Fidelity® Survey Finds 86 Percent of Millionaires are Self-Made

Millionaires Show Continued Optimism about Financial Outlook, Ranked Domestic Stocks as No. 1 Investment Choice

BOSTON -- Fidelity Investments® today released results of its fifth Fidelity® Millionaire Outlook, an in-depth survey analyzing the investing attitudes and behaviors of more than 1,000 millionaire households1. This year’s study found that 86 percent of millionaires are self-made and that their path to wealth, financial outlook and goals greatly impact their investment behaviors. In addition, millionaires’ outlook on the future financial environment is at its highest level in the survey’s history, underscored by their confidence in the stock market, as millionaires ranked domestic stocks their number one investment added in the last year.

Millionaires’ Outlook Highest Yet
Using a scale where +100 represents the most favorable outlook, zero is neutral and -100 is the most negative outlook, this year’s study found that millionaires’ outlook of the future financial environment continues to improve, with their future outlook reaching +39, the highest level since the survey’s inception in 2006. Despite millionaires’ outlook on the current financial environment remaining negative (-29), their near-term confidence is on the rise, consistently increasing by nearly 50 percent each year since 2009. (For a graphic comparing millionaires’ views of both the current and future financial environments from 2006 to 2012 to a broad economic indicator, the U.S. gross domestic product (GDP), click here.)

Millionaires’ confidence in the future was driven by positive sentiment about business spending (+43) and consumer spending (+42), which is at its highest level in the survey’s history. Millionaires’ continued trepidation around the current financial environment stemmed from their lack of confidence in the value of real estate (-75), the economy (-49) and business spending (-32).

“One trend has held true throughout the life of this study – the millionaire investor’s outlook has been consistently pragmatic about current market conditions and pervasively optimistic about a future recovery,” said Michael R. Durbin, president, Fidelity Institutional Wealth Services®. “In many ways, what millionaires have been thinking and doing can be a strong indicator for financial trends, as they are often the first to jump on an opportunity in the market – as they have recently with domestic stocks,” Durbin continued.

Today’s Millionaire Ranked Domestic Stocks as No. 1 Investment Choice
When it comes to where they are currently investing, millionaires ranked individual domestic stocks as their No. 1 investment added in the last year, followed by certificates of deposit/money market accounts/cash equivalents, equity exchange traded funds, individual domestic bonds and domestic equity mutual funds. Of those investments, significantly more millionaires chose equities over fixed-income investments – an inverse trend from the investment strategies of the average investor2.

Millionaires’ Background, Outlook and Goals Impact Investment Behaviors
According to the 2012 study, today’s millionaire is, on average, 61 years old with $3.05 million in assets. Seventy-four percent of millionaires today feel wealthy, and those who do not said they would need an average of $5 million of investable assets to begin feeling wealthy.

“This year, we went beyond just the demographics of millionaire investors and took a closer look at what has been driving their actions,” said Sanjiv Mirchandani, president, National Financial®, a Fidelity Investments company and the nation’s second largest clearing provider. “What we found is that today’s millionaires are multi-dimensional, and to really understand them, you need to look not only at their outlook, but also at their path to wealth and their financial goals for the future.”

1. Path to Wealth
Eighty-six percent of today’s millionaires did not consider themselves wealthy growing up (“self-made”), while only 14 percent said they grew up wealthy (“born-wealthy”). Key findings include:

• Of those who are self-made, their top sources of assets included investments/capital appreciation, compensation and employee stock options/profit sharing. Those who were born wealthy were more likely than the self-made group to cite inheritance, entrepreneurship and real estate investment appreciation as an asset source.

• Self-made millionaires typically felt just as financially secure as those who were born-wealthy.

• Born-wealthy millionaires were greater financial advice users with distinct advice needs, such as personal trust services and foundation/endowment management.

• When it comes to investment strategies, those who are self-made were more likely to add equity investments, while those who were born wealthy typically had more real estate investments.

