Archive for the ‘Accredited Investors’ Category

Attracting the Affluent Through Smart Offers and Targeting

Wednesday, May 17th, 2017

alc_wealth_window_luxury_credit_card-300x198As we all know, the battle to attract affluent consumers can be intense. Naturally, having great consumer insights is key to winning. Therefore, it’s valuable to understand what strategies credit card companies are using to acquire new customers, since card marketers have a very rich understanding of consumer behavior and spending habits.

So what’s happening these days in the credit card category?

While American Express has long been a dominant player, and continues to innovate, other financial institutions are realizing the value of affluent consumers and have developed prestigious cards with rich rewards to attract them.

In November, Chase made a concerted effort to attract affluent customers using powerful data strategies and highly-lucrative acquisition offers for the launch of their flagship card: The Chase Sapphire Reserve. The card offered an unprecedented 100,000-point sign-up bonus, plus many concierge-level benefits. It worked. Within months, 900,000 people applied for the card, despite an expensive $450 annual fee. (In fact, the acquisition appears to have been too rich: Chase has since reduced the sign-up bonus to 50,000 points.)

Not to be outdone, U.S. Bank recently released their own luxury card. It features a sign-up bonus of 50,000 points as well as many of the same travel-oriented benefits that made the Chase card so successful.

American Express, the longtime luxury leader, also responded to category activity by increasing the benefits of their Platinum Card.

So… what can we learn from credit card marketers?

The bar to attract affluent customers continues to increase. Luxury brands are willing to entice consumers with ever-increasing offers and enhanced services. However, given the increased costs of these services, brands must be really smart about their data targeting and offer strategies.

Hopefully, you are deploying new, smarter data strategies – aligned with consumer wants and expectations – to build your business. As always, we at Wealth Window, are here to help you pinpoint the exact customers, exhibiting the exact behavior you need, to craft messaging that will resonate effectively. My prediction, if you use Wealth Window, success is in the cards for you.

The Definition of “Accredited Investor” Will Remain the Same

Friday, April 10th, 2015

SEC committee advises that “accredited Investor” definition should remain at $200-$300K HHI & $1M net worth.

SEC committee advises that “accredited investor” definition should remain at $200-$300M HHI & $1MM net worth.

Good news for startups and budding enterprises seeking investment from angel investors…

The SEC recently heard from its Advisory Committee on Small and Emerging Companies regarding Recommendations in the Case to Change the Definition of Accredited Investor.” There was talk about raising the bar to $500M HHI and net worth to $2.5MM, which would have decreased the number of individuals that marketers and growing companies could target for investment capital.

Here’s the main takeaway: The committee found little or no evidence to suggest that the existing definition of accredited investor has led to widespread fraud or other harm to investors.” Quite the contrary, they found “substantial evidence to suggest that the current system works and is critical to the support of smaller public companies and emerging companies.”

The SEC will continue to collect data on the subject, but suggests that the focus should be more directed to enforcement efforts and increased investor education rather than raising the threshold of income and net worth. In fact they felt that raising the bar would have a disproportionate effect upon women and minority entrepreneurs.

Recognizing the importance of small and emerging companies as drivers of the economy and their reliance on raising capital from accredited investors, the SEC is taking a “do no harm” approach so as not to shrink the existing pool of accredited investors (and the pool of capital they bring to the table).

Currently, accredited investors must earn an annual income of at least $200,000 alone or $300,000 combined with one’s spouse, or a net worth of at least $1 million (excluding the value and mortgage debt of his or her primary residence).

While swindlers like Madoff may unfairly damage the reputation of investment opportunity pitches in general, in the angel investing community fraud is virtually unknown and next to impossible to perpetrate says Christopher Scott McCannell of the Angel Capital Association. “Entrepreneurs make their pitch to angel investors who research companies, analyze economic potential and invest capital after due diligence.”

This brings me back to the idea of enforcement. I’m not sure what that looks like on the government side, but I suggest that marketers seeking accredited investors do their own due diligence. They must make certain that their data providers verify that all individuals are in fact bona fide accredited investors.

A reputable accredited investor data provider should:

  1. Vet the data that they collect and append from each source.
  2. Double and even triple verify the information across multiple sources.
  3. Perform outside audits that confirm the accuracy of the data.


In a sense, financial marketers seeking individuals with the means to fund startups and help entrepreneurs must look for “accredited data providers.” Ask questions about the data and who may currently be using it. Are there any case studies that can be produced? Ask for references.

