Whether you’re at a coffee shop or at your local Parent Teacher Association meeting, if you’re in the District, Maryland or Virginia, the person sitting next to you is more likely to be a millionaire than if you found yourself in Ohio or even New York.
All three areas ranked in the top 10 regions with the highest millionaire-to-total-household ratio, according to a report the Phoenix Affluent Marketing Service released Tuesday.
Maryland ranked third in 2006, up from fourth place in 2005, with millionaires making up 6.2 percent of total households. Virginia rose from ninth place to seventh, with 5.45 percent of households led by millionaires. The District ranked ninth, with 5.3 percent of households including millionaires;D.C. ranked eighth overall last year.
“There’s just been an explosion of wealth in this area, and a lot of this really is coming from individuals who formed companies to serve the government on the defense and information technology side,” said Paul Pagnato, first vice president for investments for Merrill Lynch’s D.C. office. “When these companies are sold, you have this entrepreneur walking away with $10 million, $50 million or even $100 million.”
Technology and lobbying are among the industries driving wealth in the area, said Alban Salaman, chair of Holland & Knight’s Mid-Atlantic Region Private Wealth Services group.
When there are many millionaires in a community, service industries thrive, real estate prices soar and philanthropy increases, analysts said.
The District and its suburbs have more people creating their own private foundations to direct their philanthropic efforts, Pagnato said. Children of wealthy individuals frequently serve on the boards of these foundations, he said.
When individuals come into money, they first consider luxury purchases such as boats and cars, Pagnato said. Most people with $50 million in net worth or more will own a jet or a share in one, he said.
More wealth in the D.C. area has meant more prenuptial agreements for residents, Salaman observed. Parents, for tax reasons or other concerns, also have chosen more frequently to set up trusts for their children rather than bequeathing money directly, he said.
