Stupidity Tops The Charts As MTV Mistakenly Reports The Super Rich “Are Responsible for Half of the World’s Carbon Emissions”

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Rae Paoletta is a “dreamer, news junkie, knowledge sponge” who is some type of writer or journalist for MTV. She also Tweets as @MTVIssues where “We tell stories that are changing the world and we just have a lot of feelings.” Her boss, Sumner Redstone, the controlling shareholder in MTV’s parent Viacom, is Super Rich. His net worth is estimated at $5.3 billion. In fact, Viacom CEO Philippe Dauman, thought to be worth $200 million, is also super rich. A quick search of Google looking for what the definition of “Super Rich” is would yield a multitude of answers from having an annual household income of exceeding $9.5 million or a net worth or $30 million, or even $50 million or more.


What caught my eye about Paoletta was an article she wrote for, “Super Rich People Are Responsible For Half The World’s Carbon Emissions.”


Just reading the headline, it didn’t sound right. After all of the various estimates of Super Rich global population, the most generous, by Wealth-X, reports a mere 211,000 households worldwide with a net worth of $30 million or more. That equates to under one million people who are part of Super Rich households.


It only took getting to the second paragraph to see where journalistically Paoletta or or whomever wrote the headline made their mistake. “Disturbing new research from Oxfam, an anti-poverty organization, asserts the world’s wealthiest 10 percent are responsible for 50 percent of all carbon emissions,” she wrote.


Quick math shows 10 percent of the world’s 7.2 billion population equates to some 720 million people, of which the Super Rich make up approximately one million. The article also mentions the footprint of the richest one percent “could be 175 times that of the poorest 10 percent.” For continued clarity, one percent of 7.2 billion is 72 million. Again, the Super Rich total around one million.  In fact, there only 16 million people worldwide who are single digit millionaires (out of the 720 million people who account for 50 percent of carbon emissions).


Paoletta concludes for her readers, “Currently, world leaders are gathered in Paris discussing humanity’s role in climate change. Now is the perfect time to address the relationship between class and carbon emissions, and what can be done to catalyze the change.”


A bit deeper look at the Oxfam statistics would have revealed the wealthiest 20 percent of the world’s population, about 1.44 billion people, accounts for nearly 70 percent of all emissions. My guess is that includes a good chunk of the audience.


Perhaps a more relevant focus for Paoletta is what she and her peers can do. Of course the Super Rich or Ultra High Net Worth (UHNW), whichever label you want to use, should be conservation minded as well. But let’s start with facts. The under one million Super Rich do not produce half of the world’s carbon emissions. Headlines like the one in Paoletta’s story only create a wider divide and make critical issues harder solve. And I do really miss the days when MTV actually played music.

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The Super Rich: The Good, The Bad, The Ugly and The Sad


While perceptions of the super rich are often tied to what we read in the press, rarely do we get insights from the people who work directly for and with UHNW families. The Super Rich are generally diligent in making employees and service providers sign non-disclosure documents, and many that serve them have little to gain by spilling the beans as it would deter other UHNWs from hiring them.

According to a report in the Australian media, angel investor Kai Peter Chang was happy to dish on the UHNW customers he worked for during his days in wealth management.

Some highlights from Chang:

The Bad, The Ugly:

  • Financial services is the “Concierge of Money” for the Plutocrat class; we were suit-and-tie wearing mandarins of their largesse, who knew the details of our clients’ finances better than they did; it was our job to anticipate their needs before it even occurs to them.
  • Managing a massive personal fortune often means managing their dirty secrets.
  • Money is a personality amplifier. If you are a poor person who hates gay people/broken-English-speaking immigrants/Republicans/whatever, your need for a paying job forces a level of decorum in your conduct, and you learn to keep quiet your most objectionable opinions so you can get along with your employers/customers. On the other hand, if you are a poor person who has a benevolent heart and genuinely wishes to help the less fortunate, your financial constraints will limit whatever level of help you offer to very modest levels; your efforts may be invisible to most unless they are direct beneficiaries of your generosity, or know you personally.
  • Money removes these constraints: A wealthy bigot can afford to be a raging terror to whoever he or she wishes, with almost no consequences. I’ve witnessed multi-millionaires confidently drop shockingly racist/nasty remarks about gays/disabled/[insert group] in casual conversations.
  • Most employees and service providers roll with the tide: We were trained to go along with it — they are the client, and their accounts are worth millions in fees over the course of their lifetime, so while we won’t join in the racist/bigoted banter, we won’t object either; we are trained to nod politely and refocus the conversation to the technical matters.
  • A wealthy married man can incorporate separate businesses/LLCs for the sole purpose of buying property/spending money on the sly for his illicit lover(s).
  • Control of financial trusts can used as chess pieces to manipulate family members/dependants/beneficiaries to bend to the will of the owners of the capital.
  • Errant adult children of the wealthy who find themselves incapable of earning a living on their own, often find themselves in protracted legal battles with stepmothers their own age (their plutocrat fathers, having paid a fortune to rid themselves of their first wives, marry younger women who now vie for a piece of the dying man’s fortunes).
  • Entitled heirs — with no irony or self-awareness — often speak of their fathers’ fortunes and possessions as “my house,” “my boat” or “my plane.”
  • If you put over US$100,000 on the table in any casino in Las Vegas/Macau/Monaco (which you can either lose or win), an entire battalion of high-touch specialists employed by the casino materialize to cater to your every whim, so long as you gamble at their tables. They know your name, your favorite foods, your favorite entertainers (“free tickets for you and your friends sir, and we can arrange for you to meet singer/rapper/comedian/magician so-and-so backstage!”) and your favorite recreational drugs (if you’re into such things — they will be discreetly tucked away in the bathroom of the penthouse suite of the hotel/casino where you are staying).

The Good:

  • While many wealthy philanthropists want to get credit for their contributions to charities/foundations they support (seeing their name emblazoned on their former university’s Major Donor walls, creating foundations in their names, etc.), I was surprised by the number of people who wanted to remain strictly anonymous — the only entities who were aware of their donations of these people was the IRS (for tax deduction reasons), the recipient non-profit/foundation, and us, who facilitate/structure these large donations.
  • There are many who view their wealth as a blessing that they entrusted to be good stewards during their lifetime; they take their responsibility seriously to leave the capital to the next generation along with imparting their most cherished values.
  • Children of this second group are polite, respectful and thoughtful — they understand they occupy a rare and privileged position in society and are very careful about not lording it over others, and make sincere efforts to be worthy heirs.
  • The former type of client was far more interesting (and lucrative for the firm, given the complexities of the layers of financial instruments deployed), the latter was far more pleasant to interact with.

The Sad:

  • The most valuable thing I’ve learned is this: whether you are a rich dysfunctional bigot dropping N-words in my office and throwing your financial weight around while bankrolling mistresses through your shell companies, or a thoughtful philanthropist trying to quietly change the world for the better with your largesse, being wealthy is a relatively lonely existence.
  • The problems you encounter, while very real and very frustrating, will not elicit sympathy from 99.999 per cent of the planet.
  • Like being an exceptionally beautiful woman, most of the people who approach you are only after one thing, and that perspective warps your ability to connect genuinely with others — one of the most quintessential human needs.
  • Almost everyone wouldn’t mind being a bit more beautiful or a bit more rich, but few can truly appreciate just how alienating it is to have either in such abundant quantity, that they become the object of desire/envy by everyone you meet.

Follow me on Twitter @elitetravelerDG

Doug Gollan is ranked by Verb as “Top 25 Digital Luxury Experts To Follow.” His 2014 book “23 Ways To Create More Sales Opportunities in 25 Minutes” ranked Top 10 in 3 Amazon business categories.

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Are Luxury Brands Overexposed To Arts And Culture?

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As we approach Art Basel Miami in less than two months, I can make three predictions. Lots of luxury brands will spend tens of millions of dollars – yes tens of millions – throwing lavish parties. Secondly, lots of expensive art will be purchased in a very short time. Lastly, most of the marketing dollars will be at best an exercise in public relations.

There is no doubt that the super rich have an affinity for expensive art and high-end culture. Look at the boards of any museum or philharmonic. And there is no doubt there is a strong connection because the artisan craftsmanship of beautiful jewelry, watches and the inspiration of fashion designers and other luxury purveyors with the talents of world class painters, sculptors, sopranos or tenors.

Yet at the end of the day, much of the audience for museum galas or Art Basel Miami parties is not the Ultra High Net Worth or Super Rich consumer that the luxury brands are hoping to network with and cultivate as customers. In fact the Miami Convention and Visitors Board expects close to 100,000 people to flock to the city. In the convention center alone over 250 galleries from 31 countries will be represented. If 2015 is anything like past years, there will be around 300 to 400 private jet flights bringing in the wealthy. If you want to say there is an average of six people on the jet, we are talking about 2,500 people who are probably UHNW, usually defined as having a net worth of at least $30 million. And while that is a nice concentration of the well to do, it isn’t much different than what you would find tomorrow in any number of cities across to country from South Bend to Baton Rouge and Austin, Texas. Major collegiate football teams draw between 80,000 and 100,000 fans to those games, and for the big schools when they play big games, having several hundred private jets flying in super rich alumni who will view the game from luxury boxes is the norm.

