Mykolas Rambus CEO, Wealth-X
in conversation with
Pandora Mather-Lees, Director, IORMA Luxury, February 2015
Wealth-X is unique in providing curated research, intelligence and prospecting data on ultra high net worth (UHNW) individuals, defined here as those with net assets of over US$30 million.
This is also a cash rich segment and we are witnessing the luxury sector growing. The richest individuals are also getting disproportionately richer and increasingly discerning about how they spend their money.
Understanding this segment is therefore crucial for many. The Wealth-X database has therefore become the standard for financial institutions and luxury brands who need to obtain information critical to their strategic planning.
Headquartered in Singapore, Wealth-X has 13 offices on five continents and has just announced the acquisition of Ledbury Research, the London-based wealth market research and advisory firm bolstering its ability to offer greater intelligence on this sector and the UHNW individual.
Mykolas Rambus leads the business with immense energy and focus atop a relentless travel programme visiting clients to assist them in utilising the information and insight for maximum returns. I asked Mykolas about the Ledbury acquisition, his schedule, and the recently published Wealth-X and UBS World Ultra Wealth Report, one of several studies the firm publishes annually.
PML: First of all, congratulations on the announcement of the Ledbury Research acquisition. Can you tell us what this means for the market and your clients?
MK: We are excited about this acquisition and what we can offer our clients. Combining Ledbury’s unique market research with Wealth-X’s proprietary data places us in an unrivalled position to address our clients’ most strategic needs. I believe, this offers us an unrivalled global reach, depth of wealth intelligence, analysis and insight. It also demonstrates our commitment to better service our clients in Europe, the Middle East and Africa – while bringing increased value to our clients globally.
PML: By way of introduction could you tell us about your own background and how you came to run Wealth-X
MK: Back in 2001, I was co-founder of a mobile advertising business that was too far ahead of its time. It became extremely challenging so when opportunity came up at Forbes, I decided to take it. I was responsible for a number of areas and one of those was to understand Forbes’ audience and The Forbes List.
By 2008 it became an extremely tough time for publishers. Digital was becoming very established and publishers were not having a great response. Overnight we found that revenues were down by double digits and budgets were being cut. Therefore out of necessity we had to look at where the business needed to go and to understand the likes of Bloomberg, Fortune and the business media magazine sector. They were doing ok and we found that what was working for them was that the business model was based on an annualised subscription model and it became clear that to succeed in serving the business professional we needed to find something that would work on a subscription basis.
What was growing at the time was people data and information about the world wealthiest people. Business professionals and organisations were willing to invest large sums of money for that one golden nugget of information, insight or intelligence to help them foster a new relationship. So that was how Wealth-X was formed in understanding that there is this most valuable consumer group in the world. Surprisingly it had never really been investigated before, properly, from an inside perspective, only with a small number of individuals. We realised that luxury brands would love to have this information and were prepared to pay for it.
PML I understand you are travelling the globe as an ambassador for Wealth-X. Could you tell us a little about your day to day life?
MK: Indeed; I am CEO of Wealth-X globally and I am fortunate to sit on sidelines and observe what is currently the most interesting period of wealth in the world. I am working around the world; however, looking at the East, Singapore and Hong Kong where I spend lot of my time, I find that we are seeing the beginning of a 150 year wealth creation cycle.
What we saw happening in the United Kingdom and the US we can now watch all of those historical variables ringing true; natural resource, money and families as well as the infrastructure transitioning to services such as banking and retail. So I am able to do that and to share that insight with our clients and the community at large.
Similarly if you look at what is happening in the West, Europe and North America we are also on the verge of the largest wealth transfer. We are witnessing adults who have amassed great wealth, passing it on their wealth to their adult children. First and foremost, my work involves having that insight and sharing exactly what is happening – with families, with industries and with various geographies around the world.
Beyond that I am focused on our clients. We like to say at Wealth-X that our objective is to focus on the commercial objectives of our clients. So however I can assist our clients to better understand the marketplace and to build relationships and to work with one another to succeed, all the better. The thing I enjoy most is putting together our clients across vertical so that they can collaborate and succeed together non-profit, luxury and services all at once.
PML: So you actually bring clients together as a team so that they can approach high net worth individuals to work with them?
