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By Danielle Verbrigghe
FundFire
July 23, 2014

Boutique wealth shops carry a much higher brand cachet than bigger firms among multimillionaires, according to a recent survey by the Luxury Institute. While Rockefeller Wealth Management rose to the top of the list, several of the biggest firms, including Merrill Lynch and UBS Private Wealth Management, continued an ongoing descent toward the bottom.

In the study, the Luxury Institute asked multimillionaires with an average net worth of $15 million and average annual income of $800,000 to evaluate wealth firms on factors including product quality, exclusivity, social status and ability to deliver special client experiences, and assigned firms a score based on the responses.

Rockefeller Wealth Management, a New York-based multi-family office, topped the list of highly ranked wealth managers. Coming second was Atlanta-based Atlantic Trust Private Wealth Management. Convergent Wealth Advisors was a close third, followed by First Republic Private Wealth Management and Bessemer Trust.

“Consumers are opting for boutique firms,” says Luxury Institute CEO Milton Pedraza. “Wealthy consumers really value relationships and the smaller boutique firms really deliver.”

Some of the biggest firms meandered at the bottom or sunk lower. Merrill Lynch tumbled to last place out of 39 firms, while UBS Private Wealth Management came in second to last. Bank of America, Goldman Sachs and Charles Schwab rounded out the bottom five.

The brand reputation problem facing some of the largest firms is partially driven by legal and regulatory woes and other negative press coverage some of the brands attracted since 2008, Pedraza says. “Any time you have news that’s a negative in the media, these firms are going to get hit,” he says. “The larger firms took a beating.”

Other big brands, including, Citi Private Bank, Barclays Wealth, HSBC Private Bank and Wells Fargo also ranked in the bottom half of brands.

The rankings reflect general wealthy individual perceptions of overall brands, rather than specific client experiences, Pedraza ways. While the specific rankings tend to vary from year to year, quartile placement remains relatively stable, he says. This year’s results continue an ongoing trend of boutique wealth shops rising in the rankings and wirehouses and bigger firms sliding lower, he says.

While dropping slightly from its number three spot in 2013, Bessemer Trust made the top five list several years in a row. Brown Brothers Harriman, which took the top spot last year and in 2012, tumbled off the top five list. Northern Trust, Vanguard Personal Investors and J.P. Morgan Private Wealth Management also fell out of the top five.

Brown Brothers Harriman’s absence on the list doesn’t indicate an image problem, Pedraza says. “I don’t think it’s so much that they’re faltering as consumers perceive other brands to be better,” he says.

Boutique shops have an advantage over larger firms when it comes to creating a connection with wealthy investors, says Linda Beerman, chief fiduciary officer and head of wealth strategies for Atlantic Trust.

“Our clients feel they have an exclusive relationship with their client service representatives,” says Beerman. “It’s really a high-touch, client-service driven model.”

Offering unique experiences and hosting events is one way Convergent Wealth Advisors positions itself as a luxury brand, says Douglas Wolford, president and chief operating officer for Convergent Wealth Advisors.

“Wealthy people can find any number of people who are good investors, but what most wealthy people want is an experience,” Wolford says. “Boutiques provide that experience better than big companies.”

To differentiate themselves from other firms offering advice to ultra-high-net-worth and high-net-worth investors and families, Convergent offers special events for wealthy clients. For example, the firm is hosting an event in which wealthy clients can have lunch with David Rubenstein, co-founder and co-CEO of the Carlyle Group. Convergent has also held events for clients where wealthy investors get to drive new models of luxury vehicles, such as Ferraris or Bentleys, before they become available to the general public.

“We focus on trying to provide clients with experiences that money can’t buy,” says Wolford

Such experiences go a long way in attracting wealthy clients and enhancing the firm’s reputation as a luxury brand, Wolford says. “Convergent is a luxury brand and we take care to protect that as part of our image,” he says.

And that image has contributed to client development, according to Wolford.

Convergent Wealth Advisors has seen its Independence by Convergent unit, which caters to investors with between $1 million and $10 million in assets, grow in recent years, driven in part by brand perception, Wolford says. That division has added about 300 new high-net-worth clients over the past two years.

“The brand has really driven that growth. People want to be associated with a luxury, boutique brand,” says Wolford. “I think Convergent is an aspirational brand for people in Indepencence.”

Overall, wealthy individuals are apt to place a greater degree of trust in smaller, boutique firms, says Pedraza.