The picture above shows the lounge of Swift Aviation in Phoenix earlier today as fans of Arizona State mingled awaiting their private jets to see the Sun Devils play Utah tomorrow, not a marquis match-up.  The Phoenix/Scottsdale area has three main airports that serve private jets and more than a half dozen FBOs (private jet terminals) like the one pictured above.  This scene is repeated throughout the fall in dozens of cities around the country.

Wealth-X research shows that UHNW consumers account for over $200 billion a year in luxury spending, and as a segment are the biggest “niche” of consumers buying watches, jewelry, fashion, luxury autos and fashion.

While it may make sense for multiple reasons for luxury brands to bump heads with each other in places such as Art Basel Miami, the example of college football is a good lesson that the Super Rich have many other passion points beyond the arts. It is also good to remember as many billionaires dropped out of college as went to Ivy League institutions, and the vast majority matriculated from state universities. There are large Super Rich populations outside of New York, Miami and Los Angeles with plenty of money (there are more UHNWs in Minnesota than Russia and more super rich in Wisconsin than Saudi Arabia).

For luxury brands seeking to grow high-value, high-spending consumers, a broader view of who the wealthy are, what their passions are and where they can be found is a good way to find new clients. At the same time, there will be plenty of appreciative posers and appreciative fans of the arts drinking free champagne in early December in Miami Beach. Bottoms Up!

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The Chinese Visitor: Are Luxury Brands Losing Control Of Their CRM to Salespeople?


Luxury brands have invested hundreds of millions of dollars in CRM and building their database, and for the most part it is working.

The one exception where traditional CRM capture is falling short is in the Chinese traveler market. The reason is simple. While brands typically have salespeople capture email addresses, many Chinese have eschewed email for WeChat, using the social platform as not only an all in one replacement for Facebook, Twitter, Instagram, Pintrest, etc. but for good old email.  WeChat has grown in several years to over 700 million users!

The desire of brands to capture data about customers, particularly emails, is critical as it gives the brand a way to stay in touch with customers even when a salesperson leaves. However, the new affinity for Chinese travelers to use WeChat in place of email has not escaped salespeople working at luxury brand boutiques. Needing an effective way to stay in touch with customers to schedule second fittings, notify them when a piece they wanted comes in, engraving is done or just to sell them more, salespeople working the Chinese market are communicating to customers from their private WeChat accounts.

The department manager at a major boutique from one leading European luxury company who said corporately there is no WeChat platform specifically dedicated to the Chinese visitor shopping in the U.S. told me, “Unfortunately there is nothing we can do about it.”

Building a WeChat database specifically of Chinese travelers to the U.S. is more important than ever with the new 10-year visas introduced at the beginning of this year.  Applicants for the new 10-year renewal visas represent the frequent, affluent visitor to the U.S. luxury brands are courting, but are harder to find as they travel independently and not with tour groups.  By building this database, brands will be able to market to this target during multiple annual return trips.


WeChat is an opt-in multiplatform marketing dream that enables brands to communicate with customers, providing videos and webcams as well as enabling customers to share purchases with others on the platform.

Alec Glos, CEO of i2i Media, a Shanghai based communications company specializes in assisting companies targeting Chinese travelers. Speaking about the growing importance of WeChat as a de facto email, he reported after a recent trade mission from America to China his team entered over 500 business cards of Chinese contacts. More than half the emails bounced or went unanswered. It turns out even though the emails were on the business cards, the Chinese executives had abandoned email in favor of WeChat’s replacement feature.

Glos notes WeChat even has an appointment scheduling feature that enables users to schedule appointments. The ability to target repeat visitors from China is becoming more important. In 2014 nearly two-thirds of Chinese visitors to the U.S. were repeaters. This segment is not only the highest spending, but also is more likely to be traveling independently, so can’t be marketed to via tour group leaders. On the other hand, Chinese travelers stay in a variety of hotels, including non-luxury and with relatives, so local “concierge” solutions don’t work.

i2i under Glos is now working with luxury brands that not only want to capture more of the $24 billion Chinese visitor market, but who want to strategically ensure they have ownership of their CRM.  The upcoming launch of Galerie is an extension of the successful Essentially America platform, this time targeting Chinese visitors penchant for luxury shopping and real estate purchases.

The platform begins by capturing opt-in Chinese visitors coming to the US who receive the magazines when they are getting their renewal visa.  80 percent come to the US within 60 days and 98 percent within six months meaning for luxury marketers who want to find a needle in a haystack of 1.3 billion people, the distribution method connects directly to the approximately 1.5 million repeat Chinese visitor market brands are seeking.

Luxury Daily recently called the platform “really smart.”

i2i not only handles all of the implementation, including managing all the social media aspects of WeChat for the brands, but also takes care of translation.  “It is like having dedicated support to the Chinese visitor market, which when considers has a $24 billion annual value just to the U.S. is something critical for brands,” Glos told me.

Of course the key is being able to access Chinese visitors at the point of visa renewal.

For more information, please email me at

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(Part 2 of 2) Are You Using WeChat Effectively To Target Chinese Visitors To The U.S.?

Are you using WeChat effectively to connect with Chinese visitors to the U.S.?
WeChat is an effective way to market to Chinese visitors to the U.S.

WeChat is a key strategic element of gaining more business from Chinese visitors to the U.S., particularly repeat visitors who are harder to reach because they tend to travel independently instead of with groups.
There are over 700 million Chinese currently on WeChat, and over 100 million Chinese who travel internationally each year, so how do you find the approximately 1.4 million repeat Chinese visitors that are expected to come to the U.S. during 2016?
It may sound like finding a needle in the haystack, but it’s not!
By creating a specific WeChat account for Chinese visitors to the U.S., jewelry, watch and fashion companies can promote their own retail locations. Real estate companies can build awareness and get appointment requests.
–  If you don’t have your own retail, you can use WeChat to direct Chinese visitors to your wholesale accounts. 
– If you have your own retail, but only have a WeChat account serving the Chinese domestic market, we can create a specific one for travelers to the U.S.
The key of course is to identify those Chinese consumers who are traveling to the U.S. in the near future!
Since 1994, Essentially America Group has been specializing in inbound tourism to the U.S., and since 2012 we have been active in China having created TravelUSA, our exclusive WeChat platform that averages 40,000 active, qualified users on a weekly basis.  Users get entrance to TravelUSA via a QR code only in Essentially America China, our magazine they are given when they apply for their visa renewal before leaving for the U.S.  In fact, 80% of the Chinese who apply for a U.S. visa renewal travel to the U.S. within 60 days and over 95% in six months.  This means you are reaching readers ready to shop and buy!
In November (timed for Chinese New Year 2016 travel shopping trips), we will debutGalerie, a luxury lifestyle magazine version of Essentially America specifically geared towards the repeat visitor interested in shopping, fine dining and real estate purchases.
We can create a custom WeChat USA platform for you or just create content for you on our platform.  We have marketing programs to fit your budget, and most importantly we have a guaranteed way to target the Chinese repeat visitor to the U.S.
Email me at, and I can show you how you can benefit fromEssentially America’s more than two decades of expertise.
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(Part 1 of 2) How Can Luxury Marketers Capture Repeat Chinese Visitors to the U.S.?

Despite the headlines, China remains an economic powerhouse and key market for luxury marketers, and if fact, in North America, real estate is seeing an uptick as both a safe haven and as more wealthy Chinese send their kids to high school in addition to college.
Figuring out how to capture your fair share of the Chinese traveler market is more critical now than ever.
Thus China continues to be an important market for luxury brands, as Chinese focus luxury shopping around their travel.  The core of this spending comes from the repeat Chinese traveler.

It is a market that Essentially America has been tapping into successfully since 2012.

In November, a new luxury platform is being added to this successful model.

“In Galerié’s case, it is like casting a net into the stream. Once the fish swims by, you don’t have another chance, in this case until the next visa renewal which with the changes into effect this year, means up to 10 years,”

“The print magazine is the entry point, with advertising and editorial. The Galerie QR code then provides an ‘opt-in’ to content that will be used for the duration of the trip and for subsequent trips, so we are enabling partners to build a long-term relationship,”

Luxury Daily calls the Galerie approach integrating a print magazine given during the Visa renewal process with a custom WeChat platform “really smart…something other (media) can learn from.”


If you would like further information on how you can get more business from repeat Chinese travelers, including a free WeChat platform for your company, please email me at
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Does Hard Luxury Need To Redefine Itself? Or Is There An Easier Solution?


