Courting The Wealthy Woman
Posted on | May 13, 2008 | 1 Comment
by Milton Pedraza – CEO The Luxury Institute
She’s educated, employed, and controls the lion’s share of spending in wealthy households.
Nine of ten times she is married, or living with a life partner. Her responsibilities often include working at a high-paying job or running her own business while also caring for a child or a parent -and managing the household and its finances. This is the portrait of today’s frenetic and financially powerful wealthy woman that emerges from a recent Luxury Institute survey of women from households with $150,000 or more in annual income ($262,000 average income, $2.2 million average net worth).
Key findings is how profound the female influence is on spending and money management – something that companies from financial firms to home improvement retailers simply cannot afford to ignore.
Married wealthy women, on average, make almost two-thirds (64 percent) of a family’s purchase decisions; 73 percent report making a majority of the household spending decisions. Almost one in four married wealthy women (22 percent) say that they make all of the investment decisions on their own; another two-thirds report making financial decisions jointly with a spouse or partner. Nearly half (48 percent) say that they call the shots on home improvement projects and related purchases.
Women hold particular sway at home when it comes to spending money on travel and home appliances.
In more than two-thirds (68 percent) of wealthy households, the matriarch holds ultimate ‘veto’ authority on home appliance purchases, making it extremely difficult to sell ovens, refrigerators or dishwashers to the wealthy without the consent of the lady of the house. Similarly in travel, 61 percent of wealthy women make the family’s vacation decisions, a powerful swath of authority that includes choice of destination, airline, hotel, cruise line, car rental, and restaurants.
In 48 percent of wealthy households, women choose the family’s health care providers–both the insurance plan and specific doctors. Bank account selection is the domain of women in 46 percent of wealthy households; in 40 percent, the woman decides which automobiles and consumer electronics to buy. Almost one-third of wealthy women (31 percent) say that they control their family’s real estate purchase decisions. It’s often her own money that she’s spending and investing.
Highly paid females are flexing financial muscle and turning traditional assumptions about gender and income roles upside down. On average, women earn 39 percent of the total income in wealthy households; 24 percent of wealthy women report that they are their family’s primary breadwinner, bringing home at least half of the family’s income. Thirteen percent of wealthy women with a spouse or partner say that they earn at least 70 percent of their household’s total income. These are not women who need to ask permission before buying something big.
Wealthy women are certainly no idlers: 72 percent work on at least a part-time basis and 54 percent work full-time.
Most are well compensated for their efforts: 60 percent of wealthy women who work earn at least $100,000 a year; 20 percent earn at least $200,000 and the median annual income of working wealthy women is $124,000. One-third of these women (and 45 percent from households with income greater than $300,000) support another family member through their work; 28 percent support two family members, and 18 percent support three or more dependents. The average amount spent on supporting additional family members: $22,400. The financial influence of affluent females is powerful and growing in the business world, with women increasingly holding positions of executive authority.
One-third of working wealthy women hold jobs at the vice-president level or higher and another 22 percent hold some type of managerial position. Twelve percent of wealthy women serve on a company’s board of directors; eight percent are partners in a firm; and two percent hold C-level corporate positions.
Fifteen percent of wealthy women own their own businesses, and lifestyle is a primary consideration in doing so. One-third say that they launched a business to have a more flexible schedule, and nine percent did so to be able to spend more time with family and friends. One in six wealthy women who started a business did so to pursue financial independence or to take advantage of a better opportunity than they had in their previous work. Women 55 and older, as well as those with household income greater than $300,000, are 50 percent more likely to be business owners. Just four percent of women from high-income households with a net worth less than $1 million, and 10 percent who are younger than 45 years of age, are entrepreneurs.
Wealthy Women At Home
Despite their significant financial and professional accomplishments in the workplace, wealthy women are still far more likely than men to do most of the domestic chores. Working wealthy women with a husband or partner report that they spend an average of 2.7 hours per day taking care of their household. Almost one in four (22 percent) wealthy women who work say that they spend at least four hours daily on household duties.
Motherhood may be a big reason for the focus on domestic duties. Seventy- five percent of wealthy women are mothers–66 percent of those younger than 45 years of age and 81 percent of those who are 55 and older. Just 34 percent, however, have children younger than 18 living at home. The average number of children is 1.8, with 36 percent of wealthy women the mother of two children, 12 percent with three, and 12 percent with a brood of four or more.
Wealthy Women In The Marketplace Among the businesses with the most to gain from a sharper female focus are brokers and banks.
Home improvement chains, realtors, and car companies get the message from wealthy women–and in turn they’re getting their messages across effectively.
