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The Influence of Affluence, by Russ Alan Prince and Lewis Schiff - Excerpt
The Influence of Affluence, by Russ Alan Prince and Lewis Schiff - Excerpt
The Influence of Affluence, by Russ Alan Prince and Lewis Schiff - Excerpt
THE INFLUENCE OF
AFFLUENCE
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THE INFLUENCE OF
AFFLUENCE
How the New Rich
Are Changing America
B R OA DWAY B O O KS
N E W YO R K
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To Sandi, of course
—Russ Alan Prince
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To purchase a copy of
The Influence
of Affluence
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Random House
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C O N T E N TS
ACKNOWLEDGMENTS vii
CHAPTER ONE T H E I N F LU E N C E O F A F F LU E N C E 1
CHAPTER FIVE T H E D O C TO R W I L L S E E YO U
W H E N E V E R YO U ’ D L I K E 93
NOTES 207
INDEX 223
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AC K N OW L E D G M E N TS
The idea for The Influence of Affluence occurred on April 22, 2005,
during a lunchtime conversation between the two of us at one of New
York City’s finest restaurants, Per Se. We were the hired help that day,
having spent the late morning in the private dining wing presenting
data about recent changes in the financial industry to a room full of
financial trade reporters. As the tables were being cleared, Russ and I
drifted into a conversation about upcoming research projects. Russ,
who is able to see stories, hopes, and dreams in a spreadsheet full of
numbers, mentioned his recent “discovery” of a new demographic of
millionaires. (This discovery process is described in the first chapter of
this book.) He called them “middle-class millionaires.” I was immedi-
ately struck by that contradiction in terms—as many others have been
since. Having a million dollars sounds like a fantasy, conjuring up
images of first-class status, luxury living, and perhaps most important,
financial peace of mind. But for those working Americans who’ve
reached the million-dollar mark and still find themselves with mortgage
payments, tuition bills, and other expenses, it can be just a number—
and not necessarily an address on Easy Street.
This book doesn’t dwell on the financial contradictions of the world
we live in—although that’s a worthy topic. Rather, we set out to intro-
duce you to the people who are at the heart of that contradiction—the
substantial and increasing population of people who would call them-
selves “middle-class” but whose wealth, behavior, and attitudes have put
them in a class all their own. Taking the exercise a step further, we’ve
attempted to identify their unique attributes and contributions and
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viii ACKNOWLEDGMENTS
ACKNOWLEDGMENTS ix
—Lewis Schiff
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CHAPTER ONE
T H E I N F LU E N C E O F A F F LU E N C E
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known, and they actively solicited opinions from others. They talked
with a lot of people each day. Here was a subset of the multimillionaire
cohort who didn’t act like multimillionaires.
In a subsequent readership survey done for The New Yorker and Reg-
istered Rep magazines, Russ’s researchers interviewed 1,417 people who
declared a net worth between $1 million and $10 million, including the
equity they hold in their primary residence. It was here that he discov-
ered, as a sociological phenomenon, the Middle-Class Millionaire. Most
are baby boomers, but some were born after the boom’s end in 1964.
They made, rather than inherited, their money, often through technol-
ogy, real estate, entrepreneurship, or a mix of all three. And while
Middle-Class Millionaires are found in just about every kind of com-
munity, they tend to congregate on the East and West Coasts.
Months later Russ compared survey responses from these self-
identified working millionaires with a pilot study of ordinary middle-
class individuals. Here he found measurable differences in areas closely
related to financial success. The attitudes and beliefs of the Middle-Class
Millionaires were significantly different from those of the broader mid-
dle class. Some behaviors were valued more highly than others or were
practiced more rigorously. Knowing what those behaviors were might
help others achieve similar success. For example, Middle-Class Mil-
lionaires worked much longer hours. They were more likely to focus
on drawing financial gain from their work. They were less inclined to
be discouraged by failure.
Above all, Russ found that the millionaires in his middle-class sam-
ple were measurably more influential than people who had not achieved
millionaire status. Middle-Class Millionaires are networkers by nature.
They reported seeking the advice of others—and offering advice—far
more frequently than the other survey respondents. And they believe
that the advice they offer is much more likely to be followed by others.
In other words, as a group, Middle-Class Millionaires aren’t merely
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John Hutchins is one of the many entrepreneurs who more or less acci-
dentally discovered the Middle-Class Millionaire over the last ten years.
He began with a business plan designed to satisfy the needs of the ultra-
wealthy. But eventually it led him to the birth of a company that
depends upon a completely different clientele—one that has far more
in common with the middle class than with the super-rich.
Hutchins is a veteran hospital administrator who moved overseas
in the late 1970s to run the then-new Al Hada hospital in Taif, Saudi
Arabia. That job, which sometimes required him to settle disputes over
which Saudi prince had the larger hospital room, also helped Hutchins
familiarize himself with Europe and Asia’s network of top medical
specialists. In 1985, when the world-renowned Cleveland Clinic was
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emerge from the middle class in the late twentieth century. Overwhelm-
ingly, these millionaire households are headed by people raised in ordi-
nary middle-class homes. They’ve achieved significant financial success,
but their fortunes are not so secure that they can afford to stop work-
ing. As their wealth has grown, so have both the cost of maintaining
their lifestyles and their need for products and services that make their
lives run smoothly. Now, through the influence of their affluence, this
group is helping to bring about momentous changes throughout Amer-
ican society.
Our own exhaustive research in this field shows the degree to which
the working rich are different from the broader middle class. They are
uniquely achievement-oriented. They tend to be high-earning and big-
spending. Through their lifestyle choices and spending decisions, they
wield influence in the overall economy in support of the same middle-
class values and concerns they were raised with: security, health, self-
betterment, family, and community. They have achieved the American
dream the American way.
