How many millionaires? Depends who’s counting

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Wealth experts all agree that the world is creating more millionaires. Just how many? It all depends on who's measuring—and who defines "millionaire."

Last week, Capgemini and RBC Wealth Management released their World Wealth Report measuring the world's millionaires. The report said there were 920,000 new millionaires created in 2014, bringing the global total to 14.6 million.

The same week, Boston Consulting Group released its count saying there were 2 million new millionaires created last year, bringing the total to 17 million.

Add all that to a study last fall from Credit Suisse that said the world's millionaire population was roughly 35 million, and was expected to reach 53 million by 2019. Not to be outdone, Knight Frank, the real estate firm, said there are approximately 17.8 millionaires globally.

Measurements of millionaires by individual country vary even more. Almost all the reports say the U.S. has the most millionaires. But while Capgemini says there are 4.3 million millionaires in the U.S., Boston Consulting says there are 6.9 million, while Credit Suisse says there are 14.2 million. Spectrem Group, the Chicago-based wealth research firm, says the U.S. has 10.1 million millionaires.

The biggest differences seem to be in China. Capgemini says China's millionaire population reached 890,000 last year. Boston Consulting Group counted 3.6 million, while Credit Suisse said around 1 million.

What to make of these huge disparities? How many millionaires are there really?

It turns out, the numbers depend largely on definitions of "millionaire." Specifically, while some studies measure people, others measure households. And while some only count "investible assets" as wealth, others include homes.

Credit Suisse, for instance, says it defines millionaires as those with total wealth of $1 million or more. It says it measures both "financial" and "nonfinancial" wealth, in other words anyone with net assets of more than $1 million, i.e. your house, art collection and other assets.

Millions of millionaires
Millions of millionaires

Capgemini, however, restricts its definition to those with more than $1 million in investible assets, which doesn't including primary residences. So if you have a house worth $1 million and an art collection worth $5 million, but investible assets of only $500,000, you don't make the cut. That results in a much lower count.

Boston Consulting's definition includes "cash deposits, the net amount of listed securities held either directly or indirectly through managed funds, and life and pension assets," but doesn't include "real estate (primary residence as well as investments), business ownership, and collectibles, consumables, or consumer durables such as luxury goods."

And while Capgemini measures people, Spectrem Group and others measure households, which generates a higher number.

But definitions of wealth explain only part of the disparity. Differences in methodology–i.e. how the companies determine how many people fit their definitions of "millionaire"–also play a role. And companies like to keep their methodologies close to the vest, so we don't know exactly how they come up with their numbers.

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Boston Consulting says its "proprietary methodology for measuring the size of global wealth markets has been continuously refined and enhanced over the past 15 years," and covers 62 countries accounting for more than 94 percent of global GDP in 2014.

Capgemini says its model covers 71 countries using the "Capgemini Lorenz curve methodology," which is built in two stages. First they calculate a country's total wealth, then they calculate how that wealth is distributed.

Credit Suisse says its methodology is "robust" but like the others, doesn't give many specifics on exactly how it comes up with its estimates.

This is not to say the methodologies are faulty. It's just that we don't have much visibility into exactly how the results are derived. Like estimates of billionaire net worth, the studies are useful as general guidelines. But when it comes to estimating individual wealth, whether for millionaires or billionaires, no study or list can be exact.

This much we know for sure: The rich are not only getting richer, they're getting far more numerous.

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