Secrets from the founder of a company that analyzes the ultra-rich.
By Robert Isler
There’s the luxury crowd and then there’s the Ultra-High Net Worth (UHNW) client, someone who truly stands on rarified ground. Winston Chesterfield, founder of Barton Consulting Group in London, knows all about the latter. His firm specializes in studying their motivations, behaviors and buying habits. In a fact-filled presentation at the NKBA Luxury Summit, Chesterfield shared what makes these individuals both similar to and different from all others.
He began by putting his presentation into context, defining UHNWs as those with a net worth of $30 million or more. According to his analysis, at the start of 2020, there are 280,000 worldwide who fall within that definition — although by last August, another 15,000 joined their ranks. The combined net worth of that group is a staggering $35.4 trillion. If they were their own country, he noted, it would translate into the largest economy on earth. Most important, on average 37.8% of their net worth is in liquid assets — which means they can easily spend it.
Chesterfield discussed the geographic distribution of these individuals. North America is by far the region the highest percentage of them call home. A total of 104,000 live there, followed by 86,000 in Asia/Pacific. Together, those 190,000 represent nearly 2 in 3 of the UHNW population. Europe rounds out the top three. By country, the U.S. dominates with 93,800 — more than triple that of China, in second place. Japan is in third position. Chesterfield pointed out that although the top-three ranking has remained consistent, what has changed is a new entry into the top 10: India. It has 6,500 UHNWs.
In the U.S., the greatest concentrations, unsurprisingly, are in the New York metropolitan area (dominating with more than 10,400); the Los Angeles metro area (over 6,100); Chicago metro with nearly 3,900, and San Francisco metro, with about 3,400.
The average UHNW individual spends between $1.2 million and $2.2 million a year on luxury, across all categories, from home design and furniture to luxury vehicles (cars, jets, yachts), travel and more.
The average UHNW individual spends between $1.2 million and $2.2 million a year on luxury, across all categories, from home design and furniture to luxury vehicles (cars, jets, yachts), travel and more. The total annual expenditure by this group in the U.S. generally ranges between $112 billion and $206 billion.
The remainder of the presentation involved defining the behaviors of these people, including their motivations, beliefs, resources and environment. He tackled them one-by-one.
What Drives Them
Their motivations are led by practical considerations, not by the novelty of the purchase. Unlike some other groups, UHNWs don’t need the purchase to be aspirational. They are more likely to consider whether the purchase is “something they care about.” They are as demanding as others in not wanting their purchases to be wasteful and they appreciate good value. Chesterfield noted that although these people are lampooned as being selfish, in reality they look out for others, especially family members.
Regarding their beliefs, it’s important for them to get value for their money. Just because they have a lot of it, it doesn’t mean they are willing to throw their money around without thought. They are very defensive about potentially being ripped off by unscrupulous sellers. They define value and quality in terms of an item’s rarity, craftsmanship and expected longevity. Outstanding customer service is also very important to them — that’s part of the luxury experience — and they define it as speed, discretion and neatness. Respect and knowledge round out their belief system. They appreciate it when the seller can improve their knowledge about a potential purchase, but are upset if their privacy is invaded or if there is an attempt to gouge them on price.
Expending Resources Wisely
Resources can be divided into space, time and money. To the UHNW individual, space is defined as comfort. They don’t like pouring items into their homes, but instead value open space. They also don’t need to own many homes, but privacy is paramount to them.
Money provides liberty for Ultra-High Net Worth individuals — the more you have, the greater your feeling of freedom.
Time is something that no amount of money can buy. Their attitude is that wasted time is a tragedy. To some, the pandemic might be viewed as a wasted year. To the UHNW set, it felt like a wasted decade. Money provides liberty for them — “the more you have, the greater your feeling of freedom.” Along with spending on family, many are involved in various philanthropic projects.
Environment rounds out the four behavioral elements reviewed by Chesterfield. It is split into lifestyle, home and people. Lifestyle is about seeking happiness. UHNWs travel very frequently and almost always combine leisure with their business trips. They seek out things to do, places to see, people to meet, and they love learning about other cultures. Internationalism is important to them. At home, they have the same desires as anyone else, and consider it their sanctuary. They tend to be very social, and their home is thought of as a place to invite and interact with others. They also buy more frequently than others for their homes. People, the last environmental element, are considered critical resources for them when considering a purchase. They like surrounding themselves with topic experts and value peer advice far above product reviews or marketing.
A final observation shared by Chesterfield is that UHNWs love newness and novelty when considering a luxury purchase. It’s not enough to simply get the latest and greatest version of something that already exists in the marketplace.