If the government specifically states that “enforcement” is the road to take to eliminate the potential for fraud in the accredited investor sector, then you will want to a data provider with a sterling reputation. On top of being in compliance with rules surrounding the marketing of financial services to accredited investors, you will be working with the type of quality data that can yield the ROI that financial marketers watch ever so closely.

The Rising Tide of Mass Affluence Among Women

Wednesday, February 4th, 2015

Women are experiencing a rise in female mass affluence and are prime prospects for luxury marketers and financial service providers.

America is seeing a rising tide of affluent women becoming captains of their own ships.

Now that women control half of the private wealth in the country,* it’s time for financial service providers, luxury real estate marketers, non-profits seeking high dollar gifts, and every other purveyor of upscale goods and services to focus on them.

Over 41% of Americans with incomes exceeding $500,000 are women. By 2020, women will account for $22 trillion in spending as wealth continues to shift from men to women. There are numerous reasons for this trend. Here are the top 3 that I can see:

Constituting half of the U.S. workforce, women are empowered to take charge, “lean in,” and demand more pay. In fact, two out of five working married affluent women age 40-69 report that they earn the same or more than their husbands. Yet when it comes to investing, they lack confidence. An overwhelming majority say that it is important women have confidence in their ability to invest, but only 8% say they are. Clearly this presents a huge opportunity for financial advisors to specifically reach out to affluent female investors.

There’s a large and growing leadership of elite female role models soaring to new heights in formerly male-dominated business sectors. Here are just a few that quickly come to mind:

And that’s just the tip of the iceberg. A society where women can rise to the highest levels of net worth makes it possible for women in general to attain mass affluence. This rising class of self-made professional women is making a huge impact on the economy. It’s a force to be reckoned with and I suggest that a good start is to speak to affluent women as primary decision makers in a voice that will resonate with them.

* Source: The Power of the Purse: How Smart Businesses Are Adapting to the World’s Most Important Consumer – Women

Follow the Money to Cuba

Friday, January 16th, 2015

Wealthy Americans will capitalize on softening relations with Cuba in travel, real estate and import/export.

Wealthy Americans will capitalize on softening relations with Cuba.

With the loosening of the US embargo on Cuba and the removal of many travel restrictions, you can be sure that wealthy Americans will quickly take advantage of new opportunities. First off, many are clamoring to travel there right away. According to an article published by the Associated Press, “The few US companies facilitating travel to Cuba say inquiries have exploded since December.”

Additionally, with the easing of restrictions to certain sectors of trade and investments, Cuba will be attracting investors who want to get in on the ground floor of what could become a complete lifting of the embargo in the future.

Other Financial Implications of the Softening of Relations Include:


The News Has the Art World Buzzing

This formerly isolated nation simply bursting at the seams with creativity is seen as the next hot market in art. In a recent two-week period, a record $2.3 billion of Cuban art was just auctioned. According to Alberto Magnan, a Cuba-born NYC Gallery owner, thawed relations will have a huge impact because Cuba was a limited market in terms of who was even able to see the art. “That number now will become huge,” he said.

Opening the Flow of Luxury Goods

Trade restrictions with Cuba have been eased allowing agricultural equipment, building materials and goods for private-sector Cuban entrepreneurs to be exported from the US. Import restrictions have also loosened, with licensed US travelers authorized to bring Cuban goods (read: cigars) back to America, purchased with their US credit and debit cards. You can bet that wealthy opportunists will capitalize on the friendlier relations between Cuba and the United States.

Real Estate Investment Will Surge

It’s just a matter of time when Cuba opens up completely to American tourists and accommodates their penchant for luxury accommodations. “You’re going to see American hoteliers doing their best to find potential properties in Cuba,” says Steve Loucks, Chief Communications Officer of the Travel Leaders Group. “Four-star resorts don’t go up in a day…but we’re very positive about the potential.”

The good news for marketers is that Cuba is close and now you can have the cigar. You just need to get that message into the hands of wealthy travelers and affluent investors.

Raise the Bar in Targeting Accredited Investors

Monday, June 30th, 2014

Target high net worth in marketing to accredited angel investors.

Time to raise the bar in marketing to high net worth, accredited investors.

As the Dow, S&P and Nasdaq steam ahead, consumer confidence is actually at its lowest point since 2008. The recession has proven to have a lasting impact by showing people, the rich included, what’s essential and what’s not. It appears that the wealthy today are focused on acquiring more stocks, not buying more fancy material possessions.

