The Super Rich Spent $234 Billion On Luxury; UHNWs Account For 19 Percent Of All Luxury Spending  

Posted on April 11, 2015 by Doug Gollan

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

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Some 211,275 Super Rich households spent $234 billion on luxury purchases last year, accounting for 19 percent of all global luxury spending, according to data just released by research firm Wealth-X.

In a press interview Wealth-X President David Friedman said luxury brands shouldn’t look at what is being spent but untapped potential. He noted mass affluent consumers continue to pull back on spending yet luxury goods companies still are not taking advantage of additional spending power the Super Rich present. The report showed that share of luxury expenditures by Ultra High Net Worth (UHNW) families increased from 17 to 19 percent from 2012 to 2013.

Travel/Hospitality was top in spending at $45 billion, followed by automobiles at $40 billion, fashion (apparel and accessories) at $28 billion, jewelry/watches and art tied at $25 billion. Private jets totaled $23 billion in the report, followed by yachts at $22 billion, home and wines/spirits both…

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Note To Editors: There Is A Difference Between “The 1%” and “Super Rich”…It’s Money

Posted on April 5, 2015 by Doug Gollan

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

Private jet interior

My morning began as usual scanning news headlines and coming across the typical “for” and “against” stories about the very wealthy, their spending, the businesses they started or now own and how they accumulated their fortunes. This one from The Daily Beast was titled, “Hate Private Jets? You’re Just Jealous. The 1% want planes that can fly NYC to Hong Kong nonstop,” was not particularly unusual.

In the media “1%” and “Super Rich” are seemingly used interchangeably. It is a disturbing mixed use of names for a subgroup (Super Rich or Ultra High Net Worth) of a larger group (The One Percent, 1%, 1 Percent) where the subgroup really has very in common with those outside its limited circle. In fact, even within the “Super Rich/Ultra High Net Worth” subgroup there are vast differences.

Considering many of these articles revolve around the divisive “wealth gap” issue, it is time…

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Is $300,000 A Reasonable Monthly Allowance For Private Jet Travel?

Posted on April 3, 2015 by Doug Gollan

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

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The median price of a home in the United States is $189,000, according to the National Association of Realtors. Then again the median net worth of the American household is $56,335.

Of course, when your soon to be ex-husband gave $150 million last year to Harvard University you might decide your lifestyle should not be compromised. It is what led to the Daily Mail headline, “Hedge fund billionaire’s estranged wife demands $300,000 a month for an around-the-clock private jet in bitter divorce.”

While $300,000 may seem excessive, according to Fractional News, 25 hours per month on a Gulfstream 200 would run nearly $280,000. A Falcon 2000 would be about $320,000. A Learjet 60 would only be about $160,000. However, when you have children, nannies, friends and baggage eight seats may not be enough. It also doesn’t have trans-Oceanic range, which if you read on is a potential issue. In addition…

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Pity the People Who Pity The Rich Kids of Instagram: Is Poverty the Pathway to Happiness?

Posted on March 20, 2015 by Doug Gollan

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Even for “C” grade students like myself, it is easy to extrapolate that the hyper growth of the Super Rich naturally leads to an increase in the population Super Rich spouses and kids who are growing up in Ultra High Net Worth (UHNW) households.

Tanya Gold, a U.K.-based writer doesn’t like what she sees. “I am surrounded by affluent rage,” she writes for one of her media outlets, continuing, “Although I have moved from the kitchen with the fourposter bed in Hampstead, because I could no longer live in a part of London full of bankers pretending they live in a rural village, I have failed to escape it.”

She continues, “I moved away from the farm re-enactment people, the cold-eyed workaholics and the actresses with small dogs. But I made a terrible error, because I am now living opposite a private school and, twice a day, I have to listen to affluent screaming and the affluent squeaking of stiletto boots. The posh mums are advancing.”

Speaking about the type of cars UHNW moms drive, Gold opines, “My theory is they need the cars, because they do not work. This makes them feel powerless and the fact that their superhero investment banker husbands may not be faithful only adds to the groaning sense of terror.”

So here is Gold’s take: “My theory is this. Humans are just beasts – not in the Enid Blyton sense, but in the Charles Darwin sense. Survival of the fittest means the acquisition mania never stops – therefore, wealth does not make you happy. Actually, it makes you more unhappy than ever, because you have achieved wealth and it’s not as good as you’d hoped. You are still you, he is still him and you can’t find your car keys, because your car is bigger than Finsbury Park.”

Not to stop, in a separate column in The Sunday Times, Gold took issue with the “Rich Kids of Instagram.”

She wrote about the UHNW scions (according to Money Week; as a non-subscriber I didn’t have access to the entire Times’ piece), “I do not think a person who preens on a private aeroplane, or wears multiple Rolexes on one arm… can be happy. Rather it is the desperation of the unhappy to appear happy by shouting at the world – look at my stuff! Don’t you wish you had my stuff?”

According to Money Week, Gold suggests that “rampant materialism” only makes people more unhappy, “because it is so isolating, and, in the end, never enough, which is why there is such a glut of expensive junk on sale. All you need is love and there isn’t much of that on Instagram, which is more about boasting.”

I guess my question is, what point is Gold actually trying to make?

There are more bratty rich kids than middle class kids. The percentage of UHNWs who are unhappy is higher than those who are scraping to get by. Materialism is only represented at the Super Rich level. Being rich should buy you happiness, but it doesn’t. Materialism and ‘look at me’ selfies are more prevalent with the very rich than other income groups.

Being controversial is a good media strategy to standout and drive page views, and I suppose Gold qualifies, although she is in good company taking potshots at the Super Rich.

Over the years I have come in contact with the kids of some very, very rich people. My experience in terms of their behavior is it run the gamut just like my non-rich friends. Like all children, some will grow up to do great things, others will live their lives under the radar and some will make the headlines for unsavory endeavors.

However, where Gold misses the mark, is the behavior she detests has been around forever and exists at all economic demographics. My guess is columns on “the driving habits of middle class parents” and “the bad manners of poor kids” wouldn’t attract the readership she is looking for.

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The Super Rich, Luxury Watches and the Internet. What’s the future?

Posted on March 19, 2015 by Doug Gollan

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There are 630,000 online searches every day for 62 luxury watch brands, according to a new report issued by Digital Luxury Group on the eve of the BaselWorld 2015.  The activity translates to about 230 million searches annually. If one considers that the luxury watch industry is approximately $30 billion, that is 130 searches for each dollar of sales.

 

Makers of high-end mechanical watches are hot, so says World Watch Report, at least in terms of being searched for. Brands classifed as Haute Horlogerie saw 23 percent growth in online searches, the metric used in World Watch Report. Data is based on searches from Google, Bing, Baidu, Yandex and covered over 11,000 models.

