'Luxury Shame' Diminishing, Study Says
Emerging markets are exerting an influence on the luxury goods market, as wealthy consumers begin to shed the "luxury shame" they exhibited after the 2008 financial collapse, according to new research.
The study by Ledbury Research found that international hot spots like London and New York are benefiting from emerging-market wealth looking for security outside of their riskier domestic markets. So-called passion investments are also enjoying a renaissance with the help of emerging-market wealth, according to Ledbury. These include art, wine, and classic cars which, while prone to speculative bubbles, provide a level of security that non-tangible financial instruments cannot.
Over half of what Ledbury terms "high earners"-those with incomes over $150,000-in the U.S., U.K., and Japan use online recommendations and networking sites for financial information. But increasing numbers are also busy buying high-end items online, going against the prevailing wisdom that the rich shop for luxury items mainly at brick-and-mortar establishments. Emerging markets are exerting more influence in the luxury goods market, illustrated by the recent launch of Shiang Xia, a Chinese luxury brand by Hermes, the venerable French high-fashion house, according to Ledbury.
The wealthy, meanwhile, are starting to feel less guilty about their net worth, according to the data. The high turnout for last year's Fashion's Night Out, a global after-hours fashion and shopping extravaganza, indicated that "luxury shame"-the social embarrassment of overt luxury goods consumption-will be less of an issue for this year's event on September 8, Ledbury noted.
The very wealthy are poised to become more mobile in 2011 and beyond, due to changing demographics and the very structure of wealth generation, according to Ledbury. Emerging markets will be seeking to diversify. For example, Chinese investors are looking to emigrate, and established European wealth is moving east to countries such as Belarus, Moldova, Russia, and Ukraine due to restrictive regulations at home.
A geographic shift in where the very wealthy spend their money is taking place, according to Ledbury. Last year's hub was Asia (excluding Japan) and the Asia Pacific region, which in 2010 became home to more penta-millionaires than any other region. But Asian wealth has diminished, noted Ledbury. In 1996, 34% of the world's wealthiest were based in that region, which by 2007 had dropped to 3%. Meanwhile, South America has risen in wealth prominence, and will likely continue to do so. Though Brazil's luxury market is only a fifth the size of China's, its growth is larger than other emerging markets and looks more sustainable, said Ledbury. Closer to home: In 2004, four in every five of the wealthiest 100 lived in either the U.S. or Europe-this has declined steadily to reach 58% this year.
Go to www.ledburyresearch.com for further information.
In other news ...
New York-based Horizon Kinetics LLC has partnered with International Securities Exchange, a U.S. options exchange and subsidiary of Eurex, to launch the Horizon Kinetics ISE Wealth Index. The index includes companies whose senior management have used their respective companies as the primary means for accumulating substantial personal wealth. Go to visit www.ise.com for further information.
Investors of all ages are turning to cash in what appears to be a deliberate and longer-term fundamental change in investing, according to a survey by MFS Investment Management. Survey respondents (974 individual investors with $100,000 or more in household investable assets) cited fear and a strong desire to protect their assets as motivating factors. On average they had 26% of their portfolio in cash. Go to mfs.com for further information.
A white paper from State Street, "Next-Generation Outsourcing for Wealth Managers: Riding the Wave of Converging Business Trends," makes a case for outsourcing as the most cost-effective and efficient solution for wealth managers. For further information, e-mail [email protected].
Global spending on information technology by the wealth management industry will top $32 billion by 2015, a growth rate of 6.5% over a five-year period, predicts the research company Ovum. While all channels will see growth, Internet services will be especially strong. Go to www.ovum.com for further information.
Carlos Slim, the world's richest man, lost $6.7 billion in the stock market plunge last week, noted the San Francisco Chronicle. The Mexican billionaire's holdings, measured in dollars, dropped about 9.5% to $64.4 billion, according to data compiled by Bloomberg. That compares with a 7.2% slide in the Standard & Poor's 500 Index. Slim controls America Movil, the biggest cell-phone company in the Americas, among other assets.
