• Nonprofit Learning Lab

The State of Consumer Wealth & How to Engage with High-Net-Worth Individuals

At APRA’s 2021 Prospect Development Conference, Arup Banerjee, Windfall’s CEO & Co-founder, shared on the current state of consumer wealth and how to engage with the high-net-worth population. To help development professionals understand affluent donors in 2021, we covered:

  1. Macroeconomic Trends Related to Luxury Goods and Services

  2. Consumer Wealth Trends

  3. Creating a Data-Driven Engagement Framework for High-Net-Worth Individuals

  4. How Windfall’s Customers Have Applied Our Data and Modeling

Windfall is uniquely equipped to handle these topics; our mission is to help organizations better identify, understand, and engage the affluent. We provide precise net worth data on affluent households, which we define as having more than $1 million in net worth. Unlike legacy data vendors, which tend to be less than 50% accurate and refresh their data infrequently, Windfall uses proprietary machine learning algorithms to accurately calculate net worth and refreshes our underlying data every week.

In this post, we’ve summarized the most important themes from this webinar.

Macroeconomic Trends Related to Luxury Goods and Services

To truly understand affluent individuals and changes in consumer wealth, our team looked at macroeconomic trends in addition to our own wealth data. In our macroeconomic analysis, we evaluated industries that are popular with high-net-worth individuals: luxury, hospitality, and finance.

The luxury market lost value in 2020, but the S&P Global Luxury Index, which includes 80 of the largest publicly traded luxury goods and services companies, outperformed the S&P 500, growing 31% vs 12.3%. Although luxury took a hit in 2020, investors clearly anticipate a robust rebound for luxury in 2021 and beyond.

Source: Yahoo Finance, 2021.

Another bright spot is the hospitality industry, which is experiencing a boom after a slump in Q2 2020. For instance, short-term rental occupancy levels are 400% higher than they were at the same time in 2020 and 50% higher compared to 2019.

Source: Transparent, 2021.

On the other hand, when it comes to financial services, the outlook is mixed. While investor sentiment was positive in late 2020, it turned bearish in Q2 of 2021. But this obviously doesn’t tell the whole story. For instance, alternative investments were flat in 2020, but we’ve seen growth in this marketplace in the last 6 months and we anticipate considerable growth in this sector over the next few years.

Source: Prequin, 2020.

Consumer Wealth Trends from Windfall

While the outlook for these industries tends to be positive, there are still unanswered questions for nonprofits. Which of these consumers is bullish? How can nonprofits tap into this accumulated wealth? Where should they focus their energy and efforts? To answer these questions, Windfall looked at our own wealth data.

Because we refresh our data on a weekly cadence, we have the unique ability to understand how wealth has changed over time. In this case, our data indicates that, since March of 2020, affluent households actually amassed even more wealth compared to previous recessions. Specifically, Windfall’s unique wealth intelligence shows the following changes over the past 16 months:

  • 24.2% increase in HNW households

  • 30.8% increase in total wealth held by HNW households

  • ~68% of US wea