The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America [Hardcover]

Russ Alan Prince (Author), Lewis Schiff (Author)

Book Description

Release date: February 26, 2008

A compelling look at a new class of the affluent - the middle-class millionaires – whose attitudes and values are influencing and reshaping American life

In this groundbreaking book, Russ Alan Prince and Lewis Schiff examine the far-reaching impact of the middle class millionaires–people who enjoy a net worth ranging from one million to ten million dollars and have earned rather than inherited their wealth. Comprising 8.4 million households and growing in number, the attitudes and behaviors of these working rich are exerting a powerful influence over our society. So who are these people? They believe in the benefits of hard work. They believe in investing in themselves, and in self improvement. They are more likely to focus on drawing financial gain from their work, and less inclined to be discouraged by failure. And they don’t spend money on the extravagances indulged in by the very rich; instead, they wield their affluence according to middle-class values and ideals. From home security systems to health care, technology to travel, their spending choices are affecting us all – from the products we buy, to the communities in which we live, to the aspirations and values of the broader middle class and American population as a whole.

In the bestselling tradition of Bobos in Paradise and The Millionaire Next Door, THE MIDDLE-CLASS MILLIONAIRE is a captivating narrative – part sociology, and part aspirational journey into the lives, attitudes, and values of the middle-class millionaires. Based on extensive surveys and research into more than 3,600 middle-class millionaire households around the country, this book will reshape our understanding of what it takes to be successful – and how all of us can achieve similar success.

Editorial Reviews

From Publishers Weekly

Sandwiched between the rich and the middle class are 8.4 million American households with a net worth between $1 million and $10 million. Prince and Schiff present intriguing statistical nuggets from their survey of 586 middle-class millionaire households. Although these people may be rich by most definitions, many were raised middle class, earned rather than inherited their wealth and still retain middle-class values. Comparing the responses of middle-class millionaires to middle-class households with less than $1 million net worth, Prince and Schiff determine that middle-class millionaires work harder, suffer more setbacks, choose homes for quality schools rather than convenience to work or shopping and have larger social networks. Unfortunately, these statistics are difficult to interpret without information about differences in age, family size, income, career and location. The book offers something for those who yearn to join the middle-class millionaires or move up among their ranks, especially entrepreneurs with business plans for this population, who are heavily profiled in these pages. Despite the breezy writing style, readers looking for a rigorous economic analysis will be disappointed. (Jan. 15)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Review

Praise for THE MIDDLE-CLASS MILLIONAIRE

"Most non-fiction books consist of slightly incremental new takes on the same old reality. Occasionally, though, a book emerges that establishes a new reality. That strikes me as the case with "The Middle-Class Millionaire."
-The San Francisco Chronicle

“The Middle-Class Millionaire opened my eyes to a new force driving the American economy. Russ Prince and Lewis Schiff show us exactly what you need to look for to make the most of this enormous opportunity, whether you are just getting started on the path to being a millionaire or there already!”
-Jim Cramer, CNBC's Mad Money and Co-Founder, TheStreet.com

"Impressively thorough."
-Newsweek

"Russ Prince’s and Lewis Schiff's insightful book can help you understand and capitalize on significant business opportunities within the emerging affluent middle class."
-Tom Bradley, President, TD AMERITRADE Institutional.


“Prince and Schiff have identified a new breed of millionaire who is transforming the American lifestyle. Read how to join this elite club and follow them to the American dream."
-Consuelo Mack, Anchor & Managing Editor, Consuelo Mack WealthTrack


"A must read for anyone seeking to understand the emerging affluent market. The authors' extensive research identifies key characteristics of today's 'working rich' and provides insights as to how to successfully reach this lucrative segment."
-Grant Skeens, President, KeyBank Recreation & Luxury Yacht Lending

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: Crown Business (February 26, 2008)
• Language: English
• ISBN-10: 0385519273
• ISBN-13: 978-0385519274
• Product Dimensions: 6.3 x 1 x 9.6 inches
• Shipping Weight: 1 pounds
• Average Customer Review: 3.6 out of 5 stars  See all reviews (28 customer reviews)
• Amazon Best Sellers Rank: #824,694 in Books (See Top 100 in Books)

More About the Author

Lewis Schiff is the executive director of Inc. Business Owners Council, a membership organization for Inc. Magazine's top entrepreneurs and owners of closely-held family businesses and maintains a blog about behavioral entrepreneurship on Inc.com.