By some estimates, the number of millionaire families in America
will increase by about half again over the next decade. The Middle-Class
Millionaire explores how this burgeoning population is shaping our own
attitudes while using its expanding wealth to influence spending and
lifestyle choices throughout our economy and society. How will its grow-
ing influence affect the values we advance, the products we buy, the
ways we live, and the communities we live in? How, in the coming
decade, will this market grow as goods and services for the few are
transformed into “scalable” enterprises and services such as PinnacleCare
that promise to transform industries and change all of our lives? Will
these trends widen the gap between the haves and the have-nots in our
society? Or will they, as some predict, lead to improvements that find
their way throughout the middle class and American society as a whole?
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and colleagues know what PinnacleCare has done for him. This is why,
for instance, everyone who knows Richard Rossi also knows about his
colonoscopy.
In preparing for what has become a middle-age rite of passage,
Rossi says he reviewed his options with his PinnacleCare advocate and
grew attracted to the idea of undergoing a virtual colonoscopy. By using
a combination of X-rays and computer imaging, a virtual colonoscopy
is safer and less invasive than the conventional procedure. The sole
drawback is that if a virtual colonoscopy shows any abnormalities, the
patient must return weeks later for a traditional colonoscopy. For most
people, that means enduring the necessary twenty-four-hour fasting
and cleansing process all over again.
“I said, ‘This is ridiculous,’” Rossi recalls. “‘I’m going to cleanse just
once.’” He asked PinnacleCare to set up a virtual colonoscopy for him
in the morning, and then to make an appointment for a conventional
one later that day, just in case he needed it. As it turned out, his virtual
scan at Johns Hopkins went well, and there was no need for the second
session. PinnacleCare canceled his afternoon colonoscopy at a cost to
Rossi of $300. “But it was worth it,” he says now. “That’s how you can
bend the medical system to your will—if you have people to do the
heavy lifting for you.” Rossi’s point reflects an important Middle-Class
Millionaire attitude: that most problems can be solved with a mix of cre-
ative thinking, the right people, and an open wallet. It’s an approach to
life that they use in business, but it’s also a testament to the influence they
wield as consumers.
In the first few chapters of this book, we will describe the results from
our survey of 3,714 households and explain how the distinct set of per-
sonality traits among Middle-Class Millionaires—hard work, network-
ing, financial savvy, and persistence—contributes to something we call
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iors. More advanced systems allow real-time tracking via PC. And now
mobile phone providers have begun marketing GPS-enabled phones
with similar capabilities at a cost of about $10 per month. Our survey
shows that Middle-Class Millionaires are more than seven times as
likely to purchase such devices compared with our sample of middle-
class households. Among Middle-Class Millionaires, nearly 85 percent
expect to acquire such devices within the next three years. Is this a fea-
ture that in the near future will be included on all new cell phone mod-
els, at little or no additional cost, as cell phone providers compete for that
Middle-Class Millionaire market?
In Mexico today, a more elaborate and controversial variation on
this child-tracking concept is already on the market. The kidnapping
and ransoming of affluent children has become an epidemic in some
parts of the country, and the Mexican distributor of a tiny implantable
device already used to identify lost dogs and cats in America has begun
marketing the same device for implants in small children. In a less
crime-ridden country such as ours, that may seem extreme, but our
research suggests that Middle-Class Millionaires are already consider-
ing such a tracking tool as a way to protect their children. For them, the
ethical qualms about such technology are trumped by the nightmare of
a child’s disappearance. It’s not so far-fetched to think that in the near
future many more of our children will have some form of homing or
tracking chip implanted in them—and that the children of Middle-
Class Millionaires will have them first.
further dividing it into a two-tier system—one for the rich and one for
everyone else. PinnacleCare founder Hutchins disagrees. Interviewed
in early 2006, he told CNN with a fatherly grin, “I like two-tiered sys-
tems. I think they force necessary changes in various fields.” As he sees
it, PinnacleCare is making health care more responsive and consumer-
oriented—the benefits will eventually have an impact on the entire
industry and be enjoyed by families everywhere.
That may be marketing bravado, but one interesting effect Pinna-
cleCare seems to have is that its members use the health care system less.
There are countless stories of how the company’s preventive health pro-
grams and taking of thorough medical histories have spared members
unnecessary diagnostic tests and procedures they might otherwise have
had to undergo. PinnacleCare members are paying out of pocket to
spare their insurers expenditures.
Take the Biophysical250, a comprehensive annual blood-testing
regimen developed by Texas-based Biophysical Corporation. The test
uses a blood sample of just 30 cc to track the levels of 250 common and
not-so-common disease markers in the bloodstream. The purpose of
doing such a thorough test each year is the early detection of disease.
Many serious illnesses, including a variety of cancers and heart ail-
ments, betray themselves in blood tests long before they become symp-
tomatic. By combining already-existing blood tests commonly used in
twelve major medical specialties, the Biophysical250 can help physicians
analyze your blood from year to year and track any changes that may
indicate trouble.
The various blood tests that make up Biophysical250 would cost
$35,000 or more if they were done individually. Biophysical is currently
marketing its annual test for all 250 markers at just $3,400. “We’ve
rolled it out at a fairly reasonable price, although it’s still expensive for
many people, obviously,” says Craig Parks, a Biophysical vice presi-
dent. “There’s not widespread acceptance yet because the insurance
industry doesn’t cover it.” This kind of test conflicts with the insurance
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PDF
To purchase a copy of
The Influence
of Affluence
visit one of these online retailers:
Amazon
Barnes & Noble
Borders
IndieBound
Powell’s Books
Random House
www.BroadwayBooks.com