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The Top 2% Segment Summary January 2013

Source: 2012–13 MacroMonitor

In the run-up to the New Year, the looming US "fiscal cliff"—a threat of tax increases and automatic spending cuts—held center stage. Republicans countered the White House proposal to restore Clinton-era tax rates for households earning $250 000 or more—the top 2% of households—with an offer to increase income tax rates on households with annual incomes of $1 million or more; other income cutoffs on the table were $500 000 or more (0.3% of households) or $400 000 (fewer than 1% of households). The number of US high-earner households has fluctuated in the past two decades (see the January 2013 MacroMonitor Market Trends newsletter). Competition between financial-services providers to captivate the Top 2% of households is keen. Information about this population can further your understanding of these households and inform decisions about your product offers.


Typically, the Top 2% of household heads are mature, married, and well educated.

  • Three in five are age 50 or older; almost one-third are between the ages of 50 and 59. The mean age is 52.
  • Their total 2011 mean income before taxes is $366K; the average is $69K and $63K for households with incomes of less than $250K.
  • Almost one-half have a postgraduate degree.
  • Slightly more than two-thirds are married. They are more likely (42%) than average (35%)to have dependent children.
  • Somewhat more than one-third are preretired, one in five qualify as a Revolving Retired household head, and 21% are retired.
  • The majority live in a suburb of a large city (39%) or in a large city (21%).
  • One in five have a male or female head who is an owner or part owner in a professional practice (13%) or business (32%).

Products and Services and Financials

Higher-than-average annual income and higher-than-average financial assets, investable assets, and net worth characterize the Top 2% of households.

  • They have six times more financial assets (mean amount $1.2 million) than average, seven times more investable assets, eight times more total assets, and ten times the net worth ($3.5 million) but only three times more liabilities.
  • They are more likely than average to own most financial products. For example, they are more than twice as likely as average to own CDs, money market deposit accounts, a fixed annuity, and an IRA/SEP; more than three times as likely to own money market mutual funds, publicly traded sock, ETFs, and Treasury securities; four times more likely to own a Keogh account; and eight times more likely to own hedge funds.
  • They have a mean number of 9.7 financial relationships; 15% have 16 or more.
  • Roughly 80% have at least one type of investment account. They have a mean number of 1.9 stockbrokerage relationships; 17% have 3 or more.
  • They are more than twice as likely as average to have stockbrokerage accounts; more than three times as likely to have a wrap or separately managed account, a custodial account, a 529 plan, and to have established a personal trust; four times as likely to have an asset- or investment-management account; and over six times as likely to use private banking.

Financial Attitudes That Differentiate High-Earner Households

Three-quarters of the Top 2% are satisfied with their financial situation. They are organized, confident, sophisticated investors who have relationships with multiple financial advisors. Budgeting and expense reduction are of little concern; 86% are currently in a position to meet their long-term financial goals.

  • However, more than two in five agree they need help in managing their financial affairs.
  • Roughly the same proportion are considering eliminating some financial relationships to simplify their finances; 35% are considering consolidating assets for easier management.
  • Overall, the Top 2% are the most risk tolerant. In fact, one-third are willing to take substantial risk to realize substantial investment gain; they prefer stockbrokerage firms to banks for investing.

Interesting Tidbits

Slightly more than 25% of households with annual incomes of $250 000 or more report, "I have more than I need"; an additional 39% of households say they are financially secure.

  • In 2011, more than four in five itemized income-tax deductions.
  • Customer loyalty is to their advisor, not the institution. Almost two-thirds would "follow their financial advisor to a new institution if he or she were to move."
  • Although the proportion that gives to charity is small (3%), the Top 2% are five times more likely than average to contribute.
  • They are most interested in savings and investments that provide tax-exempt or tax-deferred income.
  • Regarding retirement, one-half are focused on managing assets.
  • To learn more about financial products or services, they rely heavily on print material: financial newsletters, brochures from financial institutions, newspapers, magazines, and books are all good sources of information—editorial not advertising. About one-quarter find financial-institution websites helpful.


For the majority of high-earner households—The Top 2%—changes in income-tax rates will not greatly change their financial situation or lifestyle. Closing tax loopholes would affect these households to a greater degree than will rate changes. However, tax rate changes will likely increase their desire to find tax-deferred and tax-exempt products—a potential opportunity for financial-services providers.

For more information, contact CFD.