 

Brands are divided into five categories:

 

o Haute Horlogerie: A. Lange & Söhne, Audemars Piguet, Blancpain, Bovet, Breguet, De Bethune, Franck Muller, Girard-Perregaux, Glashütte Original, Greubel Forsey, Jaeger- LeCoultre, Jaquet Droz, Parmigiani, Patek Philippe, Richard Mille, Roger Dubuis, Ulysse Nardin, Vacheron Constantin

 

o Watch & Jewlery: Bulgari, Cartier, Chaumet, Chopard, Harry Winston, Jacob & Co., Piaget, Tiffany & Co., Van Cleef & Arpels

 

o Couture: Chanel, Dior, Hermès, Louis Vuitton, Ralph Lauren

 

o Prestige: Breitling, Corum, Hublot, IWC, Omega, Panerai, Rolex, Tag Heuer, Zenith

 

o High Range: Baume & Mercier, Bell & Ross, Bremont, Carl F. Bucherer, Concord, Ebel, Eberhard, Frédérique Constant, Graham, Longines, Louis Erard, Maurice Lacroix, Montblanc, Perrelet, Rado, Raymond Weil, Romain Jerome, Sinn, Technomarine, Tudor, Vulcain

 

Some other highlights:

 

–          Asia is the biggest market for Haute Horlogerie in terms of searches, and saw 34 percent increase year over year

–          Patek Philippe entered the Top 5 most searched luxury watch brand thanks to the booming interest in China. The brand overtook Breitling.

–          Share of interest for models between $37,000-$100,000 and $100,000 + is low compared to all other price ranges (4 percent each among 10 price ranges)

–          In the $100,000 + price range, consumers seem to be mostly interest by recent models launched after January 2013.

–          Interest for models between $24,000-$37,000 and $100,000 + is growing the fastest among all price ranges (23% and 25% respectively ; A

–          The share of interest for models priced between $24,000-$37,000.

–     $37,000-$100,000 and $100,000 + searches are increasing compared to all price ranges.

 

“Despite the turbulence of the past months – the increase of the Swiss Franc, rumors of overstock and the announcement of the Apple Watch – worldwide consumer interest for luxury watches keeps growing.” comments David Sadigh, Founder & CEO at Digital Luxury Group.

 

Portions of the report released to the media do not deal with how consumers are using search, so it is hard to discern where in the sales cycle search comes in? Are consumers searching for more information after admiring a friend’s timepiece or reading a magazine article? Or are they going online to compare pricing and points of sale once they have decided what they want to buy? What percentage of searchers actually end up buying?

 

A DLG spokesperson said more in-depth analysis is available for purchase. Visit Digitalluxurygroup.com.

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10 Things You Didn’t Know About The Super Rich (and their lifestyle)

Posted on March 10, 2015 by Doug Gollan

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As the number of Super Rich expand, so do the research reports attempting to give us more insight into what Ultra High Net Worth households are up to. Among the notable tomes is The Wealth Report at 72 pages, put out by real estate advisor Knight Frank. While naturally this one has a property investment bent, it covers a wide range of topics of interest to the very rich, those that envy them and all the folks who make their living selling goods and services to the plutocrats.

Here are 10 things to know about the Super Rich lifestyle:

  1. Eighty-one percent of advisors said their clients are worried about tax hikes and 80 percent said they are concerned about increased government scrutiny of their wealth. Yet the biggest concern of UHNWs was within the mansion walls: Eighty-five percent said they were concerned about succession issues in the family business. Only about half of respondents were concerned about happenings in Russia, the Middle East or China.
  2. One million dollars doesn’t go far in Monaco. It will buy you about 190 square feet of home, not even the size of a tiniest cruise ship cabins. Put another way, at 2,600 square feet the average new American home would cost about $13.7 million.
  3. Despite President Obama’s taxation rhetoric against the rich, only seven percent of UHNW Americans were considering emigrating. Russia/CIS was tops at 33 percent.
  4. More folks will be getting Super Rich (net worth exceeding $30 million) in the next decade as Knight Frank projects 34 percent growth. However, its current UHNW population figure of 172,850 individuals trails the Wealth-X estimate of 211,000.
  5. Looking at the entire wealth food chain there are 17,808,831 mere millionaires out of the nearly 7.3 billion-person world population. It’s worth noting that when Oxfam crows about the one percent taking over the joint, that equates to 73 million people. In other words, over three-quarters of the fabled one percent are worth less than one million dollars.
  6. If you are looking to get ahead of the pack in terms of future hot spots for the rich, check out Belgrade, Serbia; Panama City, Panama; Addis Ababa, Ethiopia, and Yangon, Myanmar. While none of the aforementioned can even boast a single billionaire in residence, Knight Frank predicts fast growing millionaire and UHNW populations as signs of profit making opportunities.
  7. Nine of the top 10 private jet routes for NetJets include either the United States or United Kingdom. Moscow to Nice was the exception. Nice to New York showed the fastest growth. Pittsburgh-New York had the fourth highest growth. What’s up in Pittsburgh?
  8. If you are a tech elite, forget the Harvard Club or the golf club. The Silicon Valley UHNWs are moving up the peninsula into San Francisco, buying up gobs of property and starting their own social and networking clubs such as The Battery, a bricks-and-mortar Facebook of sorts. Entrepreneurs and programmers hang out, network and plot the next Facebook or something even better.
  9. A diamond may be forever, but it is no longer enough. Naturally colored diamonds are the rage with the Super Rich. They are beautiful. They are rare. And, while the average price has increased 167 percent since 2005, blue diamonds performed the best gaining 360 percent. By the way guys, treat yourself while you’re at it: Classic cars increased in value by 487 percent in the past decade.
  10. Oh, and since Knight Frank does the report to help promote the sale of expensive real estate to people who have the money to buy it, here is a plug: They expect just over 25 percent of the Super Rich to buy a new home in 2015. If that comes true, there will be just over 43,000 very happy real estate agents, insurance brokers, interior designers and landscape artists this year.
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After Russia, What’s The Next Hot Market For Luxury?

Posted on February 22, 2015 by Doug Gollan

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An article by The Moscow Times Friday reported “spending by Russian tourists abroad has plunged, diving 51 percent in January after falling 44 percent in December because of the ruble’s freefall.” The report cited figures released by tax-refund company Global Blue.

On its website, the news outlet noted luxury marketers are battling “crippled demand from Russians for luxury goods, and many labels are growing concerned the trend could last, with no end in sight for the conflict in Ukraine.”

Among those brands reportedly impacted “Salvatore Ferragamo, have been severely hit by the Russian economic crisis…Last week, Jean-Francois Palus, No.2 at Gucci owner Kering, said the group’s Italian tailor Brioni had witnessed a significant drop in sales to Russian tourists.”

The Russian traveler is an important marketing, particularly for shopping while traveling. “The Russian luxury market is made by relatively few consumers with very high discretionary spending power, as epitomized by the ‘Russian oligarch’,” said Luca Solca, a luxury goods analyst at Exane BNP Paribas. “These consumers have higher exposure to high-end versus accessible luxury brands and categories … such as Brioni and Cartier.”

So where can luxury marketers find well-to-do Ultra High Net Worth customers?

Slicing apart data from the 2014 World Ultra Wealth Report reveals if American states were viewed as countries, 23 of the top 50 Super Rich populations would be states. The report defines Super Rich/UHNW as $30 million + in assets.

Ranked alongside countries, California would be third in the world, New York sixth, Texas ninth and Florida 12th. Illinois (17th), Michigan (19th), Pennsylvania (21st), Ohio (23rd), Massachusetts (27th), Wisconsin (28th), Connecticut (31st), Maryland (32nd), Virginia (34th), Minnesota (35th), New Jersey (36th), Washington (39th), North Carolina (41st), Georgia (43rd), Tennessee (44th), Colorado (45th), Indiana (47th), Arizona (48th) and Oklahoma (49th) show that for marketers there are significant pockets of the Super Rich in the so-called “fly over” states.

