MISSION POSSIBLE....

BUT CHALLENGING ENGAGING THE ASIAN HIGH NET WORTH INDIVIDUAL Capgemini believes North America and Asia-Pacific will lead the growth in High Net Worth Individual financial wealth, and predicts Asia-Pacific will actually surpass North America by 2013. Its vice president and head of financial services at Capgemini UK & Ireland, Ed Merchant, says that some growth in these regions will ultimately be driven by increased global consumer expenditure as well as newfound autonomy for the Chinese economy, which is already experiencing increased consumer demand. HIGH NET WORTH INDIVIDUAL HAVEN High Net Worth Individuals can be found almost anywhere. Recognising the benefits of having this group within its borders countries vie with each other to encourage long term stay or migration. According to PriceWaterhouseCoopers Jersey and Guernsey prove particularly attractive. The two islands are separate and distinct jurisdictions, have their own parliament, legal and tax systems, are UK protectorates but are not part of either the UK or EU. Jersey's standard rate of income tax is 20%, but there is a special regime and rates for incoming High Net Worth Individuals where pre-immigration structuring can make it is possible to effectively cap a High Net Worth Individual's Jersey income tax liability at 100k. Guernsey's general rate of income tax is 20% but there is an overall income tax cap of 200k. No doubt in the years to come other countries will be exploring ways and means of attracting this select group to settle within their borders. Certainly something for Malaysia and its neighbours to consider. BRINGING THEM TOGETHER, IN MALAYSIA Inaccessible, elusive but with, what for the average man would be, near inexhaustible resources, the High Net Worth Individual must be one of the most desired and most difficult-to-own target market groups. Yet, the High Net Worth Individual, just like everyone else, has needs. And there are those, as one of the most unusual events to grace our shores testifies, who will go to great lengths to meet those needs. In June this year Malaysia hosted High Net Worth Summit 2009, the first ever of its kind in Asia. Running from the 16th to the 19th of June the event, jointly organised by ECMI Services and Iyecon Events, presented a platform for High Net Worth Individuals and companies involved in high value investments or luxury items such as diamonds, jets, yachts or luxury cars to reach out to each other. "The purchasing power for average wage earners, in the midst of the global economic crisis, might be affected. But for high net worth individuals, they merely shift their interest to investments that can potentially be sold later at a value," says Tan Wei Ming, who runs hotel lifestyle consultancy firm Lyecon, who has business interests in Australia and the UK and is the project director for the exclusive High Net Worth Summit 2009. GETTING MORE CAUTIOUS WITH THEIR MONEY But whether or not their purchasing power might be affected, the 2009 World Wealth Report, commissioned by Capgemini and Merrill Lynch Wealth Management, suggests that this group has become more careful of their spending. Estimates suggest over 25% of wealthy individuals withdrew assets from wealth management firms in 2008, due largely to a loss of trust and confidence.

Merchant notes that clients are now demanding greater transparency and simplicity from their wealth managers. In the near term Merchant foresees that High Net Worth Individuals will continue to value capital preservation over high returns in the short term. Regaining their appetite for risk and making a cautious return to investment is something only expected to occur in the medium term as market conditions soften and the global economy recovers. Executive air charter company, International Air Charter (IAC), whose client list includes royalty and high net worth individuals, says an increasing number of its customers are opting to use commercial airlines for long-haul journeys in order to cut air travel costs. The cost of chartering a private jet has now become an important factor for clients to consider. International Air Charter business development director Elie Abdo says that instead of spending US $90,000 to fly from Europe to the Middle East and then onto to other regional destinations, a client would only be prepared to spend around $22,000 to $30,000 adding that people are using jet travel in a smarter way these days. URTHER PERSPECTIVES ON PROSPECT AND POSITIONING Tan said out of 20,000 high net worth individuals in Asia, only 5,000 were invited to the High Net Worth Summit 2009, an exclusive event with participation by invitation only. "We want to have more intimate business meetings and smaller in scale, to ensure productive results, he explained, noting that this was particularly effective for some high-end brands. Keeping the numbers small has another important reason, of course. "If you are actually a person looking to buy a plane or yacht or simply seeking to purchase a RM2 million diamond, you just don't want to be in an exhibition or fair, finding your way through 50,000 other people," he said. THE FOR OTHERS FOR ME AXIS According to Jrg Dietzel, a consultant specialising in branding, what is interesting about marketing to High Net Worth Individuals is positioning because it is not based on price. Esteem and status needs play an important part in this field, particularly in Asia, which is more interesting as brand positioning, he says. There are basically two big groups of High Net Worth Individuals, roughly speaking, says Dietzel, and they are defined on where they are placed on the for others for me axis. Dietzel explains that name and origin are playing a smaller and smaller role in determining ones place in society. Because of this, in Dietzel's opinion, High Net Worth Individuals use status symbols to make a statement about themselves in order to position themselves within society. That has consequences on how products and services are being positioned and also how they are communicated if its for others I also need my media channel to reach these others, make sure they can understand and appreciate the statement, even if they cannot afford the product or brand. On the other extreme (and most lie in between these two), the for me positioning talks about pampering, about confidence and creating an experience for those that have nothing to prove. The more a society develops, the more we see this group grow, he says. STANFORD RESEARCH INSTITUTE'S MODEL Taking a look at Stanford Research Institute's behaviour model based on consumer values can shed more light on what Dietzel is saying. The study clarifies the difference between Achievers, who value uniqueness above all and Emulators, who want to aspire to be Achievers, but may not be able to afford the lifestyle.

