Welcome To The New Affluence

Great presentation today by Don Winter of The Harrison Group, a high-end market research company who helped American Express figure out their customer’s spending habits and profit from that very valuable knowledge. Focusing on the top five percent in America, I learned that — are you ready for this — the top 5% in America control $32 trillion in spending dollars. Trillion as in T. To spend. The wealthy in America can be divided into three basic groups: the Affluent, who have a discretionary income (after mortgage and taxes paid, just pure fun spending) of $125 to $249K per year to fritter away, to the Super Affluent, who have $250K to $499K to fritter, and the Wealthy — half a million plus as discretionary income. Let me tell you what I learned about these folks and why you should pay attention:

The affluent own on average at least 2 properties. The wealthy own at least 4, the value of each being less than a million to 2 million or way more dollars. They have shifting values since most of these newly affluent came from middle class backgrounds and are self-made. Love them those middle class values. (Right on.) In fact, 94% are self-made and 69% have had their wealth for less than 15 years. Get this: only 6% have inherited their wealth. They love family and family matters. After their first liquidity event (when they sold the stock options for the big bucks) the first thing they did was buy their parents a home. (Hope my kids read this.) They are Ellie May Clampitt graduated to Miranda Priestly graduated to Mary Kay Ash — truly she is the example they used today. (The first thing they often do is buy fine wines and cigars, then graduate to French dualing pistols. And of course, Real Estate. Always.) They embrace technology and 80% consider themselves technically intelligent. Listen up, W: They possess a rising tide of anxiety both with their nation and the world; They are transforming the marketplace with their buying habits since, while most of the buyers are impulse/passion buyers, a large number of these moneyed folks are termed logic buyers for the intelligent way they price shop and compare, mostly online. (The equivalent of mom’s coupon clipping: they are equally as liable to buy diamonds from Costco as from Neimans or Saks.) 46% are Republicans. The average age is 45, they are married often to the same spouse (as I suspected, divorce at these income levels can really waste resources and why blow it on attorney’s fees? Kiss and make up) and mom rules the roost. KIddos pipe in opinions, too, especially when it comes to designer labels. They don’t really watch TV, in fact 30% of it is filtered, but they read newspapers and magazines. And they use the internet big time. 56% consider using a Real Estate agent more of a convenience than a necessity. 53% have been ripped off. 40% of the wealthiest feel they have to have a second home. The beach is still the most popular place for that second or third home. 70% approach the market — shopping– in a logical way and some stay at home moms have saved as much as half a million per year by smart shopping. Quality, craftsmanship and design rule. Sound familiar?
And they are creating a whole new brand ethic.