Where the wealth goes: High-end businesses benefit from new ND millionaires
FARGO -- Some businesses that cater to the wealthy are feeling a flush of success, thanks in part to North Dakota's new millionaires. A recent report found North Dakota has one of the fastest growing rates of millionaires in the U.S., largely due...
FARGO - Some businesses that cater to the wealthy are feeling a flush of success, thanks in part to North Dakota’s new millionaires.
A recent report found North Dakota has one of the fastest growing rates of millionaires in the U.S., largely due to oil production and a continued strong farm economy.
Rankings by Phoenix Marketing International show North Dakota jumped 14 spots last year to 29th in the ratio of millionaires to total households. A study commissioned by the Fargo-based Impact Foundation predicts that growth will continue. It estimated the number of millionaires in North Dakota could grow to 60,000 by 2061, or 22 percent of all households.
While some of that money is spent at businesses that offer high-end goods and services, many new millionaires also choose practicality and charity over luxury.
“We don’t see people spending their new millions on clothing,” said John Stern, owner of Straus Clothing in Fargo. “They’ve never had money before and are afraid they’ll never have it again.”
Driving in luxury
When you think luxury or extravagance, you might think of German-made cars such as Mercedes-Benz, Audi and Porsche. Valley Imports in Fargo sells them, along with the more affordable Mitsubishi and Volkswagen, its largest volume line.
General Manager Jeff Richmond says typical buyers of higher-end vehicles are business owners, doctors, lawyers and younger people in the technology industry.
“So many more people in our community can afford them,” in part due to the work of manufacturers’ lending arms, Richmond said.
One car available to the upper tier only, however, is Porsche.
Top of the line is the Porsche 918 Spyder for about $850,000. The Porsche 911 GT3 goes for $170,000 to $200,000.
Valley Imports sells only a handful of both, because as a low-volume dealer, it gets a small allocation from the manufacturer.
“Probably one or two a year,” Richmond said.
And, those buyers might not be local; Valley Imports sells vehicles all over the U.S.
One thing that sets Porsche apart from other German-made cars is that they don’t ‘package’ their content. “Everything is an option with Porsche,” Richmond said.
Richmond enjoys seeing the customer’s excitement, adding that it’s almost as much fun ordering the car as it is taking delivery of it.
For Mercedes-Benz and Audi vehicles, Richmond’s frequent customers are local physicians. Often, they’ve moved from warmer climates and haven’t experienced Fargo’s seasons.
“They get this puzzled look on their faces” when they’re advised to get a vehicle with all-wheel drive, Richmond said.
“They sure are glad when they have it,” he said.
A chef all their own
It may seem over the top to hire a private chef, but Sara Watson said it’s not just for the famous.
She and her husband, Eric Watson, own and operate Mezzaluna restaurant and Mosaic Foods catering in Fargo. They’ve made many a meal for the well-to-do.
“Some of our clients have beautiful kitchens they don’t use much,” Sara Watson said.
Busy families that need meal help are also hiring private chefs, she said.
Watson will sometimes refer former employees for that kind of work. She said one woman goes into a local family’s home three times a week to cook while they’re at work.
“She takes care of all the grocery shopping and meals,” Watson said. “She puts the food in the fridge, labeled, so they just pop it in the oven.”
Watson doesn’t know how much that private chef charges, but she puts a ballpark cost of five dinners a week for a family of four at $200 to $250, including food, meal planning and preparation.
Watson also knows of half a dozen people who cook in private homes part time, but are also working chefs.
“They’ll do it as a favor for a favorite client,” she said.
Rising personal wealth and an improved economy also affect the couple’s catering business.
Watson said five years ago, in a struggling economy, corporations doing big parties tightened their budgets. “That’s all coming back.”
The influx of cash can be seen at weddings, where some couples spend up to $12,000 on food, Watson said.
“That’s extravagant for a 200-person wedding,” she said.
The type of food she prepares has also changed, with people asking for lobster and expensive cuts of beef.
“Not so much chicken anymore,” she said.
Making a unique home
When people of means are looking for something unique, exotic or custom-made for their home, they may have trouble finding it in the Fargo-Moorhead area.
“We don’t have the resources here for what a lot of people are looking for,” said Kari Bucholz, owner of by Design, an interior design firm in Fargo.
So she travels and pores over catalogues to find those items. Bucholz goes to the international furnishing market in High Point, N.C., twice a year and to the international market in Minneapolis.
“All of my stuff is custom-ordered on the client’s wishes,” she said. “If they want a sofa but it’s 72 inches long, we can have it custom made at 68 inches, change the fabrics, change the cushions, change the legs or add trim.”
Some of the more extravagant requests have been kitchen cooktop hoods made of custom metals and stone that can only be delivered and installed by the manufacturer, carpet from Australia, countertops containing real gems and Italian flooring tiles dipped in gold.
“Obviously, that’s not for high traffic areas, but for looks only,” Bucholz said.
And for those who want something no one else has?
“We work with companies that will make pieces from scratch,” Bucholz said.
Not ‘North Dakota way’
John Stern of Straus Clothing in Fargo stressed that most of his clothing is “affordable.” Part of his business, however, is custom-made suits that go for around $1,300.
Stern said those customers are either looking for unique colors and fabrics, or they have a body type that doesn’t lend itself to off-the-rack clothing.
They’re customers who wear suits to work every day - attorneys, accountants, bankers and entrepreneurs.
But as for those who have become new millionaires by way of oil, Stern said he hasn’t noticed any great uptick in spending, and he has many customers from Bismarck, Minot and Dickinson.
“Maybe someone goes to Bergdorf Goodman in New York to buy an Armani suit,” Stern said, “but we don’t see it out and about.
“It’s not really the North Dakota way,” he said.
Sharing the wealth
What is the North Dakota way, however, is sharing one’s good fortune.
Pat Traynor, president of Dakota Medical Foundation and executive director of Impact Foundation, said folks who were big donors before are becoming more generous.
“We’ve been seeing it picking up in just the last year,” Traynor said.
Some of that can be attributed to accumulation of wealth in the strong agricultural sector.
A disproportionate number of millionaires in North Dakota are farm or ranch owners, according to the 2010 Survey of Consumer Finances.
The survey said 14.8 percent of heads of millionaire households in North Dakota were farm or ranch owners, compared to just 2.3 percent nationally.
The increase in giving can also be attributed to families reaping the benefits of mineral rights.
“Royalty incomes are starting to accumulate and families are deciding they have more than enough to support their lifestyle and children,” Traynor said.
The future looks even brighter, according to the Impact Foundation study that estimates more than one in five households in North Dakota will be home to a millionaire by 2061.
The study, “Endless Possibilities on the Prairie: Unleashing North Dakota’s Great Potential,” estimates the transfer of wealth in the state from 2007 to 2061.
It shows the potential for charitable contributions in North Dakota is about 20 percent greater per household than in the rest of the country. It predicts North Dakotans will give $95.3 billion to charities over the nearly 55-year span.
Traynor is not a bit surprised by the sharing of wealth.
“Folks around here are generally kind and caring,” he said. “They’re very industrious and have a strong work ethic and faith.
“I’m really bullish on the future.”