His new book, Business Brilliant: Surprising Lessons from the Greatest Self-Made Business Icons, which focuses on the wealth-creating behaviors and attitudes that work best in the new economy, was published by Harper Collins in March 2013.

Schiff has co-authored two books: The Influence of Affluence: How The Rich Are Changing America charts the rise of America's growing affluent middle-class through original research and analysis. The Armchair Millionaire describes a wealth-creation system that leverages Nobel-Prize winning methodologies.

Most Helpful Customer Reviews

43 of 50 people found the following review helpful

3.0 out of 5 stars Some serious methodological issues July 15, 2008

By Japrisot

Format:Hardcover

This book starts out by stating that there are 8.6 million "millionaires" in the US--about one in 35 people. However, the recently completed "World Wealth Report 2008" by Capgemini and Merrill Lynch puts the total GLOBAL number of millionaires at just 10 million, and the number of US millionaires at around 3 million--about one in 100 people.

How to account for the discrepancy? The authors of The Middle-Class Millionaire foolishly include housing "wealth" (home equity) in determining who is or isn't a millionaire in the US. That increases the number of millionaires by nearly threefold. That must have made it a lot easier for the authors to assemble a large database of "millionares", but at the expense of meaningful information.

Since the book was published in early 2008, we can assume the surveys took place in 2006-2007, when home values were meaningfully higher. As a result it is not surprising that they found so many "millionaires" on the east and west coasts--these regions of the country contain many house-rich people who've probably seen significant home equity declines since then.

There's a reason the Capgemini study excluded home equity: you can't "eat" your house. Wealth is something you can live on; a house is something you can live in. Certainly there are individual cases where an individual may monetize considerable house wealth to become "wealthy"--imagine an elderly person selling their house for millions of dollars and downsizing. But for society as a whole, it's erroneous to think this is possible--after all, if everybody tries to monetize their home equity, the home equity goes away, as the countless foreclosures around the country are now showing.

So, already, nearly two-thirds of the authors' target group don't belong there in the first place. Another problem is comparing people with one million dollars to people with ten times as much money and pretending they are in the same group. Sorry, but an order of magnitude is a big difference. Many financial advisors will suggest a sustainable portfolio drawdown range of 3-5%. On one million dollars, that is 30-50K a year; on ten million, it's 300-500K a year.

Is it really possible those two groups are really living in the same economic world? Sure, there are many people with small portfolios who live beyond their means, just as there are many rich people who live well within their means--Warren Buffett famously still lives in the same house he bought for 31.5K at the age of 27. But in general, when you have two wealth cohorts separated by an order of magnitude (from 1mil to 10mil), there are going to be big, big differences in perceived reality and behavior. If you include the 5.6 million "house millionaires" like the author did, the disparity between the bottom and top of this so-called middle class becomes even more severe.

I'm not saying people with 10mil live like the people in "Richistan" who have their own private golf courses, yachts, and planes, but come on, you are talking about a very, very small segment of the population. Let's not pretend they are living in the same world, with the same range of choices, as the rest of us.

So, I can't help but be pretty dismissive of the authors' broadbrushed "conclusions". Having said that, this book has some amusing tidbits that made it a worthwhile read to me. Whether it would be interesting to you is a matter of personal taste. I would suggest a thumb-through at the local bookstore.

7 of 7 people found the following review helpful

4.0 out of 5 stars Not as good as Millionaire Next Door and Richistan October 11, 2008

By Dale C. Maley VINE™ VOICE

Format:Hardcover|Amazon Verified Purchase

I have read several of Russ Alan Prince's books. These books could be summed up by saying if you want to capture high net worth people as clients for your financial planning business, wine and dine their accountants and attorneys to gain access to them as clients. High net worth people all seem to have accountants and attorneys.

