The January in April Mystery

This full-page ad keeps popping up in our local paper, and that’s downright odd for several reasons: 

1. Hardly anybody runs full-page newspaper ads these days. January’s stands out like a a sumo wrestler at a toddler's birthday party.

2. January Capital Advisors is based in San  Francisco and run by three broker/advisor/insurance agents. The company offers wrap programs and individually managed accounts. As of three years ago they managed about $161 million. Why are they seeking clients on the Atlantic seaboard?

3. In these volatile times, investment advisers brave enough to tell nervous wealth holders, “Don’t just do something, stand there!” have gained admiration. Number crunchers point out that active trading and market timing are good therapy but too often bad for wealthbuilding. According to its Form ADV, January seems to prefer high portfolio turnover, guided in part by technical analysis, with holding periods of a year or less. In other words, don’t stay the course.

4. January is awfully late to the party. This area, known for its relative affluence, is drastically overstocked with investment advisers and wealth planners. Hundreds and hundreds! Maybe thousands.

The Man Who Reshaped Trust Marketing

Thomas J. Stanley, 1944-2015

A generation ago, marketers of trust and investment services believed the ways to find wealthy prospects were obvious. Look for those with visibly high incomes. Target mailings to zip codes containing the most expensive homes. Watch for people who drove top-of-the-line Mercedes or threw lavish weddings for their daughters.

Then along came a professor from Georgia, brandishing research. The marketers had it wrong. 

Many big spenders were simply spending their big incomes, Thomas Stanley asserted, not accumulating wealth. Big hat, no cattle.

Many wealth accumulators, by contrast, shunned conspicuous consumption. They didn't act rich. They lived in ordinary houses, drove ordinary cars, wore ordinary clothes. They looked like the people next door.

Year after year, Stanley filled hotel ballrooms, delivering his contrarian message to gatherings of trust officers, brokers and investment advisers. In 1996 he and a colleague, William D. Danko, published  their bestseller, The Millionaire Next Door.

Both The Washington Post and The New York Times offer tributes to Stanley, who died recently in a car crash. William J. Bernstein, in his primer for millennial investors, calls The Millionaire Next Door "the most important book you'll ever read." 

Searching For The Middle Class

What do the following jobs have in common?

Municipal purchasing director
High school guidance counselor
Registered nurse
Real estate broker

All are now "working-class" occupations. So says this NY Times article on racehorse investors.

To find today's middle class perhaps we have to raise our sights. Some big-city professionals making $300,000-$400,000 or more feel financially pressured and want to keep their Bush tax cut. Are they middle class, or merely upper working class?

Maybe we should look higher still, to The Middle-Class Millionaire. Financially speaking, people with investable assets of $5 million or $10 million might better be called lower upper class. Whatever you call them, writes James Surowiecki in The New Yorker, they have reason to envy the rich … and the very rich … and the unbelievably rich. Surowiecki illustrates in terms of income:

People in the ninety-fifth to the ninety-ninth percentiles of income have represented a fairly constant share of the national income for twenty-five years now. But in that period the top one per cent has seen its share of national income double; in 2007, it captured twenty-three per cent of the nation’s total income. Even within the top one per cent, income is getting more concentrated: the top 0.1 per cent of earners have seen their share of national income triple over the same period. All by themselves, they now earn as much as the bottom hundred and twenty million people. So at the same time that the rich have been pulling away from the middle class, the very rich have been pulling away from the pretty rich, and the very, very rich have been pulling away from the very rich.

Taxation traditionally pits the have-nots against the haves. This time feels different. Soon the lame duck Congress will restart the debate over income tax cuts and the existence of the estate tax. Even the have-a-lots may be envious enough to agitate for heavier taxes on the have-it-alls. More than likely, the argument will continue to rage when the new Congress convenes

•

Marketing note: “Middle class” is a state of mind, not a status measured by income or wealth. You can't assume that one $5-million prospect is like another. Some are proud of their rise from rags to riches and expect you to kowtow. Others may insist on being treated like just plain folks. Middle class folks.

Two Marketing Masters Named Cohen

Steven A. Cohen, the billionaire hedge fund manager, is the subject of this Bloomberg profile. His funds account for about 1 percent of all the trading on U.S. exchanges.

Steve Cohen, "the Millionaire's Magician," was featured in yesterday's New York Times.

Clearly, both Cohens have mastered the art of marketing services to the wealthy. Hoping to master the art yourself? Consider both articles required reading.