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She's educated, employed, and she controls the lion's share of spending in wealthy

households. Nine out 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).

Among the 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.

Vol. 104, No. 5

2

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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. Onethird

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.

Educational attainment helps to explain the financial success of wealthy women. This is

an overwhelmingly college-educated group, with 88 percent of wealthy women holding

at least a bachelor's degree. Overall in the U.S. population, just 26 percent of women

(and 29 percent of men) have earned a bachelor's degree. Twenty-eight percent of

wealthy women have earned a master's degree; another seven percent have an M.B.A.,

and 10 percent have received more advanced degrees. The rate of women with a college

degree rises to 92 percent in households with a net worth of at least $1 million, and to 95

percent for women from households with income between $200,000 and $300,000. For

two decades, women have been outpacing men in earning college degrees—women took

58 percent of all bachelor's degrees awarded in the United States in 2004—so the

accompanying financial achievements of women should continue to grow both on an

absolute level and relative to the earnings of men.

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.

3

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Meanwhile, nine percent of these working wealthy women report that their spouse has no

household duties, and another 35 percent say that the spouse spends less than an hour a

day on domestic work.

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.

Among the businesses with the most to gain from a sharper female focus are brokers and

banks. Women cite their financial situation more frequently—39 percent of the time—

than anything else when asked for one area of their lives that they would most like to

improve. Credit card companies are apparently meeting this need, with 33 percent of

wealthy women saying that credit card providers do the best job of any industry

marketing to women. Only hotels (48 percent) ranked higher. Brokers, however, have

some ground to cover: just six percent of wealthy women say that brokerages are doing

the best job marketing their services to them. Just one in ten mention private banks or

commercial banks as being supreme in their marketing to wealthy women; 13 percent

mention insurance companies.

Home improvement chains, realtors, and car companies get the message from wealthy

women—and in turn they're getting their messages across effectively. Nearly one in four

wealthy women say that these industries do a superb job of marketing to women.

Marketing by private jet companies (three percent), liquor brands and electronics brands

(both eight percent) fails to resonate in large numbers with wealthy women. One idea

may be to "go green": 60 percent of wealthy women say that they prefer using a

company's products or services if they operate by socially or environmentally sound

business practices.

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.

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

4

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limited license only for your own internal purposes, and (ii) not disclose, publish or otherwise make public or provide

the content, in whole or in part, to any third person or entity without the prior written consent of The Luxury Institute,

LLC. The content is and remains at all times the exclusive intellectual property of The Luxury Institute, LLC.

Copyright © 2008 The Luxury Institute, LLC. Published by The Luxury Institute, LLC, 115 E 57th St, 11th Fl, NY, NY 10022

action planning; underperforming an inferior "player" activated areas associated with

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.

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.

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:

Private Banks: Northern Trust maintains its reputation and earns the highest LBSI

ranking in the private banking category. Goldman Sachs, a firm that actually profited for

a time from the mortgage meltdown, earns a number two ranking, and J.P. Morgan

Private Bank ranks third. Pleased clients say that Northern Trust is "well-established" and

that it has "been focused on wealth management for a long time." In contrast, Bear

Stearns, the troubled firm that JP Morgan agreed to buy in March, scored a record low

3.49 out of 10—a clear reflection of Bear Stearns' seemingly reckless financial practices

that sent the firm into insolvency and to the brink of bankruptcy before the Federal

Reserve's rescue plan that included a fire-sale to JP Morgan.

Commercial Banks: JP Morgan Private Client Services takes top honors for brand

status. Ranking behind JP Morgan in second and third places, respectively: Wachovia

Wealth Management and Deutsche Bank Private Wealth Management.

Regional Banks: Based in Winston-Salem, N.C., BB&T Wealth Management earns the

highest LBSI among regional bank wealth managers. Pittsburgh-based PNC Wealth

Management (formerly PNC Advisors) earns second place in the regional bank rankings,

and Chicago's LaSalle Bank Wealth Management comes in third. The category overall,

has taken a substantial hit in status. In 2007, the average LBSI score for a firm was 6.56,

but that slipped nearly a full index point to 5.60.

5

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limited license only for your own internal purposes, and (ii) not disclose, publish or otherwise make public or provide

the content, in whole or in part, to any third person or entity without the prior written consent of The Luxury Institute,

LLC. The content is and remains at all times the exclusive intellectual property of The Luxury Institute, LLC.

Copyright © 2008 The Luxury Institute, LLC. Published by The Luxury Institute, LLC, 115 E 57th St, 11th Fl, NY, NY 10022

Wealthy consumers rank the PricewaterhouseCoopers brand tops for prestige in the

accounting profession. Because high net worth consumers are likely to employ

accounting firms for both business and personal affairs, it logically follows that wealthy

individuals will have some familiarity with firms in this field. PricewaterhouseCoopers

clients call the firm "thorough, professional and capable" with "high quality and

integrity." Tied for second place: Deloitte & Touche and Ernst & Young.

