NEW YORK, NY--(Marketwired - Feb 17, 2015) - According to a metadata analysis of the Federal Reserve's 2013 Survey of Consumer Finances by the New York-based Luxury Institute, luxury firms face challenges despite a jump in the number of high net worth households worth five million dollars and above.

On the surface, the demographics are encouraging. The number of U.S. households earning at least $200,000 with a minimum $5 million net worth grew 19% to 1.8 million between 2010 and 2013. That exceeds the previous peak of 1.7 million households meeting these wealth and income minimums in 2007.

One potential headwind for 2015 is sensitivity of high net worth consumers to changes in the value of assets they own. Despite favorable stock and real estate market performance since 2008, caution is still high among a majority of the wealthiest households, dampening the urge to spend. More than 40% of high net worth consumers acknowledge that they spend more when their assets appreciate, but a whopping 71% say that they rein in on spending when markets fall despite their wealth.

One other reason for caution, for luxury retailers in particular, is that 72% of Pentamillionaire households are headed by someone at least 55 years of age, and 39% are headed by someone 65 or older. These older consumers tend to buy less luxury goods and acquire more experiences, such as travel, as they get older. High net worth households meeting these criteria have an average net worth of $14.2 million and hold nearly $700,000 in liquid accounts.

"The very wealthy will always be spending even though they are quick to cut in a recession and slower to increase it in a boom," says Luxury Institute CEO, Milton Pedraza. "The key for today's luxury goods and services brands is to understand the critical need of developing deeper and more meaningful customer relationships to avoid becoming a part of the spending that they decide to cut."

Since 2004, the Luxury Institute has mined Survey of Consumer Finances data to identify emerging trends that can impact companies serving a wealthy clientele.

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Katherine Sousa