According to the study, Emulators are bent on acquiring the symbols of Achievers. However as soon as the Emulators start buying them, these symbols no longer satisfy the needs of Achievers to be unique. The style that is set or acquired by Achievers gets imitated quickly and loses its value for Achievers because the perception of uniqueness disappears. This drives creativity, and stimulates demand for the uniqueness that defines the luxury consumer market. 7 COMMON ATTRIBUTES OF WEALTH ACCUMULATORS Thomas J. Stanley, in his book, The Millionaire Next Door, explains how his research has found that individuals who have attained a high net worth have, in particular, these 7 basic attributes in common: 1. They are frugal and live well below their means: They live in an older house, drive an older car and dont spend a lot of money on what most other people consider lifes luxuries (often because they dont enjoy them). 2. They allocate their time, money and energy efficiently in ways conducive to building wealth: Wealth accumulators spend more of their time in doing things that are conducive to creating wealth budgeting, planning and setting goals for their future. Those who are high income earners but that do not have a high net worth do not spend as much time in these activities. 3. They believe that financial independence is more important than displaying high social status: They dont care about living in the right neighborhood, having a big house, driving the newest cars or shopping at the trendiest stores. 4. Their parents did not provide economic outpatient care: The parents of these high net worth individuals did not subsidize their lifestyle, or give them a bunch of money. They made their own way, working hard and succeeding on their own terms. 5. Their adult children are economically self sufficient: The children of high net worth individuals have been taught how to live a frugal lifestyle, how to accumulate wealth, and often have been taught how to succeed on their own without help from their parents. 6. They are proficient in targeting market opportunities: The high net worth are good at seeing opportunities and taking advantage of them. They arent immune to the fear of failing that all of us have at times, but they overcome their fear and act upon good opportunities when they see them. 7. They chose the right occupation: Those who have a high net worth almost always are doing something that they enjoy and they work hard at their chosen career. Your unique selling proposition needs to be laser sharp. Graff Diamonds' unique selling proposition is that they do not sell diamonds under one carat. Occasionally, out-spending works to set you apart. Laurence Graff, president of Graff Diamonds recently outbid forty potential buyers for the Lesotho Promise, the biggest diamond found in thirteen years. It weighed 603 carats. His company's slogan is we sell "the most fabulous jewels in the world". THE MARKETING CHALLENGE Dietzel believes the the first main challenge about marketing to High Net Worth Individuals is finding their motivations and needs, and then appealing to them through the brand positioning. The second is to then identify the right media channels that reach them without waste. Buying into some mailing lists or databases of certain magazines or clubs could be an option here, he said.