In terms of UHNW consumers, Russia would have ranked only 40th fit snuggly between the state of Washington and North Carolina and well behind the likes of Wisconsin, Maryland and Minnesota.

Wealth-X defines Super Rich as households with a net worth of at least $30 million and says combined this group spends $234 billion on luxury lifestyle products and services.

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Some Advice For The Super Rich

Posted on February 12, 2015 by Doug Gollan

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 following our leader?  Clearly it’s not their children. One person perhaps is a nanny. And the second person could be a cook. Hmmm. Restaurant at home doesn’t make sense?

As our principal person gets down to their car it is clear there are more people behind them now. It looks like perhaps couple landscapers. And there is clearly a pool boy. But what’s even more interesting is as our main character gets in the car this line of people gets in too and what looks to be a driver gets in the passenger side.

The car pulls into the street and now from the various storefronts on Main Street people are literally coming out of the shops and getting into our slow moving car. These people clearly aren’t customers of the shops, but people who work in them.

The car turns at the light and instead of pulling into an office parking lot, it pulls onto an airport tarmac. Our protagonist gets out and heads to a waiting private jet with what is now a literal parade of 24 people behind him.

I’m thinking James Earl Jones for the voiceover. “Last year people like Jim each created 24 jobs each, not from the taxes they paid. No! Not from the companies they created. That’s even more jobs! Last year, people like Jim each created 24 jobs each just from their purchases of watches and jewelry, fashion and accessories, trips to spas and resorts and that new home theatre. People like Jim and his family help keep our global economy going. Jim is Super Rich. Next time you read hateful articles about the very wealthy, think about Jim and his family.”

Cutting from James Earl Jones’ voice we see our 24 people lined up next to the private jet almost like one of those 1970s “Fly Me” airline commercials. As Jones finishes, in chorus, they say, “Think about us, and think about our jobs!”

Jones finishes with a quick, “How many jobs did you create last year? This message was brought to you by the Ultra High Net Worth Marketing Council.”

If one uses figures from Wealth-X that 211,000 Ultra High Net Worth families spend $234 billion a near on luxury lifestyle creating over five million jobs (my estimate) that works out about 24 jobs per UHNW.

If each of the 211,000 UHNW families (each worth over $30 million) donated $1,000 each we could have a $211 million ad campaign. Perhaps since the Super Bowl is one of the world’s top draws for private jets, the campaign could launch at next January’s big game.

When I was interviewed and narrowly missed being impaled by National Public Radio for defending Stephen Schwarzman’s multi-million dollar birthday party in 2007 I said that the Super Rich had a public relations problem. We should be encouraging them to spend, not shaming them into saving their surplus of funds.

Judging by the Jeff Greene fiasco at Davos, I would say not much has changed.

What do you think?

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Note To Editors: There Is A Difference Between “The 1%” and “Super Rich”…It’s Money

Posted on February 8, 2015 by Doug Gollan

Private jet interior

My morning began as usual scanning news headlines and coming across the typical “for” and “against” stories about the very wealthy, their spending, the businesses they started or now own and how they accumulated their fortunes. This one from The Daily Beast was titled, “Hate Private Jets? You’re Just Jealous. The 1% want planes that can fly NYC to Hong Kong nonstop,” was not particularly unusual.

In the media “1%” and “Super Rich” are seemingly used interchangeably. It is a disturbing mixed use of names for a subgroup (Super Rich or Ultra High Net Worth) of a larger group (The One Percent, 1%, 1 Percent) where the subgroup really has very in common with those outside its limited circle. In fact, even within the “Super Rich/Ultra High Net Worth” subgroup there are vast differences.

Considering many of these articles revolve around the divisive “wealth gap” issue, it is time for editors to get it right.

The cost of those super private jets that can fly nonstop across large oceans is $50 million and more. Buy a private jet that could do New York to Hong Kong with one stop and you are still laying out at least $30 million, which by most definitions is the entry point in what it takes measured by net worth to being Super Rich or UHNW, short for Ultra High Net Worth. In other words, the poorest of the Super Rich live a different lifestyle than their centimillionaire and billionaire cousins.

When OXFAM came out with its sound bite headline that in the next couple years the one percent would hold over 50 percent of world wealth, it did footnote that the average net worth of this group (14 million households based on a worldwide total of 1.4 billion) is $2.7 million. This is hardly the net worth of somebody who has multiple mansions around the world and a yacht in the Med. A New York Times analysis of University of Minnesota population data pegs the entry point of the one percent at a $383,001 household income.

Research by Wealth-X released last year showed 211,000 Super Rich households spent $234 billion per year on luxury lifestyle purchases, or about $1.1 million. Clearly that type of spending is not likely for one who makes $380,000 per year. In fact, the average household income of the one percent – dragged massively up by the Super Rich is only $717,000.

I realize there was the 2006 documentary about the Super Rich titled “The One Percent” making it a bit more confusing. However, for editors and headline writers, I would suggest if they want to create a productive conversation, they should take a closer look at how they describe various wealth based groups. Clearly, there is a difference, and a very large one at that.

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How To Tell You’re Not Super Rich: Home Improvement Edition

Posted on February 4, 2015 by Doug Gollan

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Recently we reviewed how by comparing your boat to the boats (excuse me, superyachts) of the very wealthy, you can determine without question that you are indeed not Super Rich. Today Wealth-X released a global survey of Ultra High Net Worth (UHNW) real estate habits enabling us to offer you some land-based comparisons, or in other words, “How To Know You’re Not Super Rich: Home Improvement Edition.”

There are 211,000 Ultra High Net Worth individuals globally, according to Wealth-X, and they own an average of 2.7 primary residences, or in total 569,700 homes. The combined value is $2.9 trillion meaning that the average home price is slightly over $5 million per. I can imagine that eliminates some of us right out of the box.

Wealth-X puts global Super Rich wealth at $30 trillion, so “owner-occupied residential real estate” represents about 10 percent of their total net worth.  Other researches put it as high as $50 trillion.  In that case, real estate would be closer to six percent.  By comparison, if you were worth $2 million, that would mean the value of all your homes are $120,000 to $200,000.

After the super rich have moved into to their new pad, they certainly do not need to cut back in other areas of spending. Over my 14 years running Elite Traveler I would often hear stories from friends in the hotel business about how after buying a $10 million apartment, a family would live in a luxury hotel for anywhere from six months to over a year so they wouldn’t have to be in the new home during renovations.

Previous research by Wealth-X backs this up.  Last year, it released a survey showing UHNWs spent $234 billion on luxury lifestyle products and services, only $8 billion around-the-house.

Now back to you, me and the Super Rich:  The average sale price of existing homes in the U.S. as of December was $209,500. The average new home price was $377,800. Both figures include the vaunted one percent and of course the Super Rich skewing the numbers up.

Average net worth for all Americans is $534,600, again including UHNWs. The net worth of the top 10 percent is $3.3 million, but again that is mostly skewed by the upper reaches of the one percent.