MR: That is correct. It could be as simple as a launch of a range or it may be deploying the Wealth-X database as a whole.
PML: I was excited to see the new World Ultra Wealth Report which has recently been released. How long has the research programme been running and what essentially is it?
MR: The Wealth-X and UBS World Ultra Wealth Report 2014 is part of a multi-year partnership with the Swiss bank that started in 2013. However, we started our own report since 2010, when the firm was founded. It is a report that provides global analysis on the world’s UHNW population: by gender, by wealth source, by region and by country. The analysis is all based on actual dossiers on individuals in these respective segments and estimates are based on our Institute’s analysis and evaluation.
PML: Could you tell us about your own reactions to the results? What did you expect and what surprised you?
MR: We expected to see growth but were surprised by some of the regional differences. For example, the UAE’s fast growth was not unexpected due to its strong market performance, but that it would beat other countries was. Likewise, China’s slow growth (though this time it was positive as opposed to last year) was disappointing. Other surprises like the role of technology in the United States’ wealth creation, puts proof to the constant hype over technology.
PML: Can you tell me about the public reception of the report and how businesses will be using this information?
MR: We are very excited about the collaboration with UBS and we have been doing this for several years. The industry at large uses it as a reference for strategic planning and business development. For instance, yacht sellers and high-end jewellery businesses may need to ask: how big is your market in London? Historically they have not been able to find this information. They would have known there was wealth but they did not know exactly how many ultra-wealthy people there are in London, for instance; what their background is; or how they can begin to think about aligning their own centres of influence with the market opportunity. Our wealth reports allow them to do that; to figure out market size, to do the gap analysis, and figure out what potential there is in their segment. This is how the industry uses the report: to understand exactly what -and where – the opportunity is.
PML: I was surprised to see that in Mexico UHNW women are twice as wealthy as their male counterparts. Would you care to comment?
MR: In Mexico City, 14% of the billionaires are female, but female UHNW individuals only account for 7% of the population (twice as much!) which explains this large difference. Inheritance plays a big role in this.
PML: It was also interesting that only 3% of the UHNW population of the United Arab Emirates has made its wealth through oil, gas and consumable fuels. Would you care to comment?
MR: Industrial conglomerates are the dominant industry in the UAE – 20%. Oil and gas is volatile, we’ve certainly seen this lately and Middle Eastern UHNW have developed diversified businesses to avoid having an overly vulnerable position. Within these industrial conglomerates, oil is generally significant.
PML: How do you envision the global luxury industry developing in the next 12 months? Do you have any particular insights?
MR: We expect growth in UHNW population to continue and with that continued growth in demand for luxury goods and services. We’re seeing experiential luxury becoming increasingly important and niche brands also developing fast.
PML: There is no typical UHNW luxury buyer profile, however do you see any obvious shifts in terms of where they wealth is moving in terms of demographics?
MR: I think we all know that Asia’s UHNW population is an increasingly important player when it comes to this industry. In fact, we see on average Asia’s UHNW individuals spend US$1.22 million on luxury, even more than American UHNW at US$1.20 million.
PML: And what about in terms of geographical and territorial areas?
MR: If we look at our forecast, we can see that over the coming five years, three areas are expected to grow particularly fast: Asia, the Middle East and Africa – in fact, at Wealth-X we believe we are still in the early stages of a shift in wealth creation from West to East.
PML: Please give me a fascinating fact about the luxury world?
MR: UHNW individuals account for almost 19% of the luxury industry’s revenue in the last year – across types of luxury – watches, jewellery, apparel, travel & hospitality, art, yachting and private planes, so this figure is fascinating. This is the most surprising fact from the report, that there are only 212,000 individuals who make up nearly one fifth of billions of dollars of luxury spending. The essence of luxury is about marketing, to see the landscape and see the marketplace and to understand the opportunity.
There is so much revenue and so much profit for the luxury brands, it is incredible. I use the analogy of baseball, which 15-20 years ago was driven by gut-feel. You may remember the movie, “Moneyball” with Brad Pitt? The story is one I love because it shows how another industry, historically run on guestimates and estimates, is now one which has transitioned and is driven by data.
If you think about digital marketing and even about the allusion to print marketing, this is where brands find themselves needing to go and we are excited about how the opportunity has changed over the years. It is like being able to have a road map for the first time.