As a stand-alone and recognized stock market industry category, the luxury goods sector is relatively new with many of the listed players having come to the public markets only in the last decade. Consumers in the space are differentiated in terms of innovation, quality, heritage, design, and lifestyle symbolism.
The luxury sector has now expanded into a lifestyle landscape to include jewelry, antiques, art, yachting, resorts, beauty, automotive, home ware, and wine.
Wealth management and luxury goods sector
The first year that I was doing investment consulting and wealth management, I found there was no link between wealth management and luxury sector, except for the fact that I went to buy luxury goods after finishing investment advising work once a while. However, I’ve recently realized there are many transferable and valuable lessons from the luxury market that can help my work.
The way you talk about your business
Tiffany & Co. (TIF:US) said that “Our job is to help people celebrate.” The statement is far more positive value than simply saying that “Our job is to sell you expensive cutlery.” In wealth management, it is also critical to fully understand your business and convey to your investors/clients that your investment consulting business is to provide them with ever-increasing wealth, or to enable them to secure their retirement, despite the fact that in general terms, the services are all about quality of investment advice, strategy, implementation, due diligence, portfolio construction, asset allocation, and never-ending monitoring.
Focus on the competitive landscape
Louis Vuitton (LVMUY:US) only markets its product through its own stores throughout the world, which allows it to control product quality and pricing. Similarly, an investment advisory business can excel peers in any form of service mentioned previously, however, in terms of capacity, there is no way you can be the best in everything. You don’t know where the competition is going to come from, and competition can come from places where you least expect it.
Get experts involved
Mercedes (DAI: Xetra) had a hard time fundraising for its project and campaign in Canada until the new director who had a lot of skin in the battle got involved. In investment consulting, if you are talking to a client about venture capital and buyout funds and you haven’t studied the characteristics and performance of the whole Venture Economics universe, you are probably not the person the investor wants to talk to.
Customization and Innovation
The lesson offered by Burberry (BURBY:US) is valid in this perspective. The company is known for its innovation and capability of design. Luxury customers are early adapters and early adopters; they like new designs, new technology, and uniqueness instead of packaged solutions. Investment consulting business is all about offering customized solutions that focus on the profiles of the investors and how to address the unique needs of each of your clients, individual or institutional, taxable or tax-exempt, corporate or endowments/foundations.