6 Key Things to Know Before You Begin Marketing to the Ultra Rich
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The Forbes 400 list, compiled and published annually by Forbes magazine, is a microcosmic look at the ultra-rich. In the book All the Money in the World, authors and researchers Peter Bernstein and Annalyn Swan provide a terrific in-depth analysis of the earning and spending of these wealthiest people in the world. Here, I’ll give you a thumb-sized overview of what they found out, as well as my own observations.
Self-made wealth and higher education
In 2018, 241 of the 400 basically made their fortunes from scratch, and another 36 made a large portion of their own money, even if also inheriting some wealth. Translation: 71% of the ultra-rich got there through ambition, initiative, drive, hard work, and entrepreneurship. Thinking of the ultra-rich as a silver-spoon-in-mouth crowd would be a serious mistake. This isn’t who they are, and it’s definitely not how they think of themselves.
Forty-one of the 400 attended Harvard; 27, Stanford; 10, Yale; and 2, Princeton -- a total of 51 from the top-rated, most prestigious universities. It’s worth noting however, that a higher percentage of the ultra-rich attended run-of-the-mill universities or didn’t attend college at all.
Married, with Children
The ultra-rich are a marrying bunch. Only 14 of the Forbes 400 list I analyzed have never been married. Thirty-one have been divorced at least once, but 281 are married, the majority to their first spouses -- a significantly better percentage than the general population. Cynics would say that has something to do with the high price of divorce. Golfer Greg Norman’s divorce was reported to cost more than $200 million, and he wasn’t even on the Forbes list!
Age and affluence still go together
The age of the ultra-rich skews mature, as you’d expect, but it does span wide. The oldest of the Forbes 400 members in 2018 was 95 and the youngest was 31. Average age: 69. If you step away from the top of the pyramid, the Forbes 400, and look at the broader affluent population, you’ll still see age skew senior, pointing the ambitious marketer to the affluent toward affluent Boomers.
There are many reasons for this marriage of affluence to age. One is that simple high income doesn’t equal wealth; equity does, and that usually takes time to accumulate. There’s also a profound difference between making money and holding onto it. Wealthy entrepreneurs tend to have won and lost one or more times before proving able to hold onto their gains.
Where are the rich?
There is geographic concentration. And there is migration. Only a handful of years ago, more than 20% lived in California and nearly as many in New York. In 2018, out of the Forbes 400, only 28 have their primary residence in California, and 24 in New York. As cities and states like New York and California ever more greedily tax-target the rich, more and more leave. Hollywood stars have fled Los Angeles in favor of places like Wyoming. Low-tax states like Florida and Texas have 16 from this list and are winning the competition for the relocation of the ultra-affluent. This is a factor in Google’s locating a large facility outside Silicon Valley, in Oklahoma. And in expanding there in 2012, again in 2015, and yet again in 2018.
The top ten states for millionaires and up (not just the ultra-rich) are:
California, still #1 and New York, still #2, Texas #3, Florida #4 nipping at the old guard’s heels, New Jersey #5, Massachusetts #6, Virginia #7, Washington #8, Illinois #9, and Maryland #10.
If you market nationally, not locally, it’s vitally important to stay on top of the relocation, movement, and concentrated “geo-pockets” of wealth so you can direct your mail, place your print ads, and otherwise focus your marketing there -- and omit places wealth has left or is leaving. If you’re going to open additional stores, sales offices, clinics, etc., this information is critical to making good choices so you plant where wealth is growing.
Motivations and concerns
What many of the Forbes 400 members share in common is the startup of a small business, expansion of that business, then leveraging the wealth created to that point into diversified investments as well as multiplying the core business or brand through one or more means, such as franchising or licensing. These ultra-rich people wind up with a unique mindset also held in common from this experience. Among other things, they’re deeply suspicious of anyone or anything not symbolic of hard work and methodical development. For example, if you set out to sell them an exotic safari or fishing trip, the story of your background and how you made yourself into the reigning expert on such travel and the extent of the research, planning, and preparation you invested to design and deliver the experience carries more influence than the most persuasive description of the trip and its amenities. This same principle applies to whatever you might sell to the ultra-rich with this startup background.
In many respects, the ultra-rich have the very same concerns and buying motivations as the more ordinary affluent. They’re pressed for time and eager for efficiency, competence, and convenience to be provided to them—and they’re very willing to pay for it. They worry about loss -- of money, power, status, or security. They seek approval, recognition, respect -- some only from peers, others from the world at large, all from those they conduct business with.