Where O.C.'s Wealthy are Investing

Claritas in the News

Orange County Register
July 6, 2007
John Gittelsohn

There were 9.5 million households in the world with $1 million to invest in 2006, according to the new World Wealth Report by Merrill Lynch and Capgemini. That figure ’ cash, stock, bonds, 401-k plans and real estate, not including their first home ’ jumped 8.3 percent over 2005. In Orange County, Claritas, a market research firm used by Merrill, reported 42,120 families with $1 million to invest, up 16.2 percent over 2005. Merrill Lynch's six offices in Orange County have $24.2 billion under management. Jodi Rolland, Southern California managing director of Merrill Lynch's Global Private Clients division, talked with Register reporter John Gittelsohn about how the rich are different in Orange County. Some excerpts:

Q. What's behind the increase in the number of wealthy here?

A. It's very similar to the World Wealth Report across the U.S. with one addition. It's really about the fact we've experienced GDP and market capital growth. We've had positive markets with the addition of wealth in real estate.

Q. How do high net worth people in Orange County differ from those in other places?

A. People have made a lot of money in real estate, and we see them lightening up in real estate now, and that's creating profits to invest in other ways. People here are very global in their investment approach. The other thing is the use of philanthropy for the wealthy. I think it's more pronounced in Orange County. Philanthropy is a big concern. Legacy planning is a big concern. Clearly with 42 miles of oceanfront, being socially responsible is a concern. Another concern is the next generation, how their kids handle the wealth and what impact it has on them. Our clients asked us to do training and coaching for kids.

Q. Where do people get their money?

A. Some people come here for business, because it's a great place for entrepreneurs. Other people come because it's a wonderful climate. We've got a lot of money migrating here for those two reasons. A lot of wealth is created here, around business and the real estate industry and real estate as an investment.

Q. How do your clients make money?

A. There's a fair amount of everything. Clearly, we're in the midst of a big asset transfer from the older to the younger generation. A lot of people are self-made entrepreneurs; they start small companies and make a lot of money.

Q. What type of investments are they looking at?

A. Clearly, they're into global-type vehicles. They've all seen alternative investments ’ private equity, hedge funds. We see across the U.S. people lighten up on those and add more real estate. In Orange County, we see more alternative investments and more caution in real estate.

Q. What are people doing to protect their wealth?

A. In the past, people stuck with stocks, bonds and cash. Today, it's stocks, bonds, cash, real estate and alternative investments. People are adding global investments to insulate their risk. There hasn't been a bigger move to bonds, but people are cognizant of what they need to take as a hedge. There's a shift to quality ’ higher quality bonds, large cap stocks, high quality companies. There's investing in defensive sectors, health care and consumer goods. They are also buying companies that pay good dividend income.

Q. What are some of the demographics of people of high net worth?

A. The color and look of money is changing. Clearly, it's more diverse. The amount of wealth controlled by women is substantially higher. Specifically in Orange County, there's growth in the Asian and Hispanic demographics. We don't have age demographics.

Q.You mentioned concern about philanthropy. How does Orange County differ from other places?

A.It's amazing the number who are philanthropically inclined. In other markets I've worked, I see the older generation. Here, we see a lot of younger people at charity events. Arts charities, like many of the performing arts, the opera and the symphony tend to be older. But I look at United Way, Make a Wish, the Orangewood Children's Foundation and other organizations that deal with kids and health, and I see a younger generation getting involved.

About Claritas

Since 1971, San Diego-based Claritas has been the pre-eminent source of accurate, up-to-date marketing information about people, households and businesses within any geographic area in the United States. Its target marketing services are aimed at reducing the cost of customer acquisition and growing customer value. Claritas offers industry-leading consumer segmentation systems, consulting services and software applications for site analysis, advertising sales and customer targeting. Claritas is a Nielsen company. The Nielsen Company is a world-leading information and media company that includes ACNielsen, Nielsen Media Research, Spectra Marketing Systems, and Scarborough Research, among others. To learn more about Claritas and Nielsen products and services visit their web sites at www.claritas.com and www.nielsen.com.