He employs some traditional tools to identify issues and opportunities and valuable insights that can help address these and drive marketing and communications activities. We start with a Brand Audit, he says. Dietzel acknowledges the difficulty of inviting High Net Worth Individuals to a focus group or finding an incentive that would appeal to them. The answer, he says, is to individualise the research, choose 1-on-1 interviews and work within their timetable, for example meeting them in their office, over lunch etc. As for the incentive, Dietzel believes they should be motivated by the result of the research which in some ways would benefit them too eg.the creation of a more tailored product etc. At the end of the session he suggests an appropriately meaningful token gift like a bottle of good champagne etc. REACH OUT AND TOUCH Pointing to the High Net Worth Summit 2009 in Kuala Lumpur recently Tan noted it had three key components - guests enjoy a luxury showcase, an exclusive networking opportunity to make strategic business deals with one another, and the glamour of a charity gala. As far as marketing and communication are concerned, you have more money to play with and the challenge to reach a smaller group,said Dietzel. So instead of mass media like TV, you can use a very tailored DM approach, for example, he added. High Net Worth Individuals, as with many targets, gather their decision-making information from multiple touchpoints, according to Dietzel, eg. certain internet (news) sites, news-channels in TV and often for their spouses who play an important role in decision making society magazines etc. DMs are a good way of getting their attention, if they are very premium and tailored, he adds. FACEBOOK AND SOCIAL NETWORKING In Dietzel's opinion he does not see luxury goods marketers making use of social networking sites any time soon given given the different user profile of most social media users. Wealth COO, Author and Managing Director of Whitman Independent Advisors Sdn Bhd, The First Multi-Client Family Office in Malaysia, Yap Ming Hui confesses no knowledge of any use of social network websites by luxury goods marketers. I have no knowledge of this. I don't see any luxury goods using Facebook. If there are I am not aware of them, says Yap. And yet why should this be so when High Net Worth Individuals are turning to such websites when it comes to seeking information and advice of a financial or legal nature? Described as the Facebook for rich people, Family Bhive (http://www.familybhive.com) was launched in March 2008 by its founder Caroline Garnham of the legal firm, Lawrence Graham LLP. Family Bhive is an online community that brings together and allows wealth owners and advisers (or potential advisers) - which at this time also includes life coaches and fashion consultants - to network and communicate with each other. Successful? Successful enough to allow Family Bhive to conduct a survery early last year among more than 300 UK people with a minimum net worth of 5m, more than a quarter of whom had net worth in excess of 20m, and nearly 10% of whom were worth 100m or more.

Also set up last year was the Peers wealth networking group (http://www.wealthpeergroup.com/). Founded by Francis Claessens, a Dutch entrepreneur living in London, the Peers wealth networking group is a peer group online network whose members number about 50, each with at least 5m (5.6m) in investible assets and collectively more than 1bn. And unlike Tiger 21, which inspired Claessen to set up Peers (Tiger 21 charges a $30,000 (24,000) annual membership fee), Peers is free to join. So YES to social networking but NO to the normal sites now left for what the wealthy may consider the riffraff? Not quite! "It's taken a while for wealthy consumers to start using networking sites, mostly due to privacy issues and concerns," says Milton Pedraza, CEO of the Luxury Institute, a New York-based research MARKETING WATCH OUTS We ask Dietzel what to look out for when marketing to and building relationships with High Net Worth Individuals. DO use a very personal approach avoid any look of mass marketing. DO position your brand as a strong statement then avoid talking about it since these people would like to see themselves as ones that have nothing to prove. DO keep in mind that the user may not always be the only decision maker keep in mind spouses and kids. company that focuses on high-net-worth individuals. Their January 2008 survey of 805 people (each with a minimum gross annual income of $150,000) revealed that 60% of respondents said they participate in a social network a 27% increase over 2007. 16% participated on MySpace, 13% on LinkedIn and 11% on Facebook. There are, of course, other ultra exclusive sites like Family Bhive. AsmallWorld (http://www.asmallworld.net / http://en.wikipedia.org/wiki/ASmallWorld), which was launched in March 2004 by former Lehman Brothers banker Erik Wachtmeister grew last year to include 320,000 members globally (for comparison Facebook had at that time about 40 million) with 65% of the members in the U.K., Italy, Germany and France and 20% in the U.S. The rest are sprinkled throughout the Middle East and Asia. Wachtmeister's site has been even called "MySpace for millionaires" by the Wall Street Journal. As it turns out High Net Worth Individual social networking online has been around for quite a few years at least. Even though not many people know about them. Their very existence points to an unmet need and one that can be leveraged. For example, the setting up of similar sites catering to the particular needs of Asians or even Malaysians. And in the spirit of Malaysia Boleh I'm hoping that someone from here will step up to the challenge of putting it together. The benefits in research opportunities and insights alone would prove invaluable.