Something I once read likened the lives of high net-worth individuals to all others attending a sports event. Although some fans are in the bleachers while others are in luxury boxes, everyone is watching the same game at the same time. How to "upgrade" your seat?
Understanding the rules of the high net-worth space are easy. Exclusivity and privacy prevail. That said, it is easy to understand why there has been a reluctant migration to social media sites for high-net worth individuals. While "mainstream" social networking sites have become commonplace for the fans in the bleachers, the trickle down from social networking sites to the high net-worth has been slow for the most part. According to Milton Pedraza, CEO of the Luxury Institute, "Its taken a while for wealthy consumers to be using networking sites, mostly due to privacy issues and concerns." Luxury Institute is a NYC-based research firm which focuses on high net-worth individuals. Pedraza goes on to say, "Now they want to leverage all of those social-networking advantages. In the past, most needed to attend many annual international meetings but now they can connect to like-minded people in Dubai or anywhere in the world in an instant."
Peer-to-peer insight is available for the high net-worth on exclusive websites such as: A Small World, or Quintessentially. There is also a growing number of private member forums such as Institute of Private Investors (IPI) Memberlink. These like-minded subscribers are looking to exchange information on advisers, fees, tax strategies, insurance/legal matters, succession planning, and any number of lifestyle topics such as luxury travel, entertainment, family governance issues, etc.
Even areas formerly clandestine like private equity and venture capital have ventured in to the social media area due to the ability to grease the dealflow pipeline to allow investors and money to "meet-up" in a vetted forum. It allows for more targeted funneling of investment money to be allocated to specific deals. David Teten and Chris Farmer report in the June Issue of Harvard Business Review that social media is a "best practice" among more than 150 venture capital and private equity firms surveyed.
More and more specialty sites are starting up to link the affluent with a variety of service providers and other like-minded people. Striking the balance between the two and coming up with a successful revenue model without "selling" out your members is key. Some firms have annual fees to forego accepting advertising. And others accept fees for referrals, etc.
If any of you reading through this article is thinking of joining any of these groups, remember that you probably have to know someone who matters. For some sites, you need a recommendation from a member and others you must complete a rigorous vetting process. These sites spend a tremendous amount of time selecting the right members as those are the gate-keepers for the next group of invitees and so on.
As usual, you can tell them "April sent you" although you may be asked, "April who?"