For brands at the bottom, “There’s only up they can go,” Pedraza says.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://fundfire.com/c/934734/9128/merrill_sink_luxury_ranking_rockefeller_reaches?referrer_module=emailForwarded&module_order=0

 

(NEW YORK) July 22, 2014 – In the latest edition of its Luxury Brand Status Index Wealth Management (LBSI) survey, the independent and objective New York-based Luxury Institute asked investors with an average net worth of $15 million and annual average income of $800,000 to share detailed opinions of 39 leading firms in the wealth management business. LBSI scores (1-10) comprise respondents’ evaluations of each firm’s product quality, exclusivity, social status and ability to deliver special client experiences.

Set up in 1882 as the Rockefeller family office, New York-based Rockefeller Wealth Management earns the highest overall LBSI score of 7.94. Ranking closely behind Rockefeller are Atlanta-based Atlantic Trust Private Wealth Management (7.93), and Convergent Wealth Advisors (7.92). First Republic Private Wealth Management (7.82), Bessemer Trust (7.68) round out the top five.

“Wealthy clients tell us that expertise, trustworthiness and generosity are the critical elements in building strong client relationships in wealth management,” Luxury Institute CEO Milton Pedraza. “Successful wealth managers are relationship builders first, and, since few can beat the markets in the long run, money managers second.”

Additional firms evaluated include Ameriprise Financial, Bank of America, Barclays Wealth Management, BB&T Wealth Management, Bernstein Global Wealth Management, BMO Harris Private Banking, BNY Mellon Wealth Management, Boston Private Bank and Trust, Brown Brothers Harriman, Charles Schwab, Citi Private Bank, Credit Suisse Private Banking, Deutsche Asset & Wealth Management, Deutsche Bank Alex. Brown, Fidelity Investments, Fifth Third Private Bank, Goldman Sachs, HSBC Private Bank, J.P. Morgan Private Bank, J.P. Morgan Private Wealth Management, Merrill Lynch, Merrill Lynch Private Banking & Investment Group, Morgan Stanley Smith Barney Wealth Management, National City Private Client Group, Neuberger Berman, Northern Trust, PNC Wealth Management, SunTrust Private Wealth Management, U.S. Bank Private Client Group, U.S. Trust, UBS Private Wealth Management, Vanguard Personal Investors, Wells Fargo Private Bank and Wilmington Trust Wealth Advisory Services.

Please visit www.LuxuryInstitute.com and contact us with any questions, or for detailed information about specific brand rankings.

The Luxury Institute, LLC

luxinfo@luxuryinstitute.com

By: Laura Milligan
Vogue UK
July 15, 2014

The Real Real- which is on track to do $100 million in sales this year, The Fashion Law reports – has evaluated the 500,000 designer items from 500 brands on its database to find what holds its value, and what depreciates faster than a supercar. And some of the results may surprise you.

Most of the brands that hold their value probably won’t come as a shock – Chanel, Louis Vuitton, Hermès, Christian Louboutin, Cartier, Alaïa and Van Cleef & Arpels among them – but those that lose value are more unexpected. Tod’s, Versace and Etro are among those that lose their value fastest, while Marni, Alexander Wang, 3.1 Phillip Lim and Marc Jacobs are among the labels that retail for the furthest from their original retail price. Although they are relatively young labels, Victoria Beckham, Charlotte Olympia and Alexander McQueen all resale for very close to the original value. Whether they will have Chanel or Hermès’s longevity when their pieces become vintage, however, remains to be seen.

Aside from buzz about a new designer (Phoebe Philo having rejuvenated the resale value of Céline, for example), the most important factor in a piece holding its value is availability.

“Brands have to be careful where they allow their product to be sold,” Milton Pedraza, CEO of the Luxury Institute, a industry research group, told Fortune- adding that brands that hold their value generally do not discount or sell widely online. “In that sense, it creates a perception of purity, [which the brand will then] back up with design quality and heritage. If I buy something, I will think, ‘Wow it has long term investment value.’”

One little footnote though before you go forth and shop: no piece is actually an “investment” unless you plan to ever sell it. Just saying.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.vogue.co.uk/news/2014/07/15/investment-buys-hermes-chanel-cartier-christian-louboutin

By: Paul Hiebert
The New Yorker
July 7, 2014

Bellezza mentioned Tiffany & Co. as a good example of a company executing the policy outlined in her and Keinan’s report. Some store locations offer side entrances and private viewing rooms to physically separate the élite shoppers from those looking to purchase a seventy-five-dollar Heart Tag Charm. The core Tiffany users, Bellezza says, are therefore defined by their access to privileged retail space, while the company can still grant a degree of access to the masses without tarnishing the brand. In 2013, the Luxury Institute, a research and consulting firm, conducted a survey that revealed that Tiffany was the jewelry brand most widely purchased by American women with a minimum net worth of five million dollars.

