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
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