If I were to believe what I read, which I frequently don’t, the luxury industry, specifically the makers of hard goods, need to look in the mirror as they face unprecedented hurdles, some they can’t control, others of their own making.

Amongst the headwinds are the challenges in Russia, Ukraine and China, plunging oil prices that could cut back on consumption from wealthy Gulf nations and spots like Nigeria, Azerbaijan, Kazahstan and Indonesia that have been over-delivering uber wealthy customers to the malls of Hong Kong and shopping streets of Paris, London, Milan, New York and Beverly Hills.

Questions continue about how strong the economic recovery in the U.S. truly is. Unemployment reports are structured so many that are looking for jobs aren’t counted, and there is little question that the lion’s share of economic gains go to the top of the pyramid. A recent Bloomberg article noted, “While the merely rich haven’t seen their share of society’s wealth increase since 2000, the Super Rich have seen their slice of the pie soar.”

A part of UHNW gains can be attributed that the cash rich wealthy are best positioned to jump in a buy low when there is a crisis, enabling them reap oversize returns when the curve ticks up as it inevitably does.

More troubling, the article described the overall middle class has been on a decline for a while now, like the two halves of the Titanic, the upper end white collar middle class at slower trajectory, but still the same downward track of their blue collar cousins.

If you want more bad news, a number of European economies remain shaky, and the situation in Greece and now with refugees isn’t exactly the type of news luxury goods executives wish for.

A macro-issue is when the occasional luxury consumer needs to make a choice on how to spend their limited discretionary budgets, money is apparently shifting to experiences, a boon to the luxury travel industry, at the expense of thousand dollar handbags and mechanical watches under $10,000.

A recent piece in The Guardian was titled “Luxury Brands Must Redefine The Way They Do Business.” The writer argued, “The silver bullet for luxury retailers isn’t e-commerce. It’s redefining the business they are in….With luxury consumption becoming global, digital and experiential, the role of luxury retailers irrevocably shifts from products to services and experiences. The core value unit that luxury retailers designed their businesses around isn’t a luxury item anymore – it is seamlessness, convenience, speed and quality of personal service.”

For luxury executives it must seem like driving a Formula One car at full speed with junk being thrown on the course in front of you.

My take is pretty straightforward:

  1. There is no new China or Russia ready to burst on to the scene and save the day so this time around, the answer won’t be rushing into new markets (although to be fair, many brands spent many years to ensure they were well positioned when the rush started.).
  1. Most luxury goods companies still have a country or regional approach, that ignores high-end travel is the common denominator of the big spenders. Even when an UHNW community takes a hit as they are in Russia, those that still have money are still traveling. There may be less, but they still have lots of money and still spend. Most luxury goods companies rely on local market advertising in home countries to hopefully impact those that are traveling. Just as luxury brands are spending more resources to digital, they need to shift more marketing focus on dollars to global print and airport (don’t forget private jet terminals), still the best way to be top-of-mind with the high-spending travel target.
  1. Travel’s gains in its share of the luxury-spending dollar didn’t happen by accident. After getting hammered in the American recession and not having the same flexibility to simply chase new markets (it’s hard to move a hotel, for example), they stopped selling beds and started to view themselves as “vacation stylists.” Groups such as Four Seasons created unique experience-led programs, such as being able to play basketball with retired Hall of Famer Hakeem Olajuwon if you stayed at its Houston hotel, or having a private dinner overlooking the Arne from the Ponte Vecchio if you stayed at its hotel in Florence.

I think The Guardian piece was maybe a bit too dramatic. Luxury goods in my opinion will always be closely aligned to the “It Bag,” the star designer, the celebrity who wore it, artisanal craftsmanship, heritage, limited inventory, innovation and great stories.

At the same time, by dedicating more resources to the high-end global travel market (beyond Duty Free) and taking a page from the travel industry to create experiential offerings exclusive to customers (there are dozens of on-brand, simple ideas as well as some very high-impact more complicated ones) I think the hard goods side of the luxury industry will find clear track ahead.

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How Luxury Brands Should Look At Russia, China, Brazil and the Middle East Amidst The Turmoil


There are economic woes in Brazil, China and Russia, including political worries the latter two. With oil prices plummeting, what will happen to the big spenders from the Arabian Gulf? Needless to say, luxury brands and service providers can attest first hand there is less spending. So what to do?

For brands there are key issues. Much money was invested in opening retail in emerging markets, including staffing up, marketing, advertising and communications, including events and getting aboard national celebrities as ambassadors and endorsers.

Well, the good news, in my opinion, is all of the money spent into developing these markets was well worth it, even if they are seeing some bumps, valleys or ruts. Having spent 14 years as co-founder, President and Editor-in-Chief of Elite Traveler before leaving at the beginning of the year, I was intimately involved both first hand and through extensive research in what makes the Ultra High Net Worth (UHNW) consumer tick.

Globally, as much as 90 percent of the Super Rich (those with at least $30 million net worth) are self-made and most of them were not known outside their companies and families. While certainly there are UHNWs who are celebrities, athletes or celebrity CEOs, many made their money through mundane businesses such as manufacturing, services, logistics, retailing and real estate. I’ve seen several billionaire surveys that show more billionaires dropped out of college than graduated from Ivy League institutions. In other words, the general stereotypes of Oxford University, polo and museum galas represented a sliver of the Super Rich, as does the sports team owner who made his money through car dealerships. In other words, the UHNW community is exceptionally diverse in both how they made their fortunes and their interests.

At the time we coined the term “Driveway Celebrity” as the only places they were famous was at home or at their office. We also found like the general population, they were generally attracted to pop culture. When we wrote about top suites, we created a section “who slept here” listing the famous folks who had bedded down in that suite. Rich readers loved the fact they could spend $10,000 a night to sleep in same bed as Sharon Stone or Sylvester Stallone.

We also disproved the myth that rich people don’t respond to advertising. We tracked tens of millions of dollars in watches, jewelry, hotel suites and real estate sold directly through advertising in the magazine via our oversized, pictorial format that spoke to the way UHNWs consumed media aboard their private jets.

So as I said, for luxury brands that spent big bucks on marketing and public relations in regions and countries now under pressure, my belief is that it was money well spent.

The challenge now is that with sales sliding, the broad based approach needs to be refined. Wing-X, a company that tracks private jet flights, reports that so far this year private jet flights between Russia and Europe are down 20 percent and for the United States, the falloff is 18 percent.

This news shows that clearly the recession has hit even the upper crust as it did in 2008 in the United States. At that time, private jet use dropped by as much as 28 percent. The common wisdom was that most of the Super Rich had gone broke, and those that hadn’t had shut down the spending.

Looking back more than a half decade later, the truth was much different. Yes, like what is happening now, there were UHNWs who were overexposed and were no longer Super Rich. But when one examines the U.S. UHNW market, since 2010 UHNWs households have grown not only globally, but in the U.S., their wealth has grown, and in one survey by University of California-Berkeley it was show that 95 percent of gains as the stock market came back went to those in the top 1 percent, with a large part of that in the upper half of 1 percent. Billions were made on buying distressed real estate and investing in teetering public companies. In other words, for those UHNWs that had cash in the bank, it was a great opportunity.

I recall in the ‘90s being at a New York breakfast with a well-known financial titan who in the midst of the Asian financial crisis was heading off later that day to Seoul. Somewhat dumbly, I asked, why? He simply said, “Buy low, sell slightly above the middle” and laughed.

The common wisdom after the crisis, however, was the American UHNWs had stopped spending, as in an entire group, more or less stopped. Now the wife of a former UHNW doesn’t say, “I am not going to buy this because we have serious cash flow problems.” She says, “I don’t think it is appropriate in times like this.” The fact is, she couldn’t afford it anymore. And our research showed after a 90-day dip as the Super Rich tried to get a handle on how their fortunes had been impacted, spending on luxury goods and services by those who were still loaded rebounded and actually surged a bit, although not enough to counter those who were no longer rich.

So what do I think the takeaway is? I am currently working on a partnership development project with a leading broker of superyachts. The average customer has a household income of $20 million and a net worth of about $160 million. In addition to spending an average of $200,000 per week to charter a yacht, excluding food, fuel, port charges and tips to the crew, they own five homes, spend five weeks a year vacationing at resorts, spend hundreds of thousands of dollars on expensive watches and fine jewelry, and yes they rent villas too! Most of all, they are a global audience. One day Beijing, the next Dubai, then Monaco next month for the boat show there, Ft. Lauderdale in November, Miami in February and so on.

For luxury brands the latest turmoil underscores the need to develop a global strategy targeting the Super Rich wherever they may be from, and wherever they happen to be today, as well as however they happened to make their money.  An important screen is travel, be it via yachts or just independent, affluent travelers.  We know from prior experience those who continue to travel are those with the money.