As Amy Merrick noted in April, Burberry recovered from its overexposure problem. Following the arrival of Angela Ahrendts as its C.E.O., in 2006, (who has since left for Apple), Burberry began scaling back its licensing agreements and removing its signature check from about ninety per cent of its items. A sense of sustainability has returned, thanks to a clear balance of insiders enjoying their cachet and outsiders looking in.

Click the link to read the entire article: http://www.newyorker.com/online/blogs/currency/2014/07/the-value-of-luxury-poseurs.html

By: Erin Griffith
Fortune
July 7, 2014

They’re all considered investments, but which luxury brands hold their value the best may surprise you.

There’s a reason they call them “investment pieces.” At $22,000 for a Proenza Schouler tote or $9,000 for a Ralph Lauren dress, luxury goods are meant to last a lifetime and hold their value. That’s why the market for used designer goods is the most attractive category for online consignment.

One such marketplace, a website called The RealReal, is on track to do $100 million in sales this year. (The company takes a cut of each sale.) The RealReal recently tapped its database of 500,000 luxury goods from 500 designer brands to find which brands have the highest resale value, and which ones hold their value the longest. The startup found that Chanel, Christian Louboutin, and Hermès hold their value the longest. Tod’s and Versace lose their value the fastest.

Perhaps more surprising is which brands carry the highest and lowest resale value. Items from Givenchy, Victoria Beckham, Charlotte Olympia and Alexander McQueen all sell for much closer to their original price than goods from Marni, Alexander Wang, 3.1 Philip Lim, and Marc Jacobs.

Resale values of fashion or luxury goods can fluctuate depending on buzz around a certain designer, particularly if a fashion houses hires a a new creative director or chief executive, according to Rati Levesque, Chief Merchant at The RealReal. “When Phoebe Philo joined Céline as the creative director, it added more resale value to the brand,” she says.

But more important than buzz is availability and discounting. If a luxury brand frequently discounts its goods at outlet stores or online via flash sales, consumers will perceive that they don’t have to pay full price for that brand, says Milton Pedraza, CEO of Luxury Institute, a luxury industry research group. While baby boomer shoppers tend to research something online and then buy it in the store, millennials do it the other way around. They “showroom,” the term for checking out an item in the store before finding the best deal for it online.

“These days you can find ways to arbitrage the brands, because you have so much information and the market is inefficient,” Pedraza says. “Brands have to be careful where they allow their product to be sold.”

For example: Chanel and Hermès do not hold sales in their stores and they have a limited number of outlet stores. Chanel doesn’t even sell its goods online, with the exception of beauty products. “In that sense, it creates a perception of purity,” Pedraza says.” The brands then “back it up with design quality and heritage,” he says. “If I buy something, I will think, ‘Wow it has long term investment value.’”

Below are some luxury brands that fall on both sides of the spectrum.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:http://fortune.com/2014/07/07/which-luxury-brands-have-highest-resale-value/

By: Laura Chesters
The Independent
July 4, 2014

Striding down Fifth Avenue clutching a monogrammed black Gucci leather satchel, François -Henri Pinault stands out among many of the trackpant-clad visitors to America’s most expensive shopping street.

Americans might still be better known for their casual fashions but Mr Pinault, the chief executive of Gucci’s owner, Kering, is betting that the millions of domestic and international tourists who descend on New York each year want to snap up European labels on their shopping sprees.

The Frenchman, who is married to the Mexican-American actress Salma Hayek  and whose family owns more than 40 per cent of the Paris-based luxury goods giant, says: “Over the last few years we have talked about the growth engine of luxury being in Asia – but it is important to remember the size and potential of America.”

According to market research from Bain/Alta­gamma on the luxury goods industry, the Americas actually passed China as the growth leader last year. The researchers estimate that the continent’s luxury goods market will grow 4 per cent, and the US alone is valued at €66bn (£52bn) this year.  Other European brands, including the UK’s Burberry and Mulberry, have also been steadily building up their presence across North America.

Mr Pinault is in the US to visit Kering’s American luxury division, which launched three years ago, and its flagship Gucci store in New York, the biggest in the world.

