Top advisors have high-net-worth clients. Lots of them. That’s because there are about 4 ultra-high net worth Americans (net worth over $10 million) for every financial advisor.

Yes, you read that right. So, it means there’s unprecedented opportunity for financial advisors and their practices – read on to see why.

Valuable data in the Forbes list

Forbes famously publishes its list of “400 Richest Americans.” To no one’s surprise, Elon Musk topped the most recent list. But did you know there’s a “mass market” – tens of thousands – of ultra-rich people in the United States?

Along with each person’s name, Forbes publishes their estimate of that person’s net worth.

Let’s forget the yellow journalism aspect of this, ignore the personalities, and focus only on the data.

Those data, assuming they are accurate, provide a valuable insight into the world of high-net-worth families, and not just the world of the billionaires whose names are in the media.

As we’ll show, we’ve developed an algorithm to determine approximately where in the scheme of all Americans a high-net-worth family with a given net worth would rank.

The Forbes List, Graphed

The following graph shows how various levels of net worth the rank on the Forbes list. The rank is listed on the x-axis, and the corresponding net worth is on the y-axis.

Because the handful of values at the extreme left are so high, on this graph number 400 looks close to zero, though in fact it is over $3 billion.

Math Provides Insight

The graph is perhaps not as informative as we might like.

But we can apply a bit of math, and learn some interesting facts.

The first thing that we’ll do is throw out the top 50 data points. Why? Aren’t they the famous people everyone wants to hear about? Musk, Bezos, Buffett, Gates and the like? Yes. That’s not why we’re throwing out those data points. We’re throwing them out because the data points are so extreme that when we try to make a mathematical model of high-net-worth wealth, these data points distort rather than clarify.

Here’s the same data as above, except it shows only ranks 51 to 400, leaving off the top 50.

You probably wouldn’t recognize most of the names on this shorter list (I didn’t), though there are several extremely famous names, including one of the most famous living people in the world, Donald Trump (who Forbes ranks at 319). But here, if nowhere else, 319 is just another data point. And, pardon the pun, that’s the point.

Fitting a Curve

When we take the data points corresponding to positions 51 to 400 on the list, the data is more densely packed and “better behaved” in statistical terms. That means we can fit a better curve than if we included the top 50. (That’s because excluding the top 50 leaves us with data that’s less skewed, with fewer outliers.)

These wealth data can be described by a type of equation called a power law. As you may (or may not!) remember from school, a power law equation is of the general form:

where y is the data we’re trying to explain (e.g. the level of net worth), k is a proportionality constant (i.e. a number that we find) and a is the scaling exponent (i.e. another number that we find).

When we do the math, we get the following fitted equation:

In this equation, y represents the net worth corresponding to the rank (x) on the list. We can then use this equation to extrapolate from the Forbes data to what would be higher numbers (i.e. lower ranking) on the Forbes list. For example, what if the Forbes list went to 1000? What net worth does the formula suggest for the person who would rank 1000^th?

We find that by plugging in 1000 for x in the formula, and obtain the result: $1.84 billion. (If you do the math, you’ll get 1.84, because we represented the net worth values using billions.)

What about number 10,000? We estimate that the 10,000^th person on the Forbes list (if it went that far) would have a net worth of $335 million.

What about number 100,000? The formula suggests that it would take about $60 million of net worth to rank at 100,000.

Net Worth Ranking

We might also want to know what wealth level (y) corresponds a given rank (x). With a little more math, we can solve the equation for x. That yields:

We can use this formula to answer the question of how where in the ranking would a certain net worth place a household. For example, suppose you have a client with a net worth of $150 million. You might want to know how many households in the US have a net worth of at least $150 million.

The formula tells us that the answer is about 29,400 households have that much wealth, or more.

Testing Against Other Known Data

We have extrapolated using data from the very top of the curve. Maybe our source data does not fit the curve well. It would be nice to check our fit using other data. For example, the Fed publishes its Survey of Consumer Finances, most recently in 2022. The Fed report indicates that there are about 132 million households in the US. (This figure corresponds to an average household size of 2.5 persons, and a total population of 330 million.)

Thus, by definition, there are 1.32 million households in the top 1% of household net worth, and 13.2 million households in the top 10%. The Fed Survey reports that the net worth of a household at the 90^th percentile (i.e. the 13,200,000^th wealthiest family in the US) is $1,938,000, or almost $2 million.

Our model estimates that the net worth at the 90^th percentile would be about $2,170,000. That’s pretty close, especially considering that the Fed data is from 2022 and our model was based on 2024 values, and asset values have on average increased since 2022.

Thus, while our model is an approximation, it seems to be a pretty good fit.

There’s Plenty of Opportunity at the Top

There have never been this many super-wealthy people. So, there’s unprecedented opportunity to serve the ultra-high net worth market.

If you’re an advisor, the numbers below should be pretty exciting!

The following table lists our estimate of the number of families at or above each of the household net worth levels.

For example, there are an estimated almost 40,000 families with household net worth of at least $120 million.

Our estimate shows that there are over 1.1 million families with net worth of at least $10 million. The Bureau of Labor Statistics reports that there are about 270,000 financial advisors. That works out to about 4 families with net worth at least $10 million per financial advisor.

How Can You Serve the High-Net-Worth Market?

Five of the top financially-oriented concerns of high-net-worth families include:

1. Income tax management
2. Estate planning, and estate tax management
3. Asset protection
4. Legacy development and protection
5. Philanthropic effectiveness

How Sterling Can Help

Sterling has specialized in the ultra-high-net-worth space for over 30 years, and we’ve developed tailored, specialized solutions for clients who have appreciated assets that they’d like to sell without paying capital gains tax.

Clients are thus able to sell their appreciated assets without paying capital gains tax, leaving the entire lump sum of cash to be invested in a diversified portfolio – and managed by the financial advisor.

If you have clients who might benefit from our solutions, or if you’d like to learn more, please email us at [email protected] or call us at 703-437-9720.

You can also request a free copy of our Concentrated Stock Positions advisor guide.