One thing we will see again as recoveries take place in markets now under pressure, is that for every story of an UHNW meltdown, there will be 10 of people who are taking advantage of the crisis to amass huge wealth.  Marketers need to make sure they are connected to these consumers more than ever.

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Why Being A Millionaire Doesn’t Mean Much In The Business Of Luxury


I am always on the lookout for research on Ultra High Net Worth (UHNW) consumers, who are commonly defined as having a $30 million net worth as an entry point. However, many times I have to settle for a broader cut, which is why I was interested to see Shullman Research Center’s Insights Into Luxury, Affluence and Wealth published about a week ago.

The Shullman report looks at three slices: Consumers with a household income of at least $500,000 which in the U.S. represents the vaunted 1 percent of households; those with a personal net worth of $1 million + making up 11 percent of adults, and those with a personal net worth of $1 million + in liquid assets, or six percent of U.S. adults.

The executive summary is succinct: “The good news for luxury marketers, their agencies, and the media alike is that consumers with really deep pockets are digging into those pockets with gusto, even more so than their merely affluent counterparts. These extremely high-income and wealthy luxury consumers are also purchasing with greater frequency, and this also bodes well for the entire luxury category. At the same time, challenges remain, as quality and service continue to be important for these deep-pocket consumers as well as for other luxury purchasers.”

By the same token, I was surprised to see that only 40-44 percent of the three categories said they had made 6+ luxury purchases over the past 12 months (even if it compared favorably to 5 percent of all adults). Again, 29-30 percent said they had bought at least one piece of fine jewelry at $500+ in the past 12 months. For watches valued at $500 + (not generally what the industry considers high watchmaking) the range was 18-26 percent, and while that is impressive compared to the 3 percent of all adults, it is not in line with research on spending by UHNWs.

Shullman’s research is important because it contrasts the difference between High Net Worths (HNWs) and the Super Rich. Recent research by Northrop & Johnson, a leading broker of superyachts shows 85 percent of their customers (Net Worth Average $160 million) buy fine jewelry annually and 50 percent by high-end mechanical watches annually. Research I have been involved in with private jet owners showed similar numbers. Wealth-X research shows the average UHNW household spends $117,000 annually on watches and jewelry, and the Super Rich account for 35 percent of all global purchases in these two categories.

I think the message marketers can take away from Shullman is if they want to sell expensive products with price tags in excess of $10,000 and find customers who can buy regularly, $500,000 is not high enough in terms of a household income target, and low single figure millionaires are probably of limited value.

Posted in douggollan, Jewelry, luxury, Marketing, Media, private jet, superrich, uhnw, Watches | Tagged , , , , | Leave a comment

The Prince And Ryanair: Another Example On Why It’s Hard To Get A Full Picture Of The Super Rich Via The Media


According to a recent email from Travel + Leisure Prince William flew Ryanair while traveling on business for his new employer, an air ambulance service. The brief goes on to note “insiders” say his wife Kate Middleton and Prince Harry fly budget airlines too! I am sure the report, taken from sister Time magazine is correct, since there are pictures. At the same time the source article notes Angelina Jolie and Brad Pitt were recently spotted flying coach on Air France, forgetting to mention that they had flown in from the U.S. in first class and there was no first or business class on the domestic connecting flight to Nice.  Tickets for the family on that trip likely ran well over $100,000.

A quick Google search would have found a June 23 Daily Mail article that members of the Royal Family spent nearly $8 million on travel in 2014 billed back to the state. Among the highlights was a $150,000 trip by Prince Harry to the World Cup, including about $60,000 on commercial airlines and another $60,000 for private jet charters, hardly Ryanair type fares. Prince William also rung up a $120,000 trip to Japan and China, including $30,000 for pre-trip planning trips. Prince Andrew visited Kuwait via private jet at an expense of $90,000, and in total there were over 60 trips that cost at least $15,000.

The point of this is not to say the spending was right or wrong. The aforementioned trips were as part of the Royal’s official role to generate tourism and investment in the UK, plus sales for homeland companies.

I think it’s fine that William flies Ryanair. I suppose his company won’t pay for a private jet, and he doesn’t want to pay the difference, or perhaps the Queen won’t allow it. In fact, it’s not unusual for private owners and user to mix in commercial airlines for long-haul flights or sometimes a quick hop, although Teterboro to Washington D.C. is one of the most heavily traveled private jet routes.

The point is that looking at the Super Rich through the lens of the media rarely provides an accurate picture, particularly if looked at in a singular way. Does William ever fly privately when hopping up to Scotland? The full ledger of trips shows there are plenty of domestic trips made by the Royal Family by private aviation.

That said, while flying a private jet doesn’t necessarily mean one is ready to shell out hundreds of thousands of dollars for a watch, it generally does mean they have the money. On the flip side, getting a glimpse of an UHNW on discount airline may not reflect their normal lifestyle.

While the piece by Travel + Leisure didn’t try to portray William’s Ryanair flight as anymore than a matter of fact, it just shows how it’s critical not to make assumptions from a single piece in the puzzle, particularly if you are in the business of selling and marketing luxury products to UHNWs.  After all, maybe William’s private jet had a mechanical problem?

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Donald Trump: What Luxury Marketers Should Learn

Dick Fuld was named by Time magazine one of 25 people most responsible for the 2008 financial meltdown. The last chairman of Lehman Brothers, who despite losing as much as $900 million in stock he owned at the time of his company’s bankruptcy, is thought to still have a net worth of at least $500 million.

He’s kept his toe in the waters of finance with his own advisory firm since and various SEC filings show he has been able to gain a few high profile clients, including AT&T. When it came to light a few days ago that he will probably pocket $30 million and possibly $50 million in August auctioning his 71-acre Sun Valley Ranch, it barely made a ripple, outside of reports by The Wall Street Journal, CNBC Wealth Reporter Robert Frank, Fox Business, CNN Money, some local Idaho newspapers and real estate. He wasn’t available for comment, and he has kept away from the media since 2008.

Of course he is not running to be POTUS. Then again, neither was Jeff Green when he made comments during the World Economic Forum that it might make sense that Americans don’t spend more than they earn. Forgetting that he came from a blue collar household, worked his way through college and started his first business by saving instead of partying, he was widely flamed in the media for the lavish estates he owns today and his expensive lifestyle. Yes, he arrived in Davos with wife, children and nannies aboard a private jet. Since then, we haven’t heard much from the billionaire.

Donald J. Trump may yet rue the day he decided to join the Republic primary for President. So far, he has stood his ground, slightly qualifying his comments about illegal immigrants. But first let me give you a disclaimer. In his 2005 book, “Think Like A Billionaire” Trump dedicated a chapter to me and the magazine I co-founded Elite Traveler. I had only met him a couple times and frankly didn’t know I was even going to be included until after the book was published and somebody told me. He kindly described me as somebody in the know about all the best places to go, although he did add that he prefers his own hotels. He also described the magazine as a must-read or something to that effect. It was very nice of him, and indeed it was terrific publicity for which I will always be grateful.

Back to Trump’s current situation.   Since his initial announcement, he has lost a number of business relationships. Were their ends mutual decisions? Was it because executives at those companies, who had been profiting from the relationship all along, came to the sudden realization that Trump has strong opinions they disagreed with, not always articulated with feel-good flowery prose? Was it they felt like they were going to lose customers if they didn’t cut ties? It’s impossible to really know. Either way, they’ve cut their losses soundly sleeping with the knowledge previous profits are safely banked.

The relevant part is I am sure that many other Super Rich and Ultra High Net Worth folks are watching Trump’s current plight and taking notes. Clearly, if you want to be in the public profile, you better make sure you are really well coached so you articulate controversial opinions in the most palatable way. Even better, you might want to stay clear of these type of divisive issues. Worst case, the message is that you should support issues covertly. Just donate money to folks who will get out the pitchforks and keep quiet and hide behind the scenes. is dedicated to marketing and selling to the Super Rich, so I want to look at it from that perspective. The other day on Bloomberg Television, they dedicated a segment to Trump’s company 401k plan.  It is something that you can get details of through public records. But we can be sure, as things move forward, there will be more things that will come to the surface, and they will be reported without context in the race to get headlines.

For luxury sellers, I think the lesson is quite straightforward. As private jets became a lightening rod for critics of the rich during the Great Recession, if you are selling or marketing to UHNWs remember privacy is paramount, not just for today but for 10 years from now. While it is fine if they post pictures of their yacht or earrings on Instagram or Twitter – some do, most don’t – building a successful relationship means honoring that what you and me do and don’t think twice, for the Super Rich is a potential land mine. What do I mean? Did you take a vacation to a luxury Caribbean resort the same year that you had to restructure your team. Did you buy your partner a nice watch three months after you had to close the branch office in Cleveland, forgetting that you offered everyone transfers and actually opened new offices in Buffalo and Cincinnati. Oh, and did you get a new car at the same time people in your company had their wages frozen. Yes, your wages were frozen too and certain workers got raises per contract. But lots didn’t and you got a new BMW!