2. Financial Outlook
Thirty-five percent of millionaires had a negative outlook on the current financial environment, while 31 percent had a positive current outlook. The remaining 34 percent had a “neutral outlook.” Key findings include:

• Despite a lack of confidence in the current financial environment, those with a negative outlook still had a favorable outlook on future recovery (+11).

• Those with a negative outlook also were more actively receiving financial advice on topics like general financial planning and retirement planning.

• Finally, the investment strategies of those with a positive outlook show that they have been more active in the stock market, while those with a negative outlook typically added more cash-like products.

3. Investment Goals
The study found that when it comes to concerns about their financial future, 30 percent of today’s millionaires were concerned with preserving their wealth (“preservers”), while 20 percent were focused on growing their wealth (“generators”). Other financial concerns, such as managing income flows in retirement, supporting the lifestyle they want in retirement and managing investments, made up the remaining 50 percent. Key findings include:

• Those looking to generate more wealth were not driven by having less money or feeling less financially secure, as they were just as wealthy and just as financially secure as those who are looking to preserve wealth.

• Increasing wealth is not just for the young – of those looking to generate wealth, nearly two-thirds were older boomers and seniors (61 percent).

• Generators are also more loyal to their financial advisors, with 71 percent of generators likely to move with an advisor who switches firms.

• Generators have been more active in the stock market along with being more likely to add domestic bonds to their portfolios than preservers.

Advisors and Investors Can Learn from Millionaires’ Actions
Millionaire Outlook is the first in Fidelity’s annual “Insights on Advice” series, and as part of this year’s series, Fidelity has launched an interactive website with insights and resources from the study that can help financial advisors serve their clients better and can help everyday investors approach generating wealth like a millionaire.

About the Fidelity Millionaire Outlook
The Fidelity Millionaire Outlook is a primary research study among U.S. mass affluent and millionaire investors conducted via online survey during the period of March 15-29, 2012. The mass affluent group had investable assets of at least $250,000 or $100,000 if they had an annual household income of $150,000 or more, while the millionaire group had investable assets of at least $1 million; both groups’ investable assets were excluding workplace retirement accounts and any real estate holdings. The results reflect responses from 1,520 financial decision makers with 1,020 of those being millionaire investors. The data reflects a margin of error of +/-3 percent. Using a scale where +100 represents the most favorable outlook, zero is neutral and -100 is the most negative outlook, the survey measures millionaires’ confidence levels across five key areas -- the stock market, consumer spending, the economy, business spending and the value of real estate. Combined, the five variables make up a cumulative current and future confidence level, or “outlook.” The experience of the mass affluent and millionaire investors who responded to the survey may not be representative of the experiences of all investors and is not indicative of future success. Fidelity partnered with Bellomy Research, an independent third-party research firm, to conduct the study.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.6 trillion, including managed assets of $1.6 trillion, as of June 30, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

1 Investable assets of $1 million, excluding workplace retirement accounts and any real estate holdings.

2 The percentage of Americans investing in stocks continues to decline (Stock ownership declined from 65 percent in 2007 – dropping each year – to 54 percent in 2011; Gallup, Percentage of Americans Investing in Stocks, April of Each Year, 1999-2011) while their fixed-income investments have increased (by 10 percent since 2007; Cerulli Associates, Inc., Cerulli Quantitative Update, Retail Products and Strategies 2011, October 2011)

The content provided herein is general in nature and is for informational purposes only. This information is not individualized and is not intended to serve as the primary or sole basis for your decisions as there may be other factors you should consider. Fidelity Investments does not provide advice of any kind. You should conduct your own due diligence and analysis based on your specific needs.

National Financial is a division of National Financial Services LLC. Fidelity Institutional Wealth Services is a division of Fidelity Brokerage Services LLC. The registered trademarks and service marks appearing herein are the property of FMR LLC. Clearing, custody or other brokerage services may be provided by National Financial Services LLC, 200 Seaport Boulevard, Boston, MA 02210 or Fidelity Brokerage Services LLC, 900 Salem Street, Smithfield, RI 02917, Members NYSE, SIPC.
 
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