Charles E. Williamson is president of AIG Private Client Group, a provider of high-end

property and liability insurance to wealthy individuals and families. He assumed his

current duties in January of 2006, but has been with American International Group, Inc.,

since 1988, serving in several leadership capacities. He was senior vice president of sales

and marketing for the domestic brokerage group, executive vice president of the excess

casualty unit of AIG's American Home Assurance Company, and senior vice president of

casualty for AIG Risk Management. Williamson is a graduate of Marshall University and

holds a J.D. from St. John's University.

Charles E. Williamson: Over the years I served in a variety of managerial roles. Despite

the different areas of focus, the corporate culture has remained consistent. AIG really

embraces ingenuity and ambition, and I've been fortunate to learn from some of the best

and brightest in the field. It wasn't until I transitioned to an executive role that I realized

how valuable this diversity was. AIG Private Client Group is only in its eighth year of

business, but drawing on my prior experience has helped us go from being the new kid on

the block to the thought leader in our space.

AIG Private Client Group’s business model focuses on the needs of our customers — not

on the products we sell. So for us, the concept of "luxury" has remained consistent. What

has evolved is our understanding of the end customer. Learning more about them helps us

continue to serve them successfully. For example, research has shown that the vast

majority of wealthy individuals in the U.S. have become wealthy through career success.

The "entrepreneur" has essentially replaced the "heir" as the client. Today’s millionaires,

or even billionaires, often retain their middle-class values. In fact, they don't necessarily

think of themselves as "rich." That attitudinal shift impacts our overall marketing efforts.

It's critical to anticipate the needs of your customers based on their evolving lifestyles.

Identifying unaddressed problems—and devising solutions—not only keeps you in a

leadership position, but also it can create shifts in the market as a whole. AIG Private

Client Group has created quite a few products and services that simply did not exist

before we entered the market. For example, we offer a suite of services to help

6

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the content, in whole or in part, to any third person or entity without the prior written consent of The Luxury Institute,

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policyholders dramatically reduce the likelihood of property damage due to natural

disasters such as wildfires and hurricanes. Our competitors have followed our lead in

some instances, but that only helps consumers in the long run.

There is one other factor I'd like to mention. Unlike retail products, insurance is

intangible. Superior customer service, therefore, is paramount—particularly at claim

time. Our claims professionals get personally involved to ensure that a policyholder's

individual preferences are considered every step of the way. Our creativity and hands-on

support receives constant praise from our customers, which is extremely gratifying. In

addition, AIG Private Client Group can only be accessed through independent insurance

brokers. They serve as the "face" of our business, so we only work with a small

percentage of the broker community. We want to make sure those who represent us

espouse our same values.

I have a relentless drive to innovate, and I've tried to impress that upon our staff. As I

mentioned earlier, we always need to consider the changing needs of our customers.

Equally important, however, is to surround yourself with the best people and to give them

the freedom to thrive. We have a great example within AIG Private Client Group. A few

years ago, one of our risk managers recognized the efficacy of the fire retardant used by

the U.S. Forest Service and thought, "Wouldn't it be great to protect individual homes

with that same technology?" His inventive idea led us to create our Wildfire Protection

Unit, a complimentary service for our policyholders in high-risk parts of California and

Colorado. And incidentally, that risk manager is now the service director.

At first, it was challenging to make the transition from commercial insurance to personal

insurance. I generally went from serving Fortune 500 companies to Forbes 400

individuals, and I needed quickly to understand new issues and opportunities for growth.

I was able to overcome the challenge by realizing a common thread: the need to devise

customized solutions for powerful buyers. With that in mind, I could navigate a new

business by drawing upon everything I'd learned throughout my career.

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 samestore

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

7

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limited license only for your own internal purposes, and (ii) not disclose, publish or otherwise make public or provide

the content, in whole or in part, to any third person or entity without the prior written consent of The Luxury Institute,

LLC. The content is and remains at all times the exclusive intellectual property of The Luxury Institute, LLC.

Copyright © 2008 The Luxury Institute, LLC. Published by The Luxury Institute, LLC, 115 E 57th St, 11th Fl, NY, NY 10022

conditions is 99, and while not optimistic, is almost double the current index reading of

52. 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 onethird

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.

As luxury firms expand into new markets and as new firms are created to tap into

opportunities around the world, the need to find executive talent to manage the business

in multiple countries is often an impediment to expansion. Smart executive search firms

understand the need for talent on-demand and they're capitalizing on the boom in global

trade. New York-based Martens & Heads! fulfills domestic, global and online needs of

image-driven brands in fashion, luxury, and beauty industries. Through representatives in

Paris and Hong Kong, the search firm casts a global net for talent to ensure chemistry and

cultural fit for executives who bring expertise in strategy, branding and the global

marketplace. Visit www.maxinemartens.com for details on their global network of talent.

8

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limited license only for your own internal purposes, and (ii) not disclose, publish or otherwise make public or provide

the content, in whole or in part, to any third person or entity without the prior written consent of The Luxury Institute,

LLC. The content is and remains at all times the exclusive intellectual property of The Luxury Institute, LLC.

Copyright © 2008 The Luxury Institute, LLC. Published by The Luxury Institute, LLC, 115 E 57th St, 11th Fl, NY, NY 10022