In a Google search world, it’s relatively easy to dig up stuff on anybody and put it in a bad light. That’s not what happened to Trump. But luxury marketers should make sure they have “best practices” in making sure they don’t provide any fodder when customers get caught in a firestorm. Now critics of this column may get a bit irate, but the worst thing is to “scare” down Super Rich purchasing, particularly when one considers that their lifestyle spending alone creates over 5 million jobs, many that simply are lost when their money stays in the bank.

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Marketing To The Super Rich Is More Complicated Than Knowing Where They Go


Robert Frank is one of the foremost trackers of the Super Rich. The New York Times is the paper of record.  Wealth-X is one of the best sources of market information about where the Ultra High Net Worth are from, how they made their money, and what they are spending it on.  Thus, I have to say I was a little disappointed to read, For The New Super Rich, Life Is Much More Than A Beach in the gray lady.

While nothing in the story was inaccurate, not much was new, and further, if your business is about marketing and selling luxury products and services to the rich, it missed a few key points,  in a forest through the trees sort of way. Then again, if you just happened to be enjoying a lazy weekend and never gave a thought about the lifestyles of the very rich, it would have served as a good primer.

Frank’s notable book, Richistan,” published in 2007 was and still is a must-read if your business depends on luxury consumers. If you put that together with “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else,” by reporter turned politician Chrystia Freeland, you will be a few miles ahead of many of those you are competing against. If you are looking for a third read, that takes focuses on where the rubber hits the road when it actually comes to selling your products and services to UHNWs, the 2007 book I co-authored with Russ Alan Prince, “The Sky’s The Limit: Marketing to the New Jet Set,” was based on over 600 interviews with owners of private jets. In it, we created three pyschographic buying personalities designed to help marketers better target their efforts in both audience, messaging and content.

So where was Frank’s NYT piece spot-on?   Identifying the Super Rich as a global species that is constantly on the move, hopping from one spot to the other and hard to pin down, is something I have been on my soapbox about for more than a decade, so to have two top figures in such prestigious media stating this, brings me to a happy place.  It is a key reason traditional media strategies are not effective in targeting the UHNW segment, which Wealth-X notes accounts for $234 billion in luxury lifestyle spending, about 20 percent of the total luxury market!

To give you a two-sentence recap of the article:  Today’s Super Rich fly around the world in their private jets, mainly keeping within the same circuit that includes New Year’s in St. Bart’s, Davos, some winter weekends in Palm Beach, The Milken Institute Global Conference in Beverly Hills, Art Basel in Basel, New York art auctions, The Masters golf championship in Augusta, Cannes Film Festival, Royal Ascot, dividing your summer between the Hamptons, south of France and Sardinia, and then onto the fall winding down with Miami’s version of Art Basel. Frank and David Friedman, President of Wealth-X, accurately point out that off the highway are many side routes, such as The Kentucky Derby, Wimbledon, the media confab in Sun Valley, the car collector’s delight at Pebble Beach every summer and so on.

Here is where the article from my perspective is a bit off course. Even at the headline events, there is only a small fraction of the global UHNW population in attendance. At the World Economic Forum in Davos, the grand daddy of elite hobnobbing according to the hosts, there are only 2,500 participants. St. Bart’s between its hotels, villas and yachts can only handle a couple thousand of the Super Rich at one time, if that. At the same time, Wealth-X pegs the global Super Rich population at 212,000 households, and since households include a partner and children, you are talking about around 800,000 actual people. While this may not be relevant to the general consumer readership of The New York Times, if you are involved in selling or marketing to the Super Rich it definitely is. If you are selling luxury travel or hard goods, again, reaching the spouse and kids is often critical in getting the sale!

In media and marketing, they talk about Reach. Reach is simply the percentage of your target audience your activity has a chance to connect to. If you are running an ad in a magazine that reaches 50,000 people with a $1 million + Household Income, there is a chance they will read that issue and perhaps see you ad. That’s the reason in the world of media, there is another metric, Frequency. Most people agree, that one ad or being at one event has little impact, so the key is to have enough Frequency against your target that you get noticed.

Research by Ogilvy & Mather back in the Eighties suggested your target consumer needs to read or hear about you (TV, radio, billboards, editorial, events, POP, word-of-mouth, etc.) about a dozen times before they were likely to seriously consider buying from you. Now I don’t want to equate advertising for dish soap to marketing to the Super Rich, but the theory is something worth keeping in mind. For the last decade, many marketers were hoping the Internet would solve the problem of figuring out what part of their marketing was actually working and driving ROI. Of course, we now know that over $6.3 billion per year of whatever is being spent to drive clicks is actually fraudulent, picking your pockets with such agility that you actually thought those were real people who were interested in your message.

Back to the Super Rich:  The challenge with the circuit described in The New York Times article is at even the largest of these stops, as a marketer you are reaching a very small percentage of the universe you can buy your product. If your business is based on getting a half dozen or less new UHNW customers per year, each of these events alone may provide a broad enough platform. However, the reverse challenge is that most companies that fit this profile (the guy who does six-and-seven figure home theaters, the specialist in landscaping, an independent financial advisor, etc.) is not a brand, therefore the obstacle is like the old McGraw Hill grumpy old man ad (see top of story), where he brings you down to earth, by reeling off, “I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s records. I don’t know your company’s reputation. Now-what was it you want to sell me?”

While I totally buy into Frank and Friedman’s Super Rich on the move thesis, let me add, where it gets more complicated is there is lots to add beyond the several dozen events they mentioned. Big college football games can attract more private jets than Art Basel Miami. Don’t forget the NBA All-Star Game and of course the Super Bowl, which draws over 1,000 private jets. There is the Olympics, the World Cup, and the list obviously goes on and on and on. Hot spots such as Ibiza and Turkey are drawing the Super Rich from traditional Med destinations. There are major fishing tournaments like the Bisby in Cabo that draw dozens of private jets, and today’s more active UHNWs can be found running in triathlons, fishing in Scotland, hunting in Mexico, hiking in Nepal, kite-surfing off Puerto Rico, riding big wave surf of Costa Rica one week and Indonesia, maybe today at the U.S. Open Golf Championship, or just somewhere with family celebrating Father’s Day.

In other words, where I think the story misses, is the insinuation that a large percentage of the Super Rich can be found in any one place at one time. Numerically, that is just not true. At certain times there are more than normal, but still not a significant portion of the UHNW population. This doesn’t mean that it doesn’t make sense to set-up a pop-up shop in the Hamptons as Hermes has done (of course most people know the Hermes name, if not all of the products they make), and explore opportunities to sell your services at these places.

Just keep in mind, you’re as likely to find the Super Rich at Levi’s Stadium to watch the San Francisco 49ers as Art Basel Miami. Finding them amongst the throngs is not often as straight forward as one would hope. Moreover, each of these events will only bring you to a small segment of the population. The larger challenge is 90 percent of this target audience, having not necessarily come from money, and being first generation wealth, is not as familiar with what you are selling as you may think. To create an effective UHNW strategy there is a lot of work to be done before you meet your prospect face-to-face, as our friend from the Mc Graw-Hill ad suggests.

Posted in Jewelry, luxury, Marketing, Media, private jet, Research, superrich, uhnw | Tagged , , , , , , , , , , | Leave a comment

The Wisdom Of Johann Rupert: Everything Not Reported From The Richemont Chairman’s Keynote Address

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The headlines out of the talk by Johann Rupert, Executive Chairman of Compagnie Financiere Richemont SA were big ones. Speaking at the Financial Times Business of Luxury conference, he said what keeps him up at night is the destruction of the middle class and coming mass unemployment driven by technology. That will lead to class warfare. The other big news was he invited Kering and LVMH to take an equity stake in the Internet shopping platform he is creating by merging his stake in Net-a-Porter with Yoox. In 55 minutes, those two points alone are quite a boatload, and in fact, it was interesting most of the follow-up questions in the audience were from reporters pursuing those topics.

Having had the chance to view the entire talk thanks to and the FT posting it, I thought it would be of interest to cover other points he made, which to me were also valuable, and I hope you will find worthwhile as well. Below is my summary of key points.