Marriott, Hilton, Visa and Home Depot stand out for their skill in marketing to wealthy women. Each of these companies earned an unaided mention from seven percent of respondents. American Express (five percent) and Remax (four percent) each received frequent mention, as did Cadillac, Capital One, Lowe’s and Westin (each with three percent). Honing the proper message for wealthy female consumers starts with understanding their needs and tastes, followed by creating relevant products and services that are delivered with impeccable service–just good fundamentals of business.
Luxury Lust: A Biological Link?
Higher social status has long been known to correlate with better health, but it now appears that even perceived changes in status are enough to trigger physiological reactions. Researchers at the National Institute of Mental Health identified specific changes in brain activity in students competing in a computer game for money when told how their performance stacked up against inferior and superior players. Outperforming the better player -even though there was none- activated areas in the brain controlling emotional pain and frustration. The results of the research in the April 24, 2008, issue of the journal Neuron may also provide some physiological basis for the human desire to buy luxury goods and services to elevate or reinforce their social status.
Luxury Automobiles -Brand Status
Porsche races ahead of Lexus and Mercedes to take the top spot for status among luxury nameplates. In a recent Luxury Institute Luxury Brand Status Index (LBSI) survey of luxury automobile brands, wealthy consumers ranked Porsche highest for overall brand status. Respondents cite the German carmaker’s “reputation for performance” and call Porsche automobiles “world-class sports cars for the true connoisseur.” Those surveyed have an average household income of $349,000 and average net worth of $3.7 million.
Wealth Management – Brand Status
The poor risk management practices on display at many large financial firms over the past year have not gone unnoticed by these same banks’ existing and potential wealth management clients.
Recognizing that wealth management firms faced a likely crisis of credibility with clients in the wake of the subprime meltdown and the ensuing credit crunch, the Luxury Institute surveyed an elite panel of ultra-wealthy American investors ($751,000 average income, $13.9 million average net worth) to gauge the impact of risk mismanagement on brand status. No large financial firm will emerge from the crisis without some scars, but those that have done a better job than others in managing their exposure can boost their image in the eyes of wealthy clients. Now is the time for firms to assess any damage to their brand reputations and to take action to earn back the damaged trust and confidence of wealthy investors. Here are the Wealth Management LBSI standouts, ranked by wealthy investors and grouped by type of institution.
Luxury Retail Outlook
Retail sales continue to come in weak at the high-end of the market.
Retailers overall posted a deceptively decent gain of 3.6 percent in April sales at stores open at least a year, according to the UBS-International Council of Shopping Centers retail sales tally. The timing of Easter, however, makes year-over-year comparisons difficult. Luxury retail continued to take its lumps. Nordstrom, for example, reported a 3.8 percent same-store sales decline. Retailers can take little comfort in the attitudes the wealthiest 10 percent–11.2 million– of U.S. households.
This group -with a minimum net worth of $828,000- has a much more favorable view of the economy 12 months from now than it does of the present situation, but plans for spending are muted. According to the American Affluence Research Center’s Affluent Market Tracking Survey #13, the index of future business
Also, there is more optimism than pessimism within this ultra-wealthy group on the outlook for the stock market and for their own income 12 months from now. Optimism, as a rule, rises with income and wealth. Vacation travel, however, is the only luxury spending category projected by AARC to experience growth in the next 12 months, and 55 percent of the ultra-wealthy report making a conscious effort to defer or reduce expenditures. The tendency to cut back recedes predictably as wealth escalates: just one-third of individuals worth $6 million or more are making any efforts to slow down their spending.
Luxury firms are turning to sales outside of the United States and Western Europe to fuel their growth, resulting in a potentially enduring sea change in luxury consumption.
Russia, Brazil, India and especially China are becoming important areas for sustained future growth for luxury goods firms, and their value is also apparent more immediately as they take up slack for slumping U.S. and European economies. China, the third largest consumer of luxury goods globally with a 12-percent market share, could jump ahead of the U.S. this year and be second only to Japan in consumption of luxury gods. The latest call for the surge in Chinese luxury sales comes from Wang Depei, vice chairman of the China Economic System Reform Research Association at the First Luxury Brands Forum in Shanghai. Depei forecasts that China will overtake Japan in luxury consumption by 2015.
The Wealth Report – May 2008
Get the complete Wealth Report here
Milton Pedraza is CEO of The Luxury Institute, the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net-worth consumer.
Tags: luxury goods marketing > marketing to women > wealty women
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March 27th, 2009 @ 8:20 am
I work very hard and like to enjoy my time off. It has been very hard to find a companion of substance and if I do hes usually very old and unattractive. Well life is short so I decided to “go for it”! Do yourself a favor and use this service! You wont regret it! Chrissy