Kering, which owns 17 luxury brands including Saint Laurent and Christopher Kane, now plans to invest huge sums renovating some of its 180 US stores and expanding into new areas, as well as into Mexico and South America. Sales at it luxury division rose 8 per cent last year.

Mr Pinault is also betting that wealthy Americans are beginning to change their habits.  “The way of life here has been to not dress up, but the US shopper is becoming more sophisticated.”

Sarah Willlersdorf at ­Boston Consulting Group  agrees that the wealthy millionaires and billionaires in the States have traditionally spent their cash on cars and experiences rather than expensive clothes, but that now what BCG calls the “personal goods” sector is about to enter a boom period.

She says: “The aspirational masses here do want to spend on luxury – they want to spend on brands, and it is growing. There is a huge change in the desire to buy brands.”

BCG expects that by 2020 the US will have more than a third of the luxury market and  will still be bigger than China’s high-end sector. Japan will account for 7 per cent and the rest of Asia about 23 per cent of the global luxury market. Milton Pedraza, chief executive of the Luxury Institute, a consultancy, agrees: “There are big opportunities for European luxury brands in the US.”

America already makes up 18 per cent of Kering’s group sales, and Mr Pinault is keen to make sure its brands have the best stores in the best locations across the US – not just in New York, which has always had Sex and the City-style fans of European labels.

Ms Willlersdorf adds: “It is not just about East and West coast. The middle and south are very wealthy. European brands are under-represen-ted, particularly in second-tier cities.”

Click the link to view the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.independent.co.uk/news/business/analysis-and-features/america-becomes-absolutely-fabulous-9585525.html


Flying the Flagship

June 26th, 2014

By: Simon Brooke
Sphere Magazine
June 26, 2014

Those waiting for the long-predicted explosion of luxury retailing onlines are still holding their breath. While some reports have estimated that global online retail sales have increased by as much as 17 per cent a year since 2007, growth in the effete world of luxury goods is nothing like as fast. Having viewed e-commerce with suspicion for many years, several successful brands have dipped a well-manicured toe in the digital waters-many prompted by the success of Net-a-Porter-but most have held back. Miuccia Prada summed up the sector’s attitude to web sales and e-commerce last year when she declared: “We think that, for luxury, it’s not right…Personally, I’m not interested.”

The new area for growth in luxury retailing is still not internet-based-it’s in the streets and shopping centres. Yes, bricks and mortar are back. In the luxury shopping capitals of the world-London, Paris, New York, and increasingly cities such as Shanghai and Dubai-well-established brands alongside up-and-coming names are opening new locations as well as expanding and refurbishing existing stores. Many are making significant investments: Versace, for instance, has recently sold a 20 per cent stake to private equity house Blackstone so that the brand can develop new venues.

“Luxury brands recognize the reality that only at most 10 to 15 per cent of sales are conducted online and the store, adapted for the future, will always be the main channel of customer engagement,” says Milton Pedraza, CEO of New York-based boutique research and consulting firm The Luxury Institute. “There are many cities across the world that present opportunities in growth for luxury brands and they are selectively opening stores there.”

The Italian trade body Fondazione Altagamma estimates that although online luxury shopping rose by 28 per cent last year, compared with 2012, it still only comprised 4.5 per cent of overall global luxury sales, further evidence that the luxury industry prefers “on street” to “online”. In an industry worth $300 billion, an estimated 90 per cent of luxury purchases still take place in stores.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://edition.pagesuite-professional.co.uk/Launch.aspx?EID=915643ec-109b-4ba4-a154-fc2360651b30

By: Ginette WrightHomes & Estates
Luxury Living Worldwide Edition 2
A Special Supplement for the Wall Street Journal
June 20, 2014

It is no secret that fine property today trades among an increasingly international circle of clients who appreciate the multi-faceted value of real estate. These world citizens have a truly global perspective and see country boundaries as less meaningful in the search for their desired home experience. After all, one can just as easily enjoy an evening sunset from a balcony in Paris or Miami.

What this means is that clients demand that the reach in the marketing of their home be international in scope. One could argue that all borders are crossed in connecting to buyers online; to an extent that is true. Yet there is an important distinction: trust. Am I more likely to click on a property associated with a company I recognize, whether I consciously acknowledge it or not? Milton Pedraza, CEO of the Luxury Institute, notes: “Luxury brands that offer both expertise and trust and are also recognized for delivering the ultimate in global reach in an extremely relevant and personal category such as real estate have a definite advantage in today’s marketplace.” With a heritage that spans over a century and locations in 48 countries and territories, the Coldwell Banker® brand and the Coldwell Banker Previews International® luxury marketing program are familiar to a vast audience that is interested and engaged in acquiring real estate. Our international marketing, whether online or off, enjoys the halo of our global reputation. In the United States alone, we close over $100 million dollars in luxury real estate each day.*

We also believe in the strength of partnerships with brands that have longevity and heritage similar to our own. To that end, the Wall Street journal is a world-class organization with sophisticated readership in all corners of the world. The Homes & estates publication you are holding will land in the hands of Wall Street journal subscribers in major cities on three continents. It’s an investment we make because we want our clients to have access to every potential buyer anywhere in the world.