Looking at it a couple different ways, depending on whether one is buying a new home or existing home, the house probably represents between 71and 39 percent of net net worth. University of California at Berkeley researcher Emanuel Saenz breaks out the net worth of those 14.4 million households between 1 and 10 percent, so excluding the 1.6 million in the one percent gang. The average wealth of the “next” nine percent is $1.3 million with an entry point of $660,000

In other words if you were in the 10th percent slot ($660,000 net worth) and own an average priced new house ($377,800), that would mean your homestead represents 57 percent of your net worth.

Obviously pricing is highly dependent upon where you live as are salaries unless you are in the Super Rich, where you have found a way to make lots of money wherever you happen to be from. For $400,000 in New York City you can get a 450-square foot studio in northern Manhattan whereas for the same price tag you can have 3,500 square feet and five bedrooms on a golf course in Tucson.

For many in the Mass Affluent who can afford it, a second home means a cabin by the lake, a modest abode a few blocks from the beach or perhaps a condo near the slopes. For the Super Rich, not so much. Wealth-X reports their second homes are 45 percent more valuable than their primary residence, twice the square footage and are likely to be on at least 10 acres.

If you still need another comparison, the average American household spends $2,300 per year on home improvements compared to over over $500,000 per year for the very wealthy.

The over 50-page report has a treasure of information on the Super Rich by country of nationality, global shifts, hot spots and so forth making it a must read for any luxury marketer.

Most of all, for marketers, I think it clearly underlines, no matter how much the Super Rich spend on any one thing, they remain the only consumer segment that does not have to choose, and with some savvy marketing attention, may even spend lots with your company.

Some highlights are below:

  • 79% of the world’s UHNW individuals own two or more properties and just over half of them own three or more residences.
  • UHNW individuals are increasing the number of properties they hold outside their home countries with the United States, United Kingdom and Switzerland being the three favorite locations.
  • Over 7% of the world’s UHNW population have made their wealth through the real estate industry, up from 5% in 2013.
  • The UHNW Residential Real Estate Index shows a 8% increase in the value of UHNW-owned residences globally in the past year.
  • The United States is the most popular country for foreign UHNW individuals looking to buy secondary residences.
  • New York is the city with the highest number of UHNW-owned residences in the world.
  • Monaco has the highest density of foreign-owned UHNW residences – 83%.
  • Female UHNW individuals value real estate assets more than their male counterparts, holding 16% of their net worth in such assets compared to less than 10% for men.
  • UHNW Chinese and Russian multiple homeowners are typically self-made and young – these two clusters are becoming increasingly important buyers of luxury residential real estate around the world.
  • Over 6% of the world’s UHNW population is made up of expatriates – those individuals who are currently based outside their home countries. These individuals are stimulating residential real estate demand in their home countries’ markets
    – for example, India’s non-resident population is increasing demand in Mumbai’s residential real estate market.
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The Top 10 Things Rich People Buy

Posted on February 3, 2015 by Doug Gollan

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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 looked at frequency of purchasing and found while 90 percent of those jet owners we spoke with buy designer fashion on an annual basis followed by 89 percent for fine jewelry, only 10 percent said they had chartered a yacht in the previous year.

  1. Home Improvements — $542,000   (75 percent)
  2. Yacht Charters — $404,000   (10 percent)
  3. Fine Jewelry — $248,000     (89 percent)
  4. Automobiles — $226,000   (15 percent)
  5. Meetings and Events at Hotels or Resorts — $224,000  (73 percent)
  6. Villa/Chalet Rentals –$168,000   (28 percent)
  7. Leisure Stays at Hotels/Resorts — $157,000   (65 percent)
  8. Watches – $147,000 (32 percent)
  9. Cruises – $138,000   (21 percent)
  10. Fashion and Accessories — $117,000   (90 percent)

Other notable spending includes $107,000 on spas, $98,000 on experiential travel and $29,000 on wines and spirits.

For luxury marketers, there is no question the Super Rich are a prime target.  Research by Wealth-X shows 212,000 UHNW families spent $234 billion on luxury products and services last year.

Within each category, we created three buying profiles: Trendsetters, Connoisseurs and Winners. Frequency and critically amount spent varies significantly in each category for the various profiles. Using watches as an example, Trendsetters accounted for 47 percent of purchasers but only spent $81,000. Winners made 20 percent of watch purchases by those we researched spending $176,000.  Connoisseurs accounted for the remaining 33 percent and spent $223,000, not hard when one considers that collectible watches run high into six and even seven figures.  Of course, even among Connoisseurs, there are different levels of “watch collectors” some with great knowledge of what makes it tick, others who are aesthetic buyers.

More to come.

Posted in Auto, Cruises, Fashion, Home Furnishings/Shelter, Hotels, Jewelry, luxury, Marketing, Media, private jet, Research, Shelter, Spa, tourism, uhnw, Watches, Yachts | Tagged , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

19 Ways To Tell You’re Not Super Rich

Posted on February 1, 2015 by Doug Gollan

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Even if you have a nice Stingray at about $45,000 or a summer house by the lake, comparing one’s assets to those very, very rich folks who own superyachts might just be a bit humbling.

And whatever type of boat you want to insure, the fine folks at London’s Towergate Insurance will probably get a chuckle if you approach them with a DYKWIA attitude. While the company offers a helpful online “Yacht Insurance Buyer’s Guide” they also put the overly proud boat owner in his or her place with a recent blog titled, “How much does a superyacht really cost?”

Below are highlights with my comparisons to non-superyacht owners:

1.  Operating cost is about 10 percent of initial value, so $20 million per year for a $200 million boat, or about 10 times the cost of the most expensive home you ever “dreamed” of buying.

2.  For a 71 meter yacht, you will use 500 liters fuel per hours, equivalent to 132 gallons of gas for your car.

3.  V.A.T. is 15-25 percent of vessel’s value, meaning a $300 million megayacht will run you between $45 million and $75 million, about the same as employing 500 Vice Presidents making $150,000 at your company

4.  Fuel costs $400,000 per year, compared to $1,534 for your BMW 5 Series.

5.  Dockage will run $350,000 per year, considerably more than $7,200 for your run of the mill New York City parking lot.

6.  At $240,000 per year for insurance, there is hopefully enough margin to keep Nick Colman who wrote this report for Towergate employed.

7.  $1,000,000 per year for repairs is more than five times the median cost of the American home which clocks in at $189,000.

8.  At $1,400,000 per year for crew salaries, keeping a superyacht all hands is equivalent to the total lifetime savings balance of the 401Ks of 14 Americans ($99,000).

9.  14 percent of owners were American, followed by Russians but 11 % of deliveries in 2014 went to Asians compared to 3 percent in 2011, perhaps slightly different than the demographics of your neighborhood.

10.  10 percent is paid upon order to the yard.  That would mean a check for anywhere from $10 million to $60 million. Sorry no points. Shipyards don’t accept American Express…or VISA.

11.  The new yacht is typically five years old with a fuel range of 3,000 miles. Many superyacht owners keep their yacht only three years before selling it. American homeowners have paid off less than five percent of the principal for their mortgages after five years.

