included in this group.
• Those with $500,000 or more in net worth NIPR rose to 14.3 million from 13.8 million in 2011 and 11.3 million in 2008.
• Those with $5 million or more in net worth NIPR advanced to 1.14 million from 1.078 million in 2011 and 840,000 in 2008.
• Those with $25 million or more in net worth NIPR grew by 10,000 to 117,000 in 2012 and up from 84,000 in 2008.
While the ranks of investors with at least $100,000 in net worth have finally surpassed the previous 2007 high, the numbers of households at the higher wealth levels are still below their 2007 highs. In general, though, those with more wealth have been better able to weather the downturn because of the diversity of their investments and willingness to stick, in part, with stocks.
"Just as the stock market crash triggered a steep drop in the net worth of wealthy investors, the rebound in equities has made it possible for many affluent households to largely recover," George Walper Jr., president of Spectrem Group, said in a statement. "Wealthy investors who minimized stock ownership in recent years, however, have not seen their assets grow at the same rate."
As a group, wealthy investors with $500,000 up to $1 million showed the greatest reluctance to rely on stocks in recent years and held more of their assets in cash instruments longer than other wealth segments. As a result, that category of investors has the farthest yet to go before reaching its pre-recession total, even compared with those with $100,000 to $500,000 in net worth.