October 2007

What’s on the minds of millionaires? That depends on how many millions they have, according to a Northern Trust study that has resulted in one of the most comprehensive pictures of U.S. millionaires and their finances. “Wealth in America 2007” examined more than 1,000 households across the United States with $1 million or more in liquid assets.

It’s a primer on how the wealthy approach money matters, such as investing, retirement, philanthropy and inheritances. A clear distinction emerged among those with $10 million or more in investable assets. The attitudes and actions of these “decamillionaires” set them apart from their other well-heeled cousins. So, if you want to model the decamillionaires, here’s how they distinguish themselves:

More money, more risk
Decamillionaires allocate their portfolios differently from those with single-digit millions. For one, they tolerate more risk: 22% describe their investment approach as “aggressive.”

Only 11% of mere millionaires describe their approach that way.

Incorporate alternatives
Decamillionaires allocate almost one third of their portfolios to alternative investments such as private equity, hedge funds and commodities. The percentage drops to 7% for the less wealthy.

Give and give more
Charities benefited from the increasing generosity of the wealthy. Millionaire households increased their charitable donations by more than 20% in 2006 over the previous year. The decamillionaires increased their donations by an average of more than 50%.

Among the fastest growing vehicles for philanthropy are donor- advised funds like the Northern Charitable Giving Program. These allow individuals to start their own charitable ventures while leaving the administrative work to a host like Northern Trust.

Leave a legacy
Among decamillionaires, 55% felt leaving their heirs a sizeable estate was very important and 72% expect to leave one. Only 41% in the $1 million to $4.9 million group rated it very important, but 77% expect to leave one.

Turn to experts for advice
When making investment decisions, 60% of all millionaire groups rely most heavily on their principal advisor. And 54% regard their advisors as their most important source of information.

To find out how your asset allocation in Northern Funds compares to those of the wealthy investors studied here, contact your Relationship Manager for a portfolio review. Or, call 800-595-9111 or visit northernfunds.com.

See the complete Northern Trust “Wealth in America 2007” study.