12.  In 2013, 355 superyachts were sold with a total price of $3.4 billion, the most expensive be $101 million.

13.  The Sultan of Oman’s yacht Al Said reported cost $300 million and has 154 crew.

14.  Russian businessman Andrey Melnichenko’s superyacht “A” features bomb proof windows and can cut through icebergs.

15.  Roman Abramovich’s Eclipse has a three-man “leisure” submarine, 70 crew, costs $500 million and is equipped with a missile defense system. It’s anti-paparazzi shield is activated by flash bulbs.

16.  At $200 million and just 23 crew Steven Spielberg’s Seven Seas is modest by Top 10 standards. It does have a multi-million dollar high tech projector cinema. Does your home have one?

17.  Venus is owned by the family of Apple founder Steve Jobs and at $129 million with 22 crew is relatively modest. The ship is run by iMacs and the outer design is inspired by an Apple store. Having your own iPad and having been to an Apple store doesn’t make the cut.

18.  David Geffen’s $200 million The Rising Sun can speed to 28 knots with its crew of 45. He bought it pre-owned from Larry Ellison in 2010.  Geffen probably didn’t go down to the boatyard on a Saturday to pick it out.

19.  UAE President Khalifa Al Nahyan has a crew of 50 aboard Project Azzam (pictured above) which can speed to 30 knots. At 590 feet long it is 100 feet longer than small luxury cruise ships that carry 200 passengers.  You might want to think twice before you start posting all of those Instagram pictures from your last vacation.

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Is $300,000 A Reasonable Monthly Allowance For Private Jet Travel?

Posted on January 31, 2015 by Doug Gollan

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The median price of a home in the United States is $189,000, according to the National Association of Realtors. Then again the median net worth of the American household is $56,335.

Of course, when your soon to be ex-husband gave $150 million last year to Harvard University you might decide your lifestyle should not be compromised. It is what led to the Daily Mail headline, “Hedge fund billionaire’s estranged wife demands $300,000 a month for an around-the-clock private jet in bitter divorce.”

While $300,000 may seem excessive, according to Fractional News, 25 hours per month on a Gulfstream 200 would run nearly $280,000. A Falcon 2000 would be about $320,000. A Learjet 60 would only be about $160,000. However, when you have children, nannies, friends and baggage eight seats may not be enough. It also doesn’t have trans-Oceanic range, which if you read on is a potential issue. In addition to money for chartering a jet, there is $160,000 per month for vacation rentals and all together over $1 million of monthly support being asked for.

The subjects are Ken Griffin with an estimated Net Worth of $5.5 billion, according to Forbes, and Anne Dias Griffin. When they were married at Versailles in 2003 Donna Summer was flown in to give a private concert. In terms of residences, there are “a $15 million penthouse condo at the Park Tower in Chicago, four Palm Beach properties worth $130 million, and a vast Balinese-style, beach-front property at the Hualalai resort in Hawaii which was purchased in 2011 for around $17 million,” The Mail reports. The point is while there is a prenuptial agreement that is being litigated, money is not a problem here. Dias Griffin is already estimated to be worth $50 million.

But is $300,000 per month or $3.6 million per year for private jet charters excessive?

While Griffin is Chicago-based his future ex-wife wants to relocate to New York. A single trip from New York to Hawaii to Palm Beach, Chicago and then New York would eat up the entire monthly allowance.

What’s more $3.6 million against a fortune of $5.5 billion works out to 0.00065 percent of Mr. Griffin’s reported fortune. If your net worth was the aforementioned $56,335 a similar fraction would work out to $36.87. Put another way, the money donated to the Crimson would have covered private jet charters for the next 41 years.

Naturally despite my math the same person who was able to write a nine figure check in 2014 doesn’t want to put down six digits today.

Clearly both husband and wife can buy watches, jewelry, suits, skirts, handbags, briefcases to their heart’s desire.  Lavish resort and spa vacation? No problem.

For luxury marketers, stories like this underscore three key points in selling to the Super Rich: Firstly, everything is relative. Secondly, price is rarely a true objection. Finally, when an UHNW wants to spend or not spend money, they can easily justify it either way.

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Private Jets Are Expected To Bring Over $80 Million To The Arizona Economy

Posted on January 28, 2015 by Doug Gollan

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Officials are projecting about 1,200 private jets will descend on the Phoenix area for the NFL’s Super Bowl XLIX at University of Phoenix Stadium in Glendale on Sunday night, bringing a variety of Super Rich from around-the-country and around-the-world.  Team owners, star athletes, celebrities, CEOs, politicians, wealthy business owners, their families, friends and top customers will create a diverse cocktail of affluence.

Previous research done on spending of private jet travelers show they leave an average of $69,000 in the destinations they visit. That figure does not include landing fees, parking, catering other aviation related expenses. Last year’s Big Game generated $600 million for the New York/New Jersey economy according New York Congresswoman Carolyn Maloney.

Host committee projections for this year’s event forecasts $500 million pumped into the local desert economy. Back of the envelope math would mean the “One Percent” will leave $82.8 million behind (1,200 x $69,000), or about 16.5 percent of the economic impact.

Private jet operator NetJets already announced it will be holding a private concert by Lady Antebellum for their customers. According to figures by Degy Entertainment, the Warren Buffett owned company is likely to shell out between $250,000 and $400,000 for the performance.

Naturally hotels, restaurants and attractions will do well. Needless to say there will be lots of team merchandise sold. This year’s event dovetails with the Pro Bowl held last Sunday night and the Waste Management Open, a PGA event at the Fairmont Princess Scottsdale.

Between the dining, the parties, the area’s world-rated spas and golf courses, do the Super Rich have time to squeeze in some shopping before the Super Bowl?

Molina Fine Jewelers is located about a three wood from the Arizona Biltmore, a Waldorf Astoria Resort. Speaking earlier this afternoon, Owner Al Molina took a moment from back-to-back private appointments to say he thinks he will do even better this year than 2007 when one client spent $3.4 million.

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“People like to buy when they travel,” Molina notes, “And with everything that is happening they are in a good mood.”

Molina spends much of his time traveling to UHNW clients around-the-world so with the Pro Bowl, Super Bowl and Waste Management Open converging on his home town, he says many visiting clients have already scheduled their times slots.

“We are not the type of business that has lots of walk-in traffic,” Molina says, yet already he has had several current Pro Bowl players, retired Hall of Famers and team owners, including one who dropped six figures on diamond cufflinks.  Yesterday a lady from Miami and another from Mexico City “walked in.” Molina says most new customers come as referrals from concierges at the local resorts.

For Molina, winning the Super Bowl this time around will be selling a $4.5 million necklace (The Empress) featuring 108-carats of non-heated Burmese Sapphires and 93 carats of Diamonds handmade onto 78 feet of platinum wire.

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Overall, 100,000 people are expected in town just for the Super Bowl. If Molina is successful just 1 in 100,000 will account for 1 percent of the total income projected for the entire spectacle. And for the 1,119 other private jet setters, they will only have to average $65,000 to pull their weight.

Posted in Hotels, Jewelry, luxury, private jet, Touristm, uhnw | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Flight Cancelled? Not If You Are On A Private Jet!

Posted on January 27, 2015 by Doug Gollan

#Snowmageddon2015 #Blizzardof2015 is here. Watching the news some 5,000 commercial airline flights have been cancelled today and 6,000 more will be tomorrow.  But not everyone is getting snowed in.  A quick check of flight tracking website Flightaware.com and airport websites show massive cancellations at New York’s JFK, LaGuardia and Newark airports (see below).

