Wealthy people inspire lots of reactions-envy, admiration, emulation and even legends. A veritable mythology has built up about who they are and how they got to be so rich.  I am pleased to share with advisors insights we've gleaned from nearly a decade of studying this market segment through the Phoenix Wealth Survey and, in the process, debunk a few of these myths.

We'll focus on the so-called pentamillionaires-those having a net worth of $5 million or more, excluding their primary residence.  These people are at the top of the wealth pyramid and represent less than 1% of all U.S. households, according to TNS's 2007 Affluent Market Research Program. To be successful with this coveted market requires a complete understanding of their wants and needs, and changes in their financial behavior.

Myth #1: Rich People Are Old People
When I ask advisors to estimate the average age of this market, the typical answer is 65 and older. That's not surprising given the traditional thinking that significant wealth is primarily accumulated over a lifetime, most likely from building and selling a business.  But the facts point to a different demographic-one that is younger and more diverse.

Since we launched our survey in 1998, the average age of the high-net-worth market has fallen to 53 from the upper fifties. The number of older pentamillionaires is growing, but younger pentamillionaires are growing at a faster rate.  Figure #1 shows that pentamillionaires under 40 and those 65 and older are almost the same size and the largest segments of this market (unless otherwise noted, all cited data are from the 2008 Phoenix Wealth Survey).

Pentamillionaires come from a variety of ethnic backgrounds:  74% are white, 8% Asian, 6% Hispanic, 5% black/African American and 2% are of mixed or other race. They are diverse in more than just race.  Three percent, for example, indicate they are lesbian, gay, bisexual or transgender.  All of this correlates with a wealthy population that continues to get younger.

Myth #2: Young Wealth Is Inherited Wealth
Inheritance of wealth is not the primary reason many pentamillionaires are younger today. Only 26% in last year's survey said an inheritance played any role in their wealth status. Many other factors were cited: 37% said work-related stock played a role, 32% cited work-related bonuses, 20% pointed to liquidating a business and 17% cited taking a company public.  These findings make perfect sense because the majority of wealth today is first generation.

Myth #3: Pentamillionaires Don't Worry About Retirement
The misconception that pentamillionaires are older contributes to a mistaken belief that this client group considers retirement planning a low priority. On the contrary, 94% of pentamillionaires view retirement issues as among their top concerns. Furthermore, when asked to name their single most important financial goal, 26% say it is ensuring a comfortable standard of living in retirement and 14% say it is to avoid outliving their assets.

The growing number of younger pentamillionaires may be behind some of this concern.  In focus groups with younger wealthy people, we find significant concerns about retirement security even though they start from a wealthy base and have many years to acquire assets.

The irony is that they see time working against them. In their mind, more time means more exposure to economic events that could threaten their financial security.  Focus group findings indicate pentamillionaires worry about the future of Social Security, the potential for multiple economic downturns, the disappearance of traditional pension plans and the impact greater longevity for themselves and their parents will have on their finances.  Compounding the worries are their expectations for a high standard of living in retirement and their desire to retire early.

Myth #4: Pentamillionaires Own Lots Of Life Insurance
Another mistaken belief among advisors is that individuals worth $5 million or more own plenty of life insurance.  Nothing could be farther from the truth. Less than two-thirds-63%-of pentamillionaires own individual life insurance. Only 37% own permanent coverage, while 28% own term insurance.  Only 9% plan to buy permanent insurance and 8% plan to buy term life. Clearly, the penta-millionaire market is not saturated when it comes to life insurance ownership.

Myth #5: Pentamillionaires Are All Set With Estate Plans
One might assume pentamillionaires don't need estate planning help because 85% say they already have a plan in place.  However, as Figure #2 shows, a major portion of these plans were established more than five years ago. Many of these plans will need to be reviewed and possibly revised because of the ongoing debate over estate tax reform.

We also see evidence of procrastination.  Forty-two percent of people with net worth of $3 million or more-a group that will face issues under most estate tax reform scenarios-say they have delayed estate planning due to the tax law debate in Congress.  Yet 62% of pentamillionaires say estate planning is "much more" or "more important" than in the past.

What Does This All Mean? 
Advisors who want to succeed in the pentamillionaire market must understand that the world of the wealthy in this country has changed. Stereotypes about when and how significant wealth is created aren't valid anymore.  Those who fail to recognize the realities of today's pentamillionaires will miss plenty of planning and sales opportunities.

Advisors will also need to present new solutions to their most wealthy clients to adapt to the changing economic and tax environment. For example, what if market volatility continues for the long term? What implications does this have for the financial plans and products that are already in place? Estate tax law changes are another example of an area that needs to be revisited by advisors.

Working in today's market is more like navigating a raging river than a sedate pond. The good news for advisors is that this segment of the market is favorably disposed to working with them and hearing about new solutions to their changing financial needs and concerns.