Who Owns Sundry Assets?

Given the fact that no investment advisor recommends purchasing sundry assets, how has it happened that over 20 million of them exist today? And what kind of person owns them? (Hint: they are not on welfare.)

Sundry asset owners are, generally speaking, the very wealthiest people, based on a study conducted by the Internal Revenue Service of everyone who filed an estate tax return in 1993 (meaning the decedent had a net worth of at least $600,000). A chart summarizing the study’s findings is presented here.

The left-hand column represents people worth from $600,000 to $1 million; the next one, people worth from $1 to $2.5 million; and so forth. The right-hand column shows people worth $10 million or more. The blue portion of each bar represents the percentage of the decedent's assets tied up in real estate. The chart makes shows that real estate (probably the person's house) is the biggest asset of people worth from $600,000 to $1 million; but as your wealth increases, real estate becomes less and less significant.

The red portion of each bar represents the percentage of the decedent’s net worth tied up in liquid assets (stocks, bonds, mutual funds, etc.). These are the asset classes favored by most investment advisors and, unsurprisingly, these assets become relatively more important as you move up the wealth spectrum.

But the IRS found that the asset class that grows most dramatically as one moves up the wealth spectrum is closely-held stock and other securities issued by privately-owned businesses (the yellow portion of each bar). Another name for these securities is sundry assets. The IRS found that while sundry assets represent just 9% of the net worth of people worth between $600,000 and $1 million, they constitute 31% of the net worth of people worth $10 million or more. Indeed sundry assets represent the single biggest asset of America 's wealthiest citizens. In a nutshell, the surest way to get rich in America is to own a business.

The IRS study findings are confirmed by research presented in the New York Times bestseller The Millionaire Next Door (Stanley & Danko, Pocket Books, 1996). The authors concluded that 64% of American millionaires achieved their wealth by owning a business. Thus it may be inferred that 2 out of 3 millionaires own sundry assets.

The lesson financial institutions aiming to serve the wealthy should take from these facts is clear. The wealthier one is, the more likely one owns sundry assets – yet most institutions accept their clients’ sundry assets reluctantly, if at all. This is a short-sighted policy basically telling their wealthiest clients and prospects to ‘get lost’.

	1. How many sundry assets does your institution hold (approximately)? 10-99 100-999 1,000+ 2. What types of accounts are they held in? ERISA IRA Trust Other (Specify) 3. How are they being valued now (e.g cost, $1, book value)? 4. How did you hear about SPARDATA?  Contact Information First Name: Last Name: Company: Address: City: State: Zip: Company Website : Phone: Email: I have read, understand and agree to SPARDATA's privacy policy.