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Big Hat, No Cattle

By Troy A. Waugh, CPA, Waugh & Co., Brentwood, Tennessee

In The Millionaire Next Door, authors Thomas L. Stanley and William D. Danko assert that the typical millionaire has a boring business and can be met in a trade association. Most millionaires do not flash their wealth. Rather, the authors found, "People who look like they are living the good life may not have much wealth."

This research is comforting news for CPAs who are networking in trade associations and developing referrals from solid clients. Stanley and Danko sent out 3,000 questionnaires to affluent Americans and conducted about 100 in-person interviews. Their findings build on some of Stanley's earlier research, published in his book Marketing to the Affluent. About two-thirds of working millionaires are self-employed and own mundane businesses involved with such things as scrap metals, welding, highway construction, and dry cleaning.

In the book, the wealthy list their CPA as the most-trusted business advisor. The millionaires list tax shelters, disciplined investing, and extreme thriftiness as keys to their amassing real wealth.

Texans call people who live the life of the rich and famous, without real wealth, "big hat, no cattle." Perhaps you should take notice of the people with whom you are networking. Do they have the resources to pay your fees and grow with you or are they "big hat, no cattle"? The book points out that very often those who supply the wealthy become wealthy themselves. The authors state, "There are significant opportunities for those who target the affluent, the children of the affluent, and the widows and widowers of the affluent." They estimate that nearly $270 billion will be paid to the Federal government during the 10-year period ending 2005. Professionals advising families and serving estates will earn huge fees to help conserve as much wealth as possible.

How can you profit from the advice in this book? First, make it one of your priorities to aggressively network with your affluent clients and acquaintances. If necessary, give up time you are spending with less-promising clients. Second, pay attention to the next generation of owners of your clients' businesses. When the business ownership and management changes, you don't want them changing CPAs. Third, become involved in an industry trade association. Most affluent business owners value their trade association above all other organizations. Fourth, become an advocate of the wealthy. Write your senators and legislators on matters that can help your clients. (Send a copy of letters to your affluent prospects and clients with a note saying, "This is an issue that probably affects you.") *

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