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However at Teterboro, an airport exclusively serving private aviation Flightaware.com shows flights arriving and departing and the map was relatively full of private jets coming and going. The same could be said for Boston’s Hanscom Field, another general aviation dedicated airport (bottom picture) where one smart Ultra High Net Worth traveler was headed for Ocean Reef Club earlier this afternoon.

Back to New York, while at Newark Liberty International Airports reports said cots were being set up for those who would be stranded overnight, a lucky Super Rich group were wheels up at 6:47 PM from Teterboro destination Santa Monica, California.  Current weather?  70 degrees and sunny.

Private jets arriving and departing at Teterboro Airport in New Jersey at http://flightaware.com/live/airport/KTEB

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Posted in luxury, private jet, superrich, tourism, uhnw | Tagged , , , , , , , , , , , | 1 Comment

Will The Real Jeff Greene Please Stand Up. Why Getting A True View of the Super Rich is So Difficult

Posted on January 23, 2015 by Doug Gollan

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American billionaire Jeff Greene was in the news this past week. He flew to Davos on his private jet bringing along his family and two nannies.

From Wikipedia, he came from a struggling middle class household: “His father ran a business selling textile mill machinery. His mother was a Hebrew school instructor who taught Greene to ‘save his pennies, look for value, and never pay retail.’ His family moved to Florida in 1970 after his father lost his business. In Florida, his father worked refilling vending machines and his mother worked as a waitress.”

He is self made:  Greene worked his way through Johns Hopkins University and began his business career as a busboy at The Breakers Hotel in Palm Beach. Several times before becoming Super Rich Greene tried to run for office. He also ran unsuccessfully for Senate as a billionaire in 2010.

Greene’s has made lots of money and lost lots of money. In a 2008 Forbes interview titled “The Reluctant Billionaire” he humbly speaks about making windfalls by “catching a wave” as he has a couple times. He became a billionaire when in 2006 he became convinced there was a real estate bubble and bet it would burst.

Perhaps because he saw his father lose his business and the impact it had on the family, or perhaps thinking back to his mother’s advice or maybe his own close calls, at Davos, according to a report in Bloomberg he decided to give the other 99.75 percent some advice and it went something like this:

“America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence,” Greene said in an interview today at the World Economic Forum in Davos, Switzerland. “We need to reinvent our whole system of life…I’m remarkably long for my level of pessimism,” he said. “Our economy is in deep trouble. We need to be honest with ourselves. We’ve had a realistic level of job destruction, and those jobs aren’t coming back.”

In my opinion, his words were wise. Don’t spend money you don’t have. But that’s not the point.

Being a billionaire, he no longer needs to search for blue light specials and “save his pennies.” Yet in the Forbes article he speaks about how he got a “deal” on his 165-foot yacht that costs $100,000 to gas up.

However, the facts seem to be he did very much follow that penny pinching advice to amass the $7,400 from side jobs he used to make his first real estate investment. Many others at that age would have spent the money on something that may have provided some immediate gratification. Today Greene gets to enjoy the fruits of listening to his wise mother when he didn’t have much money.

Of course, this hasn’t stopped him from being tarred and feathered from media around-the-world. He has now even spurred a new featured for the website Curbed:

“Welcome to What Do They Own?, a new Curbed series where we take someone making headlines and try to figure out how much of the world they own, and by extension, how far they’ve gone to insulate themselves from the world.
Jeff Greene is a billionaire who made the lion’s share of his fortune shorting subprime mortgages ahead of the last recession. Jeff Greene took a private jet to the World Economic Forum in Davos this week, along with his wife, children, and two nannies, and then saw fit to tell Bloomberg that ‘America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence.’ Which would be a wonderful suggestion coming from someone who, unlike Jeff Greene, does not own a $195-million palace in Beverly Hills with 23 bathrooms and a rotating dance floor, two other Los Angeles mansions, a mansion in Palm Beach, a mansion in the Hamptons, and a 145-foot party yacht called Summerwind that once severely damaged a protected coral reef off Belize. (Or perhaps from someone with the wisdom to not, as Jeff Greene did, have convicted rapist Mike Tyson serve as the best man at his million-dollar wedding.) Yes, ‘a smaller, better existence,’ shouts Jeff Greene from the rooftops of the following completely bananas mansions:”

We often see television shows and books that purport to give us the inside on Ultra High Net Worth individuals, their families and their lifestyle. Jeff Greene is a good example of much of what UHNWs allow us to see is highly scripted. Clearly Greene has long passed the stage of frugality. And by the way he has signed on to The Giving Pledge to dedicate the majority of his fortune to philanthropy.

Who is the real Jeff Greene? A charitable billionaire? A guy who still wants a deal? Somebody who spends money like water? Out of touch? An oracle of how the rest of us should manage our finances? I don’t know. But clearly the firestorm of media rage his comments brought will only increase the efforts of most Super Rich to ensure they stay out of the media spotlight or ensure their image is highly crafted for public consumption.

For luxury marketers, this means understanding what makes the Super Rich tick and accessing some of the $235 billion per year Wealth-X reports they spend on luxury lifestyle each year remains a difficult challenge.

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Understanding Super Rich Buying Personalities Is The Key To Selling More Luxury To The UHNWs

Posted on January 22, 2015 by Doug Gollan

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One thing that makes marketing luxury products and services to the Super Rich difficult is they are not a homogenous market. Depending on the research you look at as much as 90 percent are self-made.  You are as likely to find them attending a college football game (big universities such as Notre Dame see hundreds of private jets flying in wealthy alumni for games) as an art exhibit.  The same goes for hunting and fishing versus stereotypical polo.

The Super Rich or Ultra High Net Worth (UHNW) are typically defined as having a Net Worth of $30 million and up.

While many think of Wall Street and Fortune 500 CEOs or perhaps royalty, actors, musicians and sports stars or even Silicon Valley tech, and each sector has brought us a portion of the UHNW population, many made their money on more mundane pursuits such as car dealerships, refuse collection, vitamins, farming (from chickens to lettuce), energy, real estate, construction, manufacturing (from auto parts to all the plastic cards in your wallet).

What’s more, many came from middle class households and even poverty. In other words, they did not grow up in a luxury lifestyle.

The 2007 book I co-authored “The Sky’s the Limit: Marketing Luxury to the New Jet Set” was based on interviews with over 600 private jet owners who had an Average Net Worth of $89 million.

From it, we developed three distinct buying personalities that I believe are the key to understanding why the Super Rich buy and why they don’t.

Co-author Hannah Shaw Grove notes, “Segmentation can be a very helpful tool for luxury marketers or really anyone who is trying to engage with ultra-affluent buyers. Identifying the similarities and differences within populations helps us know why people act the way they do, what information grabs their attention and what prompts them to take certain actions. When those insights are incorporated into marketing and communications initiatives it can increase their effectiveness exponentially.”

The three UHNW luxury buying personalities we identified are:

Trendsetters are in alignment with their social environment. They’re often first movers as well as influencers within critical communities.

Winners use luxury purchases as personal rewards and means of validation. Spending is usually prompted by key events such as a noted business accomplishment.

Connoisseurs are exceptionally knowledgeable and highly deliberate in their purchasing behavior. However, even within this group there are huge differences in the expertise of collectors.