I suspect that those powering the markets forward are quite financially sophisticated, many of whom could be considered accredited investors with access to investment opportunities that others are barred from. Based on proof that such an investor earns at least $200M or has a net worth above $1MM, they can fund private ventures considered as possibly too risky for those with lower household income or net worth.

The rule (#504 of Regulation D) designating this income level was made decades ago. And only just a year ago did the SEC begin allowing public advertising and solicitation of Regulation D offers (private securities) to accredited investors based on those figures. So while it is legal to pitch private business investment opportunities to individuals earning $200,000, it would be wiser to target those with very high net worth and the liquid capital to put some skin in the game.

A six-figure income is nowhere near what it used to be when rule 504 established the necessary income level to be deemed “accredited.” To keep it simple, let’s use $100,000 for example. In the 80’s that would buy you a very nice house, college education for the kids and leave enough leftover for family vacations. Today, you’d need $279,000 to enjoy the same purchasing power that  $100,000 afforded in 1980.

Investors with less than a million in the bank, but earning $200,000 are probably not in position to provide seed money for the next big thing. To be willing to stake a new business startup, most investors have a sizeable, well-balanced portfolio with liquid capital. In other words, very high net worth.

Meanwhile, beginning this year the SEC is required to review the “accredited investor” definition in its entirety and consider raising the bar as it views appropriate for the current economy. That’s a strong indicator that marketers seeking accredited investors should raise their bar staring now.

Sourcing the Right Crowd for Investment Opportunities

Tuesday, April 22nd, 2014

crowdfunding investors

Crowdfunding is giving accredited investors direct access to entrepreneurs.

There’s a whole new level of crowdfunding and participants are looking for big returns, not just mentions or prizes. Let’s call it “crowd-investing.” It’s quickly taking shape in real estate as many investors are jumping onto new real estate crowdfunding platforms.

Through a provision in the recent JOBS act, entrepreneurs can now advertise private investments to accredited investors who earn at least a $200M annual income and possess more than $1 million in net worth.

Earlier this year Realty Mogul announced a $9 million crowdfunding round whereby  accredited investors pooled their resources and bought shares of investment properties. It’s similar to investing in Real Estate Investment Trusts, but unlike REITs investors know specifically what they are investing in such as office buildings, retail space and residential properties. In addition to investment returns, investors can claim real estate depreciations on taxes.

Forbes has gone as far as suggesting that crowdfunding may reshape the whole real estate investment model. Where entrepreneurs traditionally had to raise capital through banks or professional investors, they can now go directly to people with money to invest. This democratizing of the process allows individuals outside of institutional funds to invest in real estate properties paving the way for entrepreneurs to more easily secure capital.

A similar sea change is taking place in the entertainment world where accredited investors and high net worth individuals have the opportunity to back a movie. The film investment company Junction has been called “Kickstarter for the rich” and rewards investors based on their contribution to a film. Two films currently funded by Junction include some big Hollywood names — A Hologram for the King starring Tom Hanks and Triple Nine starring Chiwetal Ejifor, Kate Winslet and Woody Harrelson.

As in real estate, filmmakers can take their projects directly to people with money to invest thereby accessing capital more quickly than seeking bank loans or the backing of a big studio. The holy grail of this type of investor is the “angel” who’s willing to stake a filmmaker whatever it takes to get the movie produced. In many cases, the investors can play a role in the film making process.

A few recent developments have made online crowd-investing possible.

1)   The SEC lifted a decades-long ban on general solicitation. Prior to this, entrepreneurs could not try to raise money from investors with whom they did not have an existing relationship.

2)   Self-directed online investing has become the norm that entrepreneurial companies can capitalize on by pooling money from individuals who buy shares in the company or specific projects.

3)   Through new web platforms, investors can browse and screen investment opportunities, view details of the investment and sign legal documents online.

The key to success in crowd-investing is acquiring and retaining a list of accredited investors open to the concept of crowdfunding, which is no easy task. Before you solicit funding for investment opportunities via mail or email to a prospect list, make sure you ask two very important questions of the prospect data provider.

a)    Do you have accredited investors?

b)    Do these investors have a history of making crowdfunded investments?

Marketing to accredited crowdfunding investors will make all the difference in your ROI. Finding an angel or two among the group willing to bankroll a project can quickly spell success. These types of prospective investors are very difficult to identify, but when you do, they can send your operating capital through the roof.



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