  • His viewpoint: His view is as “insider outsider.” While outside South Africa he is know for luxury goods, in his homeland he is known for the bank he started in the 1970s that today employs 32,000 people, and diversified holdings in finance and medical. He was the first importer of Apple computers to South Africa in the mid-80s and he started a mobile phone company he sold to Vodafone. He has owned a business that lays underwater cables. It’s a bit of an unusual perspective as I often find top executives across various industries have grown up in the silo of their industry, coming to the top spot, sometimes without leaving their narrow segment, be it cruises, watches or airlines.
  • How he got involved in luxury: His entrée into luxury in the ‘70s was at a time “luxury wasn’t sexy.” It was a period before the Internet, mobile phones and even portable music – the Sony Walkman. Entertainment was Studio 54. While there is debate about how much he paid for a stake in Cartier at the time, $7 million or $9 million, it was a deal that many other’s passed up. “You couldn’t fill up a room like this in 10 years.” He said there was simply no interest. “Automobiles were a serious business. Luxury was a joke.”
  • Why the financial crisis? The problem with financial institutions running rampant dates back to changing from partnership structures to corporations. With the corporate structure came leverage. He said working in a partnership structure, “The partners regulated us. If you messed around, the partners went bankrupt. Trust me, you didn’t need regulation.”
  • How To Fix The Financial System: The current problem is “not the free market system. It’s the lack of the free market system. If they allowed (companies) to go under, people wouldn’t have these one way bets. But we kept on supporting (and) interfering.”
  • Are his products overpriced? Addressing whether pricing is inflated, he relayed that a customer told him, if you look at the cost of an A. Lange & Sohne watch, and look at how much labor it takes, it costs less on a per hour basis than getting your oil and spark plugs changed.
  • How is the pace of change changing? Change will be exponential. The difference between walking 30 real yards and walking 30 exponential yards is a trip to the moon and two roundtrips around earth. “What’s happening today with artificial intelligence isn’t science fiction.” It will create structural unemployment where jobless that are no longer employable. Hundreds of millions of jobs will be impacted. The jobs that will be impacted by the robot revolution go beyond what’s apparent, such as driverless cars. He says while hairdressers and florists will flourish, diagnostic doctors will be replaced by robots. “It’s going fast than I every thought. Everything will be squeezed into faster and faster.”
  • Technology behind the scenes is critical: He paid homage to former CEO Norbett Platt for his leadership in data management. “We know where our stuff is, and we know what it costs us at all times.”
  • How he manages his brands: “We have maisons that are centuries old. Our role is to protect their DNA and brand equity because if we can have desirability and brand equity we have pricing power…One of the greatest compliments you can give me is that we don’t innovate at all. We remain so true to the brand you don’t notice (yet) 25 percent of the products must be new, but you need to stay within the DNA. If you don’t stay within the DNA it won’t sell and won’t retain value.”
  • Will the $17,000 Apple watch displace his luxury products? The answer is a resounding no. He tells about when Cartier executives eight years ago proposed to make a mobile phone. His response was that phones are thrown away. People keep Cartier, even the box. They don’t throw it away. He also asked, for your wife’s birthday or daughter’s 18th birthday, will you buy her an Apple watch or something she will remember the rest of her life. He said, he likes the Patek campaign about passing down your watch to the next generation.
  • Marketplace challenges: “We have lots of competition from mispriced capital. When people misprice something it’s abused. It starts with landlords who take us to the cleaners, especially in Asia.”
  • What he is doing to keep luxury creative: “We’ve amalgamated luxury and luxury can’t be ubiquitous…We need style, design and creativity…Taste, design, culture and luxury goods are strengths of Europe.” New UHNW/Super Rich have forgotten their money quicker in the past, and they didn’t stop past the culture part en route. The craftsman who make luxury items sometimes feel affronted in the ways they are being asked by today’s luxury customer to apply their skills. In June, he will announce a platform with Net-A-Porter and Yoox that will enable “the little artisans who sit in the little village” so they remain employed in the second machine age.
  • The minnow and the whale: Luxury is still a small business. Richemont at $5 billion Euros is a hiccup compared to Apple, IBM and other players. The costs of big data are huge and too much for any single player.
  • Why Switzerland is a good place to do business: There was a vote at his factories in the French part of Switzerland. Should workers get extra paid holidays? The Swiss workers said, no, we have enough. The French workers said they were crazy. “Do you not like working in a place like that” Swatch didn’t just fall out of the sky.”
  • Is luxury buying coming back in China? There are 90 million people in the Communist Party out of over 1 billion population, so as a minority, the crackdown of corruption in the party “is a very wise thing to do.” However, the normal status symbol of a mistress “or four” is coming back, “which is great for our business. The Chinese are smart, work like hell and save. There are more men than women…They have to be very generous with the women.”
  • On the global luxury market: “We have five engines and five continents. Coco Chanel said money is money. It’s only the pockets that change…Oil prices go up, sales go up in the Middle East. We just have to remain true to the brand equity.”
Posted in douggollan, Fashion, Investment, Jewelry, luxury, Marketing, superrich, switzerland | Tagged , , , , , | Leave a comment

How Much Do The Super Rich Know About Luxury Goods and Services?


Today, more than ever, marketers of luxury products and services have more choices than ever.

What are you doing to target Millennials?  How about the exclusivity seeker?  I also hear indulgers spend 15 percent more than exclusivity seekers!  What about them?  The bridal market is good.  After all, don’t people get married whether the economy is good or bad?

If you are a marketer in the luxury segment with any sort of budget, I am sure glad I am not on your side of the table.  Everyday you have a line of people at your desk talking up some segment and why you need a higher profile with that group.

However, having been there and done that for over 15 years, I can safely say there is one segment many luxury marketers believe their brand has covered, and I can tell you first hand they don’t.

“The Super Rich already know us.”

During my tenure running a magazine that specifically targeted this group via distribution to private jets it was an answer I would  hear quite a bit when I spoke with purveyors of luxury goods and services.

There is an urgency to get the word out to a broader audience of aspirational consumers with the belief that Ultra High Net Worth prospects already have some type of intimate knowledge of what they are selling. It’s as if billionaires and centimillionaires wake up in the morning wondering what new luxury products have been launched lately.

Now that I don’t have a dog in the fight, I thought it might be useful to list off why luxury marketers and sellers need to re-think about whether or not they have enough focus on the UHNW segment.  And by the way, hosting a couple “collector” dinners, sponsoring a polo tournament and assuming/hoping that today’s Super Rich are also reading regularly the media on your current plan is not a strategy.

First of all, around 90 percent of Ultra High Net Worths (UHNWs) are self-made, first-generation wealth. In The Sky’s The Limit only 2.9 percent of private jet owners we surveyed became rich via inheriting their money. Many came from middle class households. (See five Super Rich Americans who started out super poor). Dad might have been a bus driver or factory worker, mom a teacher or nurse. Wealth was created via business success or innovation. There were no father and son trips to Hermes to buy new saddles before heading to the club. More likely mom was taking the future UHNW to soccer games in a minivan while dad was painting the house.

Today’s UHNW was never the aspirational consumer flipping through fashion magazines in their cubicle. As they built their business, every extra dollar was plowed into the business. During school breaks, vacations meant the kids came to work in the warehouse. The spouse helped in the business, and her shopping was probably buying new computer equipment online, not shoes.  There are many stories about today’s very rich having to borrow money from friends and family to make it through the early years.

Somewhere between age 30 and 50 these folks crossed the chasm that separates being UHNW from aspirational wealth. Today’s UHNW didn’t grow up shopping to impress other people. There was no need to wear Gucci loafers at the factory. Now they are the ones with the money. In fact, since 2009 the Top 1 Percent, the rich have gotten richer, having gained 95 percent of income increases, according to UC Berkeley researcher Emanuel Saez. Their new found lifestyle means they are active in luxury, having time and taking time to vacation, often working it in with business and investment opportunities, flying on their private jet, pursuing hobbies and passions, going to places where a nicer wardrobe and some upgrades are needed. Research by Harrison Group suggests this socialization into luxury trappings and preferences is a five to 15 year process, providing a nice window of opportunity for marketers.  In some cases it never stops.  Carl Icahn was in his 60s when he bought his first super yacht although he could have afforded to buy one for many years before.

My take:

The Super Rich know less about your product or service than you think. While they weren’t thinking about you as they were making their money, you have been busy the last decade or so churning out innovative products and experiences, line extensions and so forth. After all, it wasn’t that long ago Montblanc, as an example, just made pens. Now a large part of their business is mechanical watches, they have a jewelry line and accessories such as briefcases and luggage. It’s only in recent years Louis Vuitton launched high jewelry, high-end mechanical timepieces and menswear. The Super Rich don’t wake up in the morning and think about what new product launches you just had. So while UHNWs may know the brand, they might not know everything you do.

At the same time they are the segment with the most money. They already spend lots of money with you or your competitors, but they have the depth of wallet to spend more. To me, that’s an opportunity. This goes for every segment. How many people who have the money have chartered a yacht? How many Super Rich people know the full range of spa experiences? It seems like there is a new concept every month. For that matter, destinations are constantly evolving their offerings. Fine dining in Australia? How many rich people have never had an Italian hand stitched suit made custom? Why doesn’t Bill Gates appreciate the complex mathematical concepts behind mechanical watches? After all, Microsoft and minute repeaters are both the works of genius.

