This is the first in a two-part series about how the face of wealth is changing in America as more middle class people become affluent. It is adapted from an article that appeared in the April 2007 issue of Investment Advisor magazine.

Economists consider the Federal Reserve Board’s triennial Survey of Consumer Finances to be the most accurate assessment of wealth distribution in America. According to the 2001 and 2004 surveys, affluent middle-class households are the fastest growing segment. Between 2001 and 2010, families with net-worths of between $1 million to $10 million are projected to grow by 50 percent. We are thus on the brink of a wealth boom that may dramatically change the business you are in. This rapidly growing demographic of affluent individuals presents unique opportunities to the investment advisory community. The challenge is to understand these wealth boomers and decide how to profit from them.

In my forthcoming book, The Middle-Class Millionaire: How the Influence of Affluence Is Transforming America, co-authored with Russ Alan Prince, we conducted a survey of 3,500 households to understand the new affluent population better. Tracking today’s wealthy took us from the frontier of medical innovation, where new, expensive blood tests detect disease early, to the California desert, where we visited a self-described “Ritz Carlton” of mobile home parks (or “motor coach parks” as the residents prefer to call it), complete with golf-course views and concierge services.

Who Are Middle-Class Millionaires?

Our marketing survey was the result of earlier research designed to measure how much influence the buying habits of these very affluent readers exert on those around them. That earlier survey concluded that the buying decisions of very high-net-worth individuals — those with net-worth in excess of $10 million — exert very little influence on the people around them. Except for certain celebrities, wealthy people who are influential by almost every other measure tend to not discuss their purchases, and seldom interact with enough people on a day-to-day basis to exert any significant influence.

One small subset of this overall data was intriguing enough to warrant additional attention: A handful of the least affluent in this group reported behavior patterns that set them apart from the rest. This slice of the affluent demographic actively developed support networks. They solicited opinions from others and spoke with a lot of people each day. Here was a subset of the multi-millionaire cohort who didn’t act like multimillionaires.

As Richard Rossi, an education entrepreneur from Washington, D.C. put it, “I’ve gotten to the point in my life where I’m pretty clear how I want to spend my time: with my family, my friends, my business and with my own evolution as a person. I don’t want to spend my time worrying about anything else to the degree that I can avoid it.”

In particular, the research reveals several ways that the Middle-Class Millionaire’s strong desire for that “circle of support” has led to new types of businesses that may serve as models for financial advisors hoping to serve the new affluent. One is a healthcare firm in Baltimore called PinnacleCare.

In 2001, John Hutchins, a medical administrator who had run hospitals in Saudi Arabia and the VIP programs at the Cleveland Clinic and Johns Hopkins, started a “healthcare advocacy” business. For a $10,000 initiation fee and annual fees starting at $5,000, PinnacleCare’s members are looked after by a lead representative and each member is treated as though his or her health is a financial portfolio. A staff of healthcare advocates, mostly registered nurses and social workers, assess goals, draw up plans, monitor progress, and attend to crisis. This team keeps after members with diet and prescription reminders, accompanies them to medical appointments, hammers out problems with insurers, and consults with the company’s staff physicians about second-opinion referrals.

Increasingly, Middle-Class Millionaires are looking for someone to help solve their financial problems across many domains of expertise in much the same way that clients of PinnacleCare want to have their physical care coordinated.

For a financial advisor, following a similar model means becoming a high-net-worth client’s “problem-solver,” addressing a client’s specific needs by leveraging expertise in estate planning, insurance, tax planning, and cash and credit management — experts who have more experience and up-to-date knowledge on those topics than the primary advisor does.

The payoff for advisors is that their role can yield significant new revenue streams several times greater than the asset-management fees generated from those clients by sharing fees and commissions with those other experts.

Corporate executives, professionals like physicians and business owners have always been an advisor’s bread and butter. But many of those same clients now possess — or will soon — net worths in the seven and eight figures and investable assets well in excess of $1 million.

More importantly, unlike retirees, their wealth is still growing. Most Middle-Class Millionaires are actively engaged in accumulating wealth and report goals of increasing their net worth by as much as ten times over the long term. In addition, Middle-Class Millionaires have expensive lifestyles, leading to fragility in their financial affairs — both real and perceived. They are the “working rich.”

These Middle-Class Millionaires are likely to have made their money through technology, real estate, entrepreneurship or a mix of all three and can be found in just about every kind of community across the country.

However, there is a significant opportunity to serve the Middle-Class Millionaire with financial services beyond just tax planning. Nearly nine out of 10 Middle-Class Millionaires report they are “very concerned about losing their wealth,” according to Prince & Associates, and consider addressing this concern one of the most important issues in choosing an advisor.

In Part 2 of this series we will the challenges and opportunities this slice of the affluent demographic presents to investment advisors.

Lewis Schiff is the principal of Advanced Planning Group, a private wealth specialist for accountants and advisors. His forthcoming book, The Middle-Class Millionaire, will be published in January 2008.