The percentage of each group varies in different categories, meaning that sellers of mechanical watches need a different approach than fashion companies or yacht brokers.

One thing is clear: The Super Rich may only number slightly over 200,000 households worldwide, but they are cumulatively worth as much as $50 trillion (more than the GDP of the 10 largest countries) and spend $235 billion annually on luxury purchases, representing 19 percent of total sales. For luxury marketers, a smart UHNW strategy is more important than ever.

Posted in Auto, Fashion, Home Furnishings/Shelter, Hotels, Jewelry, luxury, Marketing, Media, private jet, Research, Shelter, Spa, superrich, tourism, uhnw, Watches, Wines/Spirits, Yachts | Tagged , , , , , , , , , , , , , , | Leave a comment

What Does Oxfam Data Mean For Luxury Marketers?

Posted on January 19, 2015 by Doug Gollan

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According to Oxfam wealthiest 1 percent of adults will soon control over 50 percent of world wealth. While there are many social implications, there are also implications for luxury brands. In other words, which segments of the world’s consumers have the money to be dependable customers for the luxury industry?

 

Credit Suisse’s Global Wealth Databook 2014 published in October, noted that “global household wealth totaled $263 trillion in mid-2014, equivalent to $56,000 for each of the 4.7 billion adults in the world.”

 

Quickly taking 50 percent of $263 trillion gives us some $131.5 trillion that the 1 percent controls if we agree with Oxfam. One percent of 4.7 billion nets out to 47 million adults worldwide in the top 1 percent. This means a net worth of $2.7 million per adult.

 

Depending on where you live a net worth of $2.7 million is a comfortable amount of money to have. However, for luxury marketers it is at best the outlying suburbs of where one will find “heavy users” of luxury. As an example, Honda Jet’s entry level private jet will run you $4.5 million. Last year over $22 billion in new private jets were delivered, most in the tens of millions of dollars.

 

Back to the average 1 percenter: Unless one has a robust Household Income of $500,000 to $1 million or more adding to that net worth, after taxes, schools and colleges, mortgages, insurance and such you have a consumer who can treat themselves to luxury but have to make choices.

 

Super Rich researcher Wealth-X shows via their research that 212,000 Ultra High Net Worth individuals worldwide (those with a Net Worth of at least $30 million) together control nearly $30 trillion. I have seen figures that go as high as $50 trillion for UHNW wealth.

 

If we merge the Wealth-X numbers with the Credit Suisse research, we find 212,000 individuals out 47 million (about 4/10ths of one percent) control about 23 percent of that 1 percent wealth Oxfam is focused on.

 

In 2007 I co-authored the book “The Sky’s the Limit: Marketing Luxury to the New Jet Set. In it, we interviewed over 600 private jet and fractional private jet owners. In it we found that the average spend per year for various luxuries was impressive:

 

  • $248,000 spent on fine jewelry
  • $147,000 spent on luxury watches
  • $117,000 spent on fashion accessories
  • $157,000 spent on leisure stays at hotels
  • $224,000 spent on events at hotels
  • $107,000 spent on spas
  • $98,000 spent on adventure travel
  • $29,000 spent on wines and spirits
  • $542,000 spent on home improvements
  • $168,000 on villa rentals

 

Wealth-X released their luxury spending data late last year finding that the UHNW universe cumulatively spent $235 billion a year on luxury purchases. According to their data the Super Rich account for nearly 20 percent of all luxury purchases from handbags to luxury autos and spirits. In categories such as watches and jewelry, the UHNW sliver accounted for as much as 35 percent of all sales. (For full data click here.) Of course, mechanical watches and jewelry retailing for $10,000 or $25,000 are not everyday purchases even for those in the leaf lined suburbs of Oxfam’s one percent.

Posted in Auto, douggollan, Fashion, Home Furnishings/Shelter, Hotels, Jewelry, luxury, Marketing, private jet, Research, Shelter, Spa, superrich, switzerland, tourism, uhnw, Watches, Wines/Spirits | Tagged , , , , , , , , | 1 Comment

UHNW Marketing 101: What are the levels of Super Rich?

Posted on January 17, 2015 by Doug Gollan

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First of all, the below is a reprint from Reddit user A1988eli.  However, I think it provides a very good overview on why when it comes to looking for heavy users of luxury goods and services, Income and Net Worth trump the typical market segmentation tactics brands typically use.

“I can answer this one. For some reason, I attract these people into my life. I don’t do anything super extraordinary. I am not famous. But I count many peoplewith ultra high net wealth among my close friends and I have spent more time than even I can believe with 8 different billionaires. This is not just meet-and-greet time. This is small group and even one-to-one time. I dated the daughter of one billionaire several decades ago. So I have gotten a peek into this life.

Let’s get one thing out of the way. There are gradations of rich. I see four major breaking points:

Worth $10mm-$30mm liquid (exclusive of value of primary residence). At this level, your needs are met. You can live very comfortably at a 4-star/5-star level. You can book a $2000 suite for a special occassion. You can fly first class internationally (sometimes). You have a very nice house, you can afford any healthcare you need, no emergency financial situation can destroy your life. But you are not “rich” in the way that money doesn’t matter. You still have to be prudent and careful with most decisions unless you are on the upper end of this scale, where you truly are becoming insulated from personal financial stress. (Business stress exists at all levels). The banking world still doesn’t classify you as ‘ultra high net worth’

Net worth of $30mm-$100mm

At this point, you start playing with the big boys. You can fly private (though you normally charter a flight or own a jet fractionally through Net Jets or the like), You stay at 5 star hotels, you have multiple residences, you vacation in prime time (you rent a ski-in, ski-out villa in Aspen for Christmas week or go to Monaco for the grand Prix, or Canne for the Film Festival–for what its worth, rent on these places can run $5k-20k+ per NIGHT.), you run or have a ontrolling interest in a big company, you socialize with Conressmen, Senators and community leaders, and you are an extremely well respected member in any community outside the world’s great cities. (In Beverly Hills, you are a minor player at $80 million. Unless you really throw your weight around and pay out the nose, you might not get a table at the city’s hottest restaurant). You can buy any car you want. You have personal assistants and are starting to have ‘people’ that others have to talk to to get to you. You can travel ANYWHERE in any style. You can buy pretty much anything that normal people think of as ‘rich people stuff’

$100mm-$1billion

I know its a wide range, but life doesn’t change much when you go from being worth $200mm-$900mm. At this point, you have a private jet, multiple residences with staff, elite cars at each residence, ownership or significant control over a business/entity that most of the public has heard of, if its your thing, you can socialize with movie stars/politicians/rock stars/corporate elite/aristocracy. You might not get invite to every party, but you can go pretty much everywhere you want. You definitely have ‘people’ and staff. The world is full of ‘yes men’. Your ability to buy things becomes an art. One of your vacation home may be a 5 bedroom villa on acreage in Cabo, but that’s not impressive. You own a private island? Starting to be cool, but it depends on the island. You just had dinner with Senator X and Governor Y at your home? Cool. But your billionaire friend just had dinner with the President. You have a new Ferrari? Your friend thinks their handling sucks and has a classic, only-five-exist-in-the-world-type of car. Did I mention women? Because at this level, they are all over the place. Every event, most parties. The polo club. Ultra-hot, world class, smart women. Power and money are an aphrodisiac and you have it in spades. Anything thing you want from women at this point you will find a willing and beautiful partner. You might not emotionally connect, but damn, she’s hot. One thing that gets rare at this level? friends and family that love you for who you are. They exist, but it is pretty damn hard to know which ones they are.