I think it’s important to state luxury industry and brands have done a phenomenal job developing lots of infrequent buyers, the aspirational consumer, who spends money they really don’t have to create an image of status not matched by their bank accounts. According to Boston Consulting Group there are 350 million aspirational luxury consumers worldwide that account for $620 billion in global sales, or about $1,700 in total luxury purchases annually per household.

In terms of growth opportunities, my point is there are untapped opportunities with UHNWs.  According to Wealth-X, the global UHNW audience spends $234 billion on luxury goods and services despite a population barely breaking 200,000 households. With wealth possibly exceeding $50 trillion, more than the GDP of the 15 larges economies in the world, they have more to spend.


While every brand has its fans and advocates, there are lots of Super Rich folks out there that could spend a lot more. The opportunity is only matched by the depth of their pocketbooks.

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The Top 10 Things Rich People Buy

Doug Gollan: Selling to the Super Rich -- Ideas, Research and News for luxury marketers


What do the Super Rich spend their money on? When we interviewed over 600 Ultra High Net Worth (UHNW) private jet and fraction jet share owners for “The Sky’s the Limit: Marketing to the New Jet Set” Home Improvements was number one.

Of course, when one considers those surveyed average three homes, spending just over a half million dollars a year can go quickly.

Spending nearly a quarter million dollars on fine jewelry was a combination of six figure purchases and ongoing buying at accessible price points. You know, pop into Neiman Marcus, pick up a couple new outfits and then accessorize with a new $2,000 bracelet and $4,000 earrings. When one considers the cost of flying privately is somewhere between $5,000 and $20,000 per hour, all of the other spending equates to you or I popping down to Starbucks and splurging on a large premium coffee.

We also…

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For Luxury Marketers, A Canary In The Coal Mine. But Which Way To Clear Air?


If you don’t follow the sales numbers of new private jets and the companies that make them, you probably missed that both Embraer and Bombardier, two conglomerates that as part of their portfolios manufacture private jets, both cited the segment as performing weakly.

In fact, a few days ago, a top columnist at Bloomberg ran a story titled, “Billionaires Aren’t Buying Enough Private Jets.” He referenced a press release from the Canadian manufacturer that read “current economic conditions and geopolitical issues in some regions such as Latin America, China and Russia, have impacted order intake levels industry-wide. As a result, Bombardier Business Aircraft will reduct its production rate of Global 5000 and 6000 aircraft.”

There is no question that even the very rich are being impacted in these places just as they were in the U.S. after the recession. The key thing is not all of them are being impacted, and only a minority are being effected. I monitor the monthly private aviation operations (actual flights) between Russia and Western Europe and they have been tracking in the negative 20 to 30 percent range for some time.   After the U.S. crash, flying dropped by about a quarter as well. Again, this is flights, not new aircraft sales, which also dropped.

Everyone has already heard about various luxury brands retrenching in China, either closing boutiques or cutting expansion. In Russia, there is a retreat as well. Having run a media company during the period of the U.S. recession, I can report first hand most companies took significant parts of their budgets here and reallocated them to emerging markets to take advantage of the growth, something they were successful with. Certainly anyone who bet on the former Soviet Union, certain Latin countries and China over the past decade have seen for the most part handsome results.

So the bloom is off rose when it comes to these countries. What’s next? Yes, we hear Africa. But where in Africa, and now with oil prices dipping, is some of the growth sustainable? Will affordable energy in the West mean less lavish spending in the Middle East.

From what I am seeing many luxury companies are putting renewed hopes and dollars into the U.S., and while for many personal reasons, I am delighted to hear this, in the dark confines deep in the coal mine I think they may be headed down a dangerous shaft instead of towards clear air as they chase the elusive aspirational consumer and hard-to-understand millennial market.

While U.S. sales for luxury brands have been increasing and are indeed a bright spot, my question is where are the sales coming from? Digging into economic data and studies, it’s clear that over 90 percent of income gains in the U.S. since 2009 have gone to those in the one percent, a group of under two million households in a nation of over 100 million. And while it only takes a Household Income of $400,000 to get into this group, digging further shows most of the gains have really gone to the the upper echelon of the 1 percent, so perhaps several hundred thousand households, the proverbial needle in the haystack.  There are also plenty of studies – I reference in particular to one done by The Washington Post – which shows that even at $250,000, the typical family of four in a major city has very little money to contribute to the coffers of the big luxury brands. Beyond taxes, rents and mortgages, huge amounts of money go to various insurance payments, costs of maintaining a home, car payments, parking, gas, the kids and so forth, there is little left for luxury goods and services. In the example of a Long Island, New York-based family, they would need $290,000 to lead a life that included no luxury cars and no designer fashions, spending under $4,000 a year on vacations.

At the same time, regardless of whose research you look at the number of Ultra High Net Worth (UHNW), be it Royal Bank of Canada, Wealth-X, Wealth Insight, CapGemini, Knight Frank, the number of Super Rich households globally have expanded dramatically, as well as in the U.S.

My belief is a large part of the U.S. sales growth luxury brands have seen the last several years is not from the aspirational segment who today has even more “look for less” choices but from High High Net Worth ($10 million + Net Worth) and Ultra High Net Worth U.S. based consumers and global UHNWs and other affluent visitors.

So what does what’s happening in Russia, Latin America and China mean for luxury brands? I look and see that from Russia to Western Europe the number of private jet flights are at about 70 percent of where they were a year ago. That means more than two-thirds of the Russian Super Rich market is still traveling and has some money to spend. If we look at the U.S., this was true in 2009 and beyond. While many had written off the U.S., the top end of the market with those UHNWs who had liquidity were busy buying at a bargain, making more money and spending. One drag at that point on new airplane sales is one could go to the desert and buy a recently parked 737, 757 or 767 at a fraction of the cost of a new jet, spend tens of millions on new avionics, dining rooms, showers, lounges and have a larger and more luxurious jet at a lower cost than what the top manufacturers could provide new.

For those luxury companies and groups that have yet to create a global UHNW marketing strategy and organization tying together assets from around-the-world, in my opinion they are missing the next emerging market, the Global UHNW. After all, there are still plenty of Chinese, Russian and Latin Super Rich, however if you want to sell to them it will be increasingly outside their home nations. What’s more, most research shows in total, between over 100 far flung countries, the population of Super Rich – those with over $30 million in new worth – will grow by 50 percent by the next decade.

The challenge I always found is many luxury companies think there is a silver bullet to reach the rich people, usually a sponsorship here and some private dinners. Their marketing mojo when it comes to truly tackling the UHNW market lacked real commitment. Unfortunately, in 15 years monitoring the market I can report there are no silver bullets, although like any market, there are plenty of sellers making promises. What’s needed is a true global UHNW strategy, including all elements of sales, marketing and merchandising from media to public relations, VIP services and so forth.  According to Wealth-X, 211,000 Super Rich households spend over $235 billion on luxury goods and services annually.  Based on their wealth, unlike lots of us, they also have plenty more to spend.  For luxury companies, the opportunity is to understand that getting more share and growing sales from the Super Rich probably won’t fit into the marketing structure they have.  That said, just like investment in digital, with commitment and focus, the payoff can be huge, particularly as one understands the new reality is the world’s richest consumers are rarely found in one place for very long.

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How Do The Super Rich Spend Their Money? Ask An Asset Manager!

The below is analysis of how the Ultra High Net Worth consumer spends his or her money. While clearly there are many variations, the document is well sourced. It was put together by an Asset Manager, Will Wister, who has allowed me to reprint an answer he originally posted in Quora below:

(Editor’s Note:  Wister’s use of the Super Rich spending is skewed a bit to the high side as those numbers represented the spending only by the people who participated in specific category.  The actually spending number per household is closer to $2.9 million per household instead of $4.351 that he calculates.  Nevertheless, the analysis brings together close to a dozen sources which combined paint a very helpful picture.)

How do the super-rich spend their money?

Excluding money reinvested to generate even more wealth, I’m asking for a breakdown of how super-wealthy people (say, more than $50 million) ultimately spend that money. What percentage is for luxury goods for themselves, and what sort of luxuries do they like? What percentage is left to their family? How much goes to philanthropy, and which sorts of causes do they prefer (in particular, do the… (more)

1) The philanthropy statistics were surprising:

Statistics from the IRS show that people with incomes of more than $1 million give 3.6% of their income to charity, vs. 3.5% for those with incomes below $1 million. [1][3]

These statistics suggest that the ultra-rich people do not give a large percentage of their income, even though arguably they could afford to give significantly more.

What happens when rich people die? On average, 20.8% of estates over $20 million was given to charity. However 48.8% of people with estates over $20 million gave nothing to charity.

This suggests that some rich people are quite charitable when they die, while others are not.

Those with a gross income of $1-10 million gave 0.46% to 0.6% of their investment assets away each year. Those with an income of $10 million or more typically gave away 1.2% of their estimated investment assets each year. For reference the average amount of investible assets in the last group was $152 million and they gave $1.53 million on average[8].

