Goldman Sachs, JPMorgan and UBS Launch New Brands to Lure Average Investors

… is nothing compared to its pre-acquisition attitude, which may have given JPMorgan a moment of pause:

Although we await how UBS might modify Wealthfront’s identity and messaging, curiously none of these robo-brands has yet been folded into its owner’s master brand. Might this be an error?

Declasséfication

Uppermost in the anxiety of any premier brand seeking popular approval must be the declasséfication struggles of companies like Stella Artois, Patagonia and, most infamously, Burberry — whose trademark(ed) plaid came close to catastrophe in the 2000s when it was swamped by counterfeiters and a “chavalanche” of apparently undesirable working-class consumers.

To defend against such brand dilution (or even destruction), and discourage market cannibalization, personal luxury goods marketing has developed a range of strategies that monetize “masstige” while protecting the golden goose.

Diffusion lines: Cheaper and often more gaudily-branded versions of “main line” designs (Marc by Marc Jacob; Miu Miu by Prada; Versus by Versace) intended to appeal to “day-trippers” without threatening the elite.

Recently, secular (and sexualized) brands (Dior, Prada, H&M, Dolce & Gabbana, Uniqlo) have created religiously diffuse “modesty lines” and “Ramadan capsule collections” to similarly attract the orthodox — why leave money on the altar?

Affordable extensions: Leather goods, accessories, eyewear, cosmetics and fragrances that grant hoi polloi an affordable touch / sniff of the real thing. The breakdown of LVMH’s 2021  revenue by business group was: 9% wines and spirits; 10% perfumes and cosmetics; 14% watches and jewelry; 19% selective retailing and other activities; and 48% fashion and leather goods.

Poorthenticity: Internal “made-for-outlet” knock-offs, usually identifiable by cheaper materials, hidden label codes and hard-to-believe discounts.

Recently, luxury brands have rushed also to adopt:

Collaboration: Where limited edition (and limited risk) mash-ups and pop-ups create media buzz and consumer frenzy.

Resale: “Where real “real-real” brands (including Gucci, Valentino and Jean Paul Gaultier) take back control of their “pre-loved stock” from vintage stores and online resellers. For example, Encore by Oscar de la Renta “invites you to shop decades of runway fashion, authenticated by our archivists and reconditioned by hand in our atelier.”

Ironically, wealth may be the only thing immune from declasséfication, for cash forms the irreducible core of status, to which “status symbols” are merely distractions or confirmations.

It’s noteworthy that while Warren Buffett’s everyman diet of junk food and Coke is central to his popular mythology as the Sage of Omaha — distracting from his $128 billion net worth — the same menu choices by Donald Trump are derided as “weird” and “self-destructive,” thus  confirming the opinion that he’s “populist, cheap and maybe too salty for most people’s taste.”

The decision by Goldman Sachs, JPMorgan and UBS to keep their robo-advisors at a distance from their master brands suggests that they are least cognizant of declasséfication — and the risk it poses to their credibility among the 1%.

But unless you’re Elon Musk, there is always someone above you on the ladder, and billions on the rungs below. And so instead of sticking with Marcus, Nutmeg and Wealthfront, might their owners haven taken a more bullish approach?

Hierarchy Branding

Hierarchy branding is premised on an acceptance of (or acquiescence to) inequality.

At the time of writing, British Airways offered return flights from London to New York for around £520 in economy, £970 in premium, £3,900 in business and £4,600 in first class.

Few passengers “turning left” onto a plane feel guilty enough about those crammed into coach to swap seats (luxury is inevitably enhanced by its comparison to economy). Equally, few in the cheap seats have the financial means to fly up front, and those who do are presumably alive to the opportunity costs.

Although some research from 2016 suggests that “the increasing incidence of ‘air rage’ can be understood through the lens of inequality,” most consumers seem to “know their place,” as codified by the 1848 hymn, “All Things Bright and Beautiful”:

The rich man in his castle, The poor man at his gate, God made them, high or lowly, And ordered their estate.

It’s therefore no accident that airlines still use the word “class” to segregate flyers, or that “class” remains useful for mass-market luxury car brands:

These class divisions are distinct from other branding/price ladders, which nudge consumers gently up the specs or reflect divergent use-case profiles.

Unlike social class, which is defined at birth, marketing class is based solely on wealth and is, in consequence, fluid. (“An A-class customer today is an S-Class customer tomorrow.”) Such fluidity empowers hierarchy brands to deploy an all-encompassing message across the income chasm, without intimidating the less well-off or disenchanting even the ultra-rich.

Take the quintessential hierarchy brand American Express, which offers a range of color-coded card classes — Platinum ($695/year), Gold ($250/year), Green ($150/year), Blue ($0/year) — under the counterintuitively egalitarian banner: “Many kinds of cards. One kind of membership.”

Because wealth is (more or less) inconvertible, AmEx neither hides nor disguises its hierarchies. Indeed, its color-coded class system seems to suit everyone: The less affluent feel they are in the same club as the über-wealthy (branding’s “halo effect”), while the rich are either reassured by being primus inter pares, or as indifferent to Blue card holders as they are to passengers in coach.

So confident is American Express in its hierarchy branding, the company even toys with consumers by dangling the existence of an “invitation only” Centurion membership  ($10,000 joining fee + $5,000 a year) while declining to comment on its perks or indeed if the “black card” was inspired by Jerry Seinfeld.

‘Missed a Trick’

Perhaps it’s no surprise that Goldman Sachs, JPMorgan and UBS chose to go with funky, indie-approximate diffusion branding for their mid-market wealth-management bots. After all, the kids love a friendly name (Marcus!), an approachable font and an amiable block of sales copy — as we know from the unceasing wave of “identikit” brands flooding our Instagram feed.

But you can’t help feeling they’ve missed a trick.

True wealth management — as distinct from day-trade speculation and crypto hype — is premised on expertise, judgment and time. These are all attributes that legacy banks have in spades, and finech startups are working to acquire.

Borrowing the branding of the latter to sell the services of the former seems like an odd choice. Not every brand gets to be a hierarchy brand, but those that can be probably should.

***

Ben Schott is Bloomberg Opinion’s advertising and brands columnist. He created the Schott’s Original Miscellany and Schott’s Almanac series, and writes for newspapers and magazines around the world.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. He previously worked for the Wall Street Journal and the Financial Times.

Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.