The City & Guilds Vocational Rich List 2011 ranks wealth among those in the U.K. who have built their fortunes through an apprenticeship or other practical qualification. Defying the economic downturn, they are worth a collective 17.6 billion pounds, up a billion pounds since 2008. The high ranking of celebrity chefs notwithstanding, entrepreneurs from industry, including high-tech sectors, lead the way with 30 in the top 100, followed by property and construction with 25 millionaires and the leisure industry with ten. Go to www.cityandguilds.com to see the full list.
Events
SOCAP 11 will be held September 6-9 at the Ft. Mason Center in San Francisco. The conference is part of Social Capital Market's event series connecting investors, foundations, institutions and social entrepreneurs worldwide to address the impact investing market-an emerging asset class that provides financial gains for investors with a social and environmental benefit. Go to socialcapitalmarkets.net for further information.
The Marketing and Client Servicing for Hedge Funds Conference, hosted by Financial Research Associates, will be held September 8-9 at The Princeton Club in New York City. Go to www.frallc.com for further information.
The 11th Annual New York International Film & TV Finance Summit, a forum to explore how independents can find financing to make, distribute and market films, will be held September 22-23 at the Marriott Marquis Hotel in New York City. Go to www.citeusa.org or call 800-207-4432 for more information.
The Fiduciary Gatekeeper Research Manager Summit, produced by Financial Advisor and Private Wealth magazines, will be held September 26-28 at the Boston Park Plaza Hotel and Towers in Boston. Morningstar's head of fund research will be on hand to explain the company's new system for rating analysts. Go to www.fa-mag.com for further information.
The inaugural Chicago Ideas Week, a gathering of top innovators, thinkers and creators from around the world, will be held October 10-16 in Chicago. Speakers include former Supreme Court Justice Sandra Day O'Connor and John Thorn, the official historian for Major League Baseball. Go to www.chicagoideas.com for further information.
The FOX Fall Forum, featuring keynote speaker Richard N. Haass, president of the Council on Foreign Relations, will be held October 17-19 in Chicago. The event is for qualified family offices only. Go to www.familyoffice.com for more information.
The 9th Annual Point of Change Nonprofit Conference, sponsored by the Connecticut Association of Nonprofits, will be held November 10 at the Crowne Plaza Hotel in Cromwell, Conn. The event will address economic and legislative changes facing the nonprofit sector as demands for services rise. Go to www.ctnonprofits.org for more information.
On The Move
First Republic Bank, a private bank and wealth management company based in San Francisco, has hired Brian J. Morrisroe as relationship manager and managing director in New York. Morrisroe is a former vice president and private banker for TD Bank in New York.
Citi has appointed Bassam Salem as CEO of Citi Private Bank, Asia Pacific, replacing Aamir Rahim, who has been appointed head of Citi's Public Sector Group for Asia Pacific. Bassam first joined Citi Private Bank in Geneva in 1985. He is expected to begin his new role this fall.
Momentous Insurance Brokerage Inc. of Van Nuys, Calif., has hired Kathleen Bragg-Pebley, a former senior associate at Wilson Elser, as in-house counsel. Momentous specializes in designing insurance programs for high-net-worth individuals.
Rockefeller Financial, a New York-based wealth management firm, has hired Jeffery Moy as head of private equity. Previously, Moy was a senior managing director at Liberty Mutual Investment Advisors LLC..
City National Bank, based in Los Angeles, has appointed Andrea Scalisi as senior vice president and team leader for private client services in New York. Previously, Scalisi was serving high-net-worth clients for US Trust/Bank of America Private Wealth Management.
Wilmington Trust has hired Kirk D. Mooneyham, former vice president of captive services for Beecher Carlson and its predecessor RiskCap Inc., as vice president and managing director of the company's Captive Management Services business based in Colorado.
-Cort Smith