The Experience Economy: Making Your Money Mean Something

(As featured in The New York Times- January 1, 2017)

Written by: Citigold Media Team

Remember when investing was all about the financial returns? For a growing number of individuals and families, those days are long gone.

Today’s investors increasingly want other kinds of returns as well. They want to travel with friends to faraway places, collect fine wines — and even own the winery. They want to scour galleries for the next up-and-coming artist or style. They want to take action to aid people or areas in need, spending a vacation helping to build a school in Africa, perhaps, rather than just lounging on a secluded beach.

Bottom line: Investors want to put their money into products and companies they admire, causes they care about and personal passions that bring them joy.

“They can purchase a $100,000 Tesla to minimize their use of fossil fuels,” says Tom Corley, author of “Rich Habits: The Daily Success Habits of Wealthy Individuals.” “They can create a financial plan that invests their money in companies producing products that are in line with what’s important to them.”

In fact, says Demetri Argyropoulos, founder of business-advisory firm Avant Global, those who own equity in a brand are 54 percent more likely to use that brand’s product.

Karla Dascal, a Miami-based entrepreneur who owns wellness center Sacred Space Miami, often travels to India for yoga retreats — and invests in companies she wants to see grow. For Dascal, health is a way of life. “If you don’t have your health, you have nothing,” she says.

Dascal started investing in health-and-wellness companies before most of her peers. Now, though, many of her friends are also buying wellness products, adopting healthier lifestyles and seeking rejuvenating experiences. “People are now very interested in this,” she says.

The rise of small, high-end gyms supports that perception. In 2016, boutique gyms accounted for 42 percent of the total U.S. fitness-club market, double what it was in 2014. Members typically paid $80 to $140 a month for access to these gyms in 2014, significantly more than the $52 average for overall gym memberships. Organic foods and immersive wellness experiences — including healthy-eating retreats, outdoor fitness challenges and expert seminars on wellness-related topics — are also doing well. This growth is being seen in the uptick in IPOs of health and wellness companies over the past couple of years, including well-known gyms and healthy-snack makers.

Investing in sustainability is another way people are putting their values to work — installing solar panels on their roofs, holding shares or making direct investments in renewable-energy technology, buying organic foods and purchasing electric cars. One indicator of the strength of the market for environmentally friendly products is the revenue gains enjoyed by electric-car manufacturers, who have built their business on the premise that people will pay a significant premium for sustainable products. From 2013 to 2015, Tesla’s revenue doubled, to about $4 billion.

And with individuals now building more environmentally friendly homes, interest in Tesla’s forthcoming Powerwall is growing. The home battery will use electricity generated by solar panels to power the house. In some setups, homeowners will even be able to sell unused power back to the grid.

Another area attracting investors with a purpose: water. David Wilson, head of the strategic analysts group at Capgemini, which tracks the habits of affluent individuals, says he’s seeing people make direct investments in technology firms that support water purification or companies aiming to improve water sustainability in emerging markets. “They’re making investment choices based on clearly defined objectives,” Wilson says.

As a result, desalination companies are likely to become a major focus. As droughts have become more frequent and widespread, there’s greater urgency to develop cheaper and more efficient ways to remove the salt from seawater to make it drinkable. Once that technology is up and running, investors in these projects are likely to want to travel to see the results of their efforts in action.

Many investors are also passionate about technology — they want everything from mobile gadgets and smart-home devices to optimized financial technology and personal robots. Some 40 percent of individuals in this income bracket say they are early adopters of technology, according to a study by Accenture.

The same report found that 87 percent of investors with a net worth of at least $750,000 are using digital products to handle their financial needs. They’re also upping their investments in FinTech-related endeavors — 895 projects in 2015, four times more than in 2010. Meanwhile, venture capital firms have poured more than $4 billion into wearable-technology players in the past two years, up from just $333 million in 2011.

Then, of course, there’s the investment that has beckoned the heart and the portfolio of the affluent from time immemorial: art.

In 2015, financial advisors surveyed by Knight Frank’s Wealth Trends reported 63 percent of their clients were becoming more interested in buying paintings and sculpture. Wilson says he’s seen a rise in art collecting among the wealthy, noting that “people buy art for the aesthetic value — they can get a personal benefit from it every day, while at the same time it’s an uncorrelated asset.”

The difference today is that it’s so much easier for potential collectors to explore what’s out there than it used to be. Galleries are everywhere — not just in major international hotspots. But perhaps even more important has been the rise of online purveyors of paintings and sculpture, all vying to disrupt the closed and secretive global network of high-end art exchange. Online art sales rose 24 percent year-over-year in 2015, and the value of the online art market is forecast to soar 193 percent by 2020.

Finding the best ways to invest in your values and passions isn’t easy, but a financial advisor with experience counseling the wealthy can help, says Corley. “The good ones are continuously updating their knowledge (of investment options.)”

Meanwhile, investors’ determination to use their money to express who they really are will no doubt continue to spread and strengthen. “People are living longer,” says Argyropoulos. “So they want to make a difference while they’re alive. They want to be able to realize their dreams while they can.”

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