$1billion

I am going to exclude the $10b+ crowd, because they live a head-of-state life. But at $1b, life changes. You can buy anything. ANYTHING. In broad terms, this is what you can buy:

Access. You now can just ask your staff to contact anyone and you will get a call back. I have seen this first hand and it is mind-blowing the level of access and respect $1 billion+ gets you. In this case, I wanted to speak with a very well-known billionaire businessman (call him billionaire #1 for a project that interested billionaire #2. I mentioned that it would be good to talk to billionaire #1 and B2 told me that he didn’t know him. But he called his assistant in. “Get me the xxxgolf club directory. Call B1 at home and tell him I want to talk to him.” Within 60 minutes, we had a call back. I was in B1’s home talking to him the next day. B2’s opinion commanded that kind of respect from a peer. Mind blowing. The same is true with access to almost any Senator/Governor of a billionaires party (because in most cases, he is a significant donor). You meet on an occassional basis with heads-of-state and have real conversations with them. Which leads to

Influence. Yes, you can buy influence. As a billionaire, you have manyways to shape public policy and the public debate, and you use them. This is not in any evil way. the ones I know are passionate about ideas and are trying to do what they feel is best (just like you would). But they just had an hour with the Governor privately, or with the Secretary of Health, or the buy ads or lobbyists. The amount of influence you have can be heady.

Time. Yes, you can buy time. You literally never wait for anything. Travel? you fly private. Show up at the airport, sit down in the plane and the door closes and you take off in 2 minutes, and fly directly to where you are going. The plane waits for you. If you decide you want to leave at anytime, you drive (or take a helicopter to the airport and you leave. The pilots and stewardess are your employees. They do what you tell them to do. Dinner? Your driver drops you off at the front door and waits a few blocks away for however long you need. The best table is waiting for you. The celebrity chef has prepared a meal for you (because you give him so much catering business he wants you VERY happy) and he ensures service is impeccable. Golf? Your club is so exclusive there is always a tee time and no wait. Going to the Superbowl or Grammy’s? You are whisked behind velvet ropes and escorted past any/all lines to the best seats in the house.

Experiences. Dream of it and you can have it. Want to play tennis with Pete Sampras (not him in particular, but that type of star)? Call his people. For a donation of $100k+ to his charity, you could probably play a match with him. Like Blink182? There is a price where they would simply come play at your private party. Love art? Your people could arrange for the curator of the Louvre to show you around and even show you masterpieces that have not been exhibited in years. Love Nascar? How about racing the top driver on a closed track? Love science? Have a dinner with Bill Nye and Neil dGT. Love politics? have Hillary Clinton come speak at a dinner for you and your friends, just pay her speaking fee. Your mind is the only limit to what is available. Because donations/fees get you anyone.

The same is true with stuff. You like pianos? How about owning one Mozart used to compose music on? This is the type of stuff you can do.

IMPACT. Your money can literally change the world and change lives. It is almost too much of a burden to think about. Clean water for a whole village forever? chump change. A dying child need a transplant? Hell…you could just build and fund a hospital and do it for a region.

RESPECT. The respect you get at this level is just over-the-top. You are THE MAN in almost every circle. Governors look up to you. Fortune 500 CEOs look up to you. Presidents and Kings look at you as a peer.

PERSPECTIVE. The wealthiest person I have spent time with makes about $400mm/year. i couldn’t get my mind around that until I did this: OK–let’s compare it with someone who makes $40,000/year. It is 10,000x more. Now let’s look at prices the way he might. A new Lambo–$235,000 becaome $23.50. First class ticket internationally? $10,000 becomes $1. A full time executive level helper? $8,000/month becomes $0.80/month. A $10mm piece of art you love? $1000. Expensive, so you have to plan a bit. A suite at the best hotel in NYC $10,000/night is $1/night. A $50million home in the Hamptons? $5,000. There is literally nothing you can’t buy except.

Love. Sorry to sound so trite, but it is nearly impossible to have a normal emotional relationship at this level. It is hard to sacrifice for another person when you are never asked to sacrifice ANYTHING. Money can solve all problems for someone, so you offer it, because there is so much else to do. Your time is SOOOO valuable that you ration it. And that makes you lose connections with people.

Anyway, that is a really long answer, but I have a very unique perspective because I have seen behind the curtain of the great and mighty OZ. just wanted to share”

Again, let me emphasize that I picked the above up from Reddit at the following link: http://www.reddit.com/user/a1988eli/gilded/

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For Switzerland Tourism and Watchmakers The Super Rich Are Wanted NOW…  

Posted on January 15, 2015 by Doug Gollan

mountain-view-of-the-Swiss-Alps

The Swiss National Bank (SNB) decision today to uncap its currency against the Euro means watch prices are increasing by as much as 20 percent, according to Su Jia Xian, a watch collector based in Singapore whose respected blog SJX is dedicated to his eclectic interest in horology. The currency change also impacts tourism, so two of the country’s most important industries are now facing a new challenge as prices climb for visitors.
In his report this morning, he wrote, “Just hours ago, in a shock move, the Swiss National Bank (SNB) abandoned the cap on the value of the franc against the Euro, a step MB&F founder Maximilian Busser label a ‘gigantic pain.’ Implemented in 2011 after the Swiss franc surged, the lifting of the cap batters Swiss exporters, exacerbating the situation of the Swiss watch industry.”

He continued, “In the hours after the SNB’s announcement, the Swiss franc jumped to the highest level ever against the Euro – appreciating some 41% – and also strengthened against all other currencies. But this year, unlike in 2011, the Swiss watch industry is facing nearly flat growth and a very uncertain outlook.”

Shares in both the Swatch Group and Richemont have fallen over 15 percent, according to Bloomberg. Swatch Group CEO Nick Hayek, quoted in Bloomberg, said, “Today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.”

At the same time Wealth-X recently released a tracking study of luxury purchases by the Super Rich and share of total luxury purchases. The Wealth-X research tracks the sliver of families with over $30 million in wealth, globally just 211,000 households.

For both the Swiss tourism and watch industry, this target will now be more critical than ever. Before the SNB announcement, Super Rich consumers, according to Wealth-X, were already accounting for $25 billion in annual watch and jewelry purchases, over 35 percent of all consumption.

For the Super Rich spending isn’t a choice. A vacation or a watch? They buy both, and then more. For the UHNW it is a lifestyle. On the tourism front, the Super Rich account for $45 billion in annual luxury travel spending, about 22.5 percent of all spend in the category. The Super Rich also spend annually over $4 billion a year in adventure travel, a key component of Switzerland’s tourism offerings.

Can the Super Rich spend even more?  In interviews after releasing the research Wealth-X President David Friedman said that for luxury providers, the UHNW consumer has large amounts of untapped spending power.  His firm estimates UHNW wealth at nearly $30 trillion with other estimates going as high as $50 trillion.  The total GDP of the United States is a mere $17 trillion.

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