There is so much more I’d like to share about the value of the Previews® program and the expertise of our fine associates, but I am limited by the space on this page. Instead, I invite you to enjoy a fine read on Robert A.M. Stern Architects (buying his firm’s new book “designs for living” is also a must) and consider the housing possibilities we’ve included in this magazine. do you see a property that fits your view of living? Since summer is upon many of us throughout the world, we chose to look at the luxury lifestyle from the view of the coastline. After all, few moments are more prized in luxury real estate than the moment when you catch that first glimpse of water from your residence and feel a sense of serenity, knowing that you own this experience—the experience of home.

By: Joe MacCarthy
Luxury Daily
June 13, 2014

Brands continue to up their digital advertising budgets, according to the Interactive Advertising Bureau.

Internet ad revenues reached $11.6 billion in the first quarter of 2014, compared to $9.6 billion from the year-ago period. While the sharp rise is not all that surprising, the increasingly effective nature of digital ads indicates that revenues will keep climbing at double digit intervals.

“Digital advertising is so much more targeted,” said Milton Pedraza, CEO of The Luxury Institute, New York. “You can now target people so much more finely than you could a few years ago.

“Relatively speaking, the cost is very competitive,” he said. “There’s a tremendous amount of online media that you can tap into.

“It’s just a revolution, a transformation, in advertising.”

Mr. Pedraza is not affiliated with the IAB, but agreed to comment as an industry expert.

The Interactive Advertising Burea was unable to comment. The IAB is comprised of more than 600 media and technology companies that account for selling 86 percent of online advertising in the United States.

Spending spree
Consumers are increasingly dependent on their smartphones, which gives marketers countless opportunities to reach them throughout their daily routines.

Also, since brands continually engage with consumers through social media and other platforms, they can expect a high level of campaign recognition when targeting ads.

Many luxury brands are finding interesting ways to increase click-throughs and post-ad engagement.

For instance, Jaguar of North America leveraged its ongoing British Villains campaign with mobile advertisements on The New York Times, The Wall Street Journal and other publications.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.luxurydaily.com/us-internet-advertising-revenues-jump-19pc-in-q1-report/

By: Marco Muellner
Luxury Daily
June 11, 2014

For luxury marketers, 2014 is predicted to be the year that tips the scales, with more than half of affluent shoppers discovering, actively browsing and shopping for luxury items via digital channels. This evolution is spurred by shoppers who are online to save time, yet remain likely to finish the purchase in-store.

According to an April 2013 Luxury Institute study on the multichannel purchasing habits of United States Internet users with incomes of at least $150,000, 48 percent of respondents sourced information about luxury fashion online via a computer. Yet only about a quarter actually completed the purchase online.

Also, eMarketer found that a whopping 74 percent of purchases researched on mobile devices are completed in-store.

Which brings me to the first trend to watch:

Mobile
We tend to think of mobile consumers as similar to desktop consumers, but on different devices. This is just not true.

Most mobile time, is, well, mobile. Digital marketers have always struggled to predictably drive offline traffic to retail, but data suggests this is changing.

With more than 70 percent of daily Facebook and Twitter users on a mobile device, digital marketers must think mobile-first.

For luxury marketers this is particularly challenging as device constraints and consumer expectations limit the richness of the experience.

But with skill and creativity, many luxury marketers are embracing the constraints without compromising brand promise.

Understanding the purchase intent journey
We have been trying to figure out what makes people buy as long as we have been selling, but it is a fragmented challenge and capturing the data at every step has been impossible.

We have made a lot of progress thanks to companies such as Datalogix and others and, as a result, luxury marketers are on the verge of the next evolution, having almost completely wired the journey.

The key, like most things in our modern world, is the smartphone.

In this next phase of digital marketing, understanding how and why consumers buy will be essential to attracting the next generation of affluent shoppers.

Click the link to read the entire article: http://www.luxurydaily.com/6-luxury-marketing-trends-to-watch/

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