This book has a different focus. It attempts to compare the non-millionaire group with a head-of-household income of $50K to $80K with the millionaire group having a net worth between $1M and $10M. As other reviewers have pointed out, I was surprised to see the authors include house value in net worth. Because of housing differences in the U.S., most studies of net worth do not include housing values.

Growing up in Illinois, I was surprised to learn about some aspects of the hybrid seed corn study. Before hybrid seed corn, farmers kept the best corn from harvest to plant the next year. Hybrid seed corn offered higher yields and better resistance to insects and weather, but it meant becoming dependent on a seed corn company every year versus using your own corn for seed corn. Since this transformation occurred in the 1930's, this probably explains why I never heard of the trade-off decision between independence and reliance on the seed corn company each year. It is an interesting case of the adoption rate of new technology.

The author repeats the long known marketing strategy of selling new technology to the rich first at high prices, then lowering the price and selling to the masses. Automobiles, TV's, VCR's, and computers all used this approach. The author's latest addition is the $100K Tesla roadster, an all electric car as fast as a Porsche.

The U.S. financial planning industry is currently based upon charging about 1% of assets under management for fees. For a client with $500K in investable assets, the financial firm receives $5,000 annually. For a client with $10M, the firm receives $100K annually. There is no appreciable difference in the cost of servicing the $500K client versus the $10M client. The authors repeat the common strategy of trying to find 50 or 100 millionaires as clients versus hundreds of non-millionaire clients.

The authors also point out that fractional ownership has spread from jets to many different asset types.

The authors conclude with the 10 ways to become a middle class millionaire:

1. Get a coach
2. Tip the work-life scale to career versus family, friends, religion, hobbies
3. Focus on finding a job you can make money at and don't focus on careers that make you happy
4. Focus on ownership versus being a wage-slave
5. Don't diversify, focus your efforts
6. Play to win
7. Take calculated risks
8. Don't be afraid to fail
9. Network
10. Get help from other millionaires

The authors point out that wealth has become more concentrated in the last 20 years. They argue that the wealthy really control the amount of consumer spending, not the non-wealthy. They argue that the retirement of the Baby Boomers won't crash the stock market, because the wealthy own most of the stock market and have no need to sell. They also argue that one should not buy stock in Wal-Mart, but instead should buy stock in companies that focus on selling goods to the rich.

All-in-all, not as informative as The Millionaire Next Door or as entertaining as Richistan, but it does make a few interesting points.

In this age of full disclosure, it can be noted that I am the author and publisher of the book INDEX MUTUAL FUNDS: HOW TO SIMPLIFY YOUR LIFE AND BEAT THE PROS. This book is an introduction to the concept of index funds is and is sold on Amazon. I am also a contributing author to the book THE BOGLEHEADS GUIDE TO RETIREMENT PLANNING available from Amazon with an estimated release date of October 2009. I have also written 21 short stories on investing which are also available on Amazon.

If you are interesting in learning more about how to join the wealthy group, I would suggest reading some of the books noted below.

The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing
Wealth: Grow It, Protect It, Spend It, and Share It
Retirement Income Redesigned: Master Plans for Distribution: An Adviser's Guide for Funding Boomers' Best Years

22 of 28 people found the following review helpful

5.0 out of 5 stars an important book with useful information to impart March 3, 2008

By Andrew A. Goldman

Format:Hardcover

The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America is an important book. it shatters old paradigms, shibboleths and myths about millionaires.

While on the one hand it discloses, almost like an instruction manual, how one could achieve such wealth, or, at least, how others did, it doesn't advocate paying the price necessary to achieve the objective. The authors are content to point out the myriad ways the wealthy are different from the rest of us.

I read it not as a primer or "how to" book, but as a fascinating and thoughtful description of a new and important phenomenon. At a time of greater disparities in wealth than any I can remember in my 72 years, it is useful and even important to understand just who and how some of those who have mastered the system have done it.

One doesn't read about NBA basketball players in order to become one--but one could well benefit from reading The Middle-Class Millionaire. I know I did, and I have sent copies to the young people in my life.