This data is corroborated by a Merrill Lynch/Bank of America survey that has also some statistics on high net worth giving, and which causes are supported.[9] The average net worth of respondents was $10.7 million. They gave $54,016 directly to charity, of which $12,759 went to education, $9,985 went to religious charities, $7,641 went for youth and family services, $5,531  went to the arts,  $4,587 went to international causes, $4,511 went to health, $3,410  went to Environment/ Animal Care, and the rest went to other causes.

2) Luxury Spending on an annual basis

A survey of those who own private jets was recently completed[2]. The average net worth of jet owners in the survey was $89.3 million and their average annual net income was $9.2 million. The average person surveyed had at least two residences worth $2 million each, so it’s arguable that real estate is a priority. Of course each family was very different, but here is how they spent their money on an annual basis, on average:

  1. Art : $1,746,000
  2. Home Improvement : $542,000
  3. Yacht Rentals : $404,000
  4. Jewelry : $248,000
  5. Cars : $226,000 per year
  6. Parties & Events at Hotels and Resorts : $224,000
  7. Villa / Chalet Rental : $168,000
  8. Hotels & Resorts : $157,000
  9. Watches : $147,000
  10. Cruises : $138,000
  11. Clothes : $117,000
  12. Spa treatments : $107,000
  13. Guided Tours & Experiential Travel : $98,000
  14. Alcohol : $29,000

Theoretically these purchases would be shared by the families who purchased them although some in the family would clearly benefit from certain purchases more than others. 70% of the respondents of the survey were men, yet spending on items like clothing, spa treatments, and jewelry exceeded spending on cars and watches, indicating that men in the survey likely bought luxuries for their family as well as themselves.

At that level of wealth, spending on domestic staff is likely to be quite high, and even though it’s not a traditional luxury, perhaps other surveys will include statistics on personal chefs, gardeners, cleaning ladies, nannies, etc. It goes further as the survey indicates that only 34% of this group opens their own mail and only 19% pay their own bills, suggesting secretaries or accountants were employed as well.

The total value of items on this list is $4.351 million which amounts to 4.9% of assets and 47% of income for this group. However the true percentage of luxury spending is likely higher than that because this list is incomplete. In addition to domestic staff, real estate spending is notably absent from the totals. Also the money spent on private jets is missing, as everyone in this survey owns a jet. Unlike charitable contributions, luxury spending is not tax deductible, so taxes would meaningfully also raise the total amount of money required to support this lifestyle on an annual basis.

3) How much do the wealthy save?

The savings rate for the top quintile of incomes is highly variable and often negative. [4][5] When the stock market rises, the wealthy spend more.

As Alan Greenspan said [6] :
Conventional regression analysis suggests that a permanent one-dollar increase in the level of household wealth raises the annual level of personal consumption expenditures approximately 3 to 5 cents after due consideration of lags.
If one assumes that the wealthy spend 3 to 5 percent of their household wealth per year, that is indeed a very high number. A well-constructed portfolio of stocks and bonds might be expected to gain 4-8% per year on average, so 3 to 5 percent would be a very high percentage of the expected annual gains. It gets worse when you factor in inflation which might average around 2% and capital gains taxes which would would need to be paid when assets were sold to finance the spending. Considering that wealthy people often have additional income from high paying jobs or non-public assets, this spending percentage becomes more understandable.

The vast majority of investible assets are owned by the wealthy. The top 1% of people own 43% of financial wealth, and the top 20% control over 90%[10]. It’s possible that this data might be different for the ultra-wealthy, however one thing to keep in mind is that an extra $10 million of wealth via capital appreciation suggests an extra $400,000 of annual spending which, as indicated by the above luxury spending survey could be achieved any number of ways.

It could be that spending increases in response to simply feeling better about the asset increase, so it’s certainly possible that the 3 to 5% is not a steady number. However if that were true, spending would have fallen after an initial rise, and Greenspan would have likely have highlighted that issue in his research, which he did not.

4) Conclusions:

  1. The ultra-rich don’t appear to give a lot of money to charity – as a percentage of their incomes or assets during their lives. Some fraction of the wealthy are more charitable when they die.
  2. The ultra-rich don’t appear to save a lot of money – as a percentage of their income or assets.
  3. The ultra-rich appear to spend large amounts of money on luxury goods which benefit themselves and their families. The amount spent on luxury goods seems to help make sense of the lower amounts spent on philanthropy and saving.

[3] Anyone with a net worth of 50 million almost certainly is invested in some combination of stocks and bonds that provides them with an income over 1 million.
[9] http://www.philanthropy.iupui.ed…

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Why The Rich Can’t Catch A Break (With a little help from The New York Times)


So back in January, Jeffrey Green got pillored for saying during an interview in Davos, people shouldn’t spend money they don’t have. Even though the billionaire is self-made, came from a financially challenged family, worked his way through college and saved to start his own business when he was in his early twenties, I suppose there is nothing we can learn from someone who is rags to riches anymore, particularly if the advice is not what we want to hear.

Recently The New York Times had a piece where Steve Balmer, the Microsoft billionaire, noted he flies by private jet to see games played by The Los Angeles Clippers, the NBA basketball team he bought for $2 billion. Now when it comes to the environment, there is no doubt each private jet flight burns “thousands of extra gallons of jet fuel that would not be burned if you flew commercial” as the paper published. Balmer explained his private jet usage, “Time is our most precious commodity, and there are conveniences wealth brings to essentially get your more time.”

Wealth being relative, Balmer is exactly correct. For the rest of us, it is also faster, more expensive and uses more gas to take our car rather than walking someplace or taking the bus for that matter. If our finances allow, and time constraints make it so, most of us hop in the car.

Back to the private aviation industry. In the U.S. alone, the industry employs over 1.2 million people and contributes 150 billion to the economy. In places like Los Angeles, Van Nuys Airport, used only for private aviation supports 12,300 jobs, generates over $700 million revenue into the community and pays over $80 million in state and local taxes.

Now true, the quotes I was referring to about wasting gas weren’t from a reporter of The New York Times. Even worse, they were from a letter to the editor the paper published which appears in full below:

Re “Speaking Loudly, Carrying a Big Wallet,” April 22: The Los Angeles Clippers owner Steve Ballmer justifies his use of a private jet to commute to his basketball team’s games with the statement “Time is our most precious commodity, and there are conveniences that wealth brings to essentially get you more time.” No, Steve, a habitable planet is our most precious commodity. Using your wealth to put an extra airplane in the air, exhausting the result of burning thousands of extra gallons of jet fuel that would not be burned if you flew commercial, is not a convenience; it’s selfish and shortsighted.


– DON ALLEN, Carlisle, Mass.

Using its valuable real estate to forward a misguided hypothesis that Balmer’s actions are somehow going to lead to the end of earth as we know it is just, well, irresponsible and not fair to Balmer or the many who make their living and pay their bills working in private aviation. It’s hard to imagine that the gray lady is short on letters to the editor, so why choose something so wacky? If one wonders why many of the Super Rich try to put a protective shell around the themselves, look no further than the way much of the media portrays them.

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UHNWs Shell Out Big Money For Private Concerts

Doug Gollan: Selling to the Super Rich -- Ideas, Research and News for luxury marketers


The Super Rich seem to have no problem spending into the millions for 60 minutes of enjoyment when marketers create awareness and desire.  Look at your favorite rock star.

Greg Furman, the former CMO of Bergdorf Goodman who founded The Luxury Marketing Council, talks about depth of pocket with the Top 0.01 Percent. In other words, the high net worth crowd is a deep well that has more to give savvy marketers. I tend to agree with his viewpoint, that properly motivated, the Ultra High Net Worth segment will spend even more than it currently does on hotel suites, watches, designer fashion, jewelry, home and so forth.

Part of the problem in my opinion is that most luxury marketing is focused on budget constrained aspirational consumers, when the UHNW segment doesn’t even have a clue what’s on offer from some of the best brands out there.  The Super…

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Some Advice For The Super Rich

With the UK elections coming up, this I believe, continues to be relevant.

Doug Gollan: Selling to the Super Rich -- Ideas, Research and News for luxury marketers

Many  bundle of US 100 dollars bank notes

I’ve never created, directed or produced a television commercial but here it goes.

Like tens of millions of other heads of households around-the-world our protagonist opens the front door to the morning sunshine ready for a productive and long day at work.

I am thinking there are going to be several versions.

One will have a white male. Another version with will feature a woman. Maybe there will be a few ethnic takes.

After taking a deep breath to enjoy the fortune of perfect weather, our principal walks down the front path towards the driveway. For background music I am thinking about “Something Great” from LCD Soundsystem. They also have a song “North American Scum” but for this commercial that would be a faux pas.

Here’s where we add the first unusual element. Trailing our protagonist is a line of people. With suspense building we try to make out who is…

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