Fast Cars and Fat Wallets: Those Crazy Wall Street Guys
The rich really do get richer around bonus time, when bankers and lawyers reap the rewards of their hard work throughout the year. First year professionals may receive $20,000-$50,000 (depending on their seniority, performance, and the whims of their employer) with longer-tenured Wall Streeters pulling in up to $5 million.
Undoubtedly, many of these hotshots turn their good fortune into sensible investments, college and retirement funds, and charitable works. According to Alan Johnson, managing director of Johnson Associates, a New York-based compensation consulting firm and one of Wall Street's leading pay consultants, unlike in the 1980s, most high rollers don't want to be too ostentatious.
Well, there are exceptions. Some bonus babies find it rewarding to spend it all - on toys, on real estate, even on their parents.
If you've got a few extra thousand or millions lying around (or you've got a really good feeling about that lottery ticket you just bought), you may find this guide useful.
According to Brian Miller, owner of Manhattan Motor Cars and a specialist in high priced vehicles like Bentleys, Porsches, Rolls-Royces and Lamborghinis, the first big ticket item a banker or lawyer buys is often a car, with Porsches the most popular. A banker a few years out can normally spring for a spiffy 911 (at about $110,000), or, for those feeling a bit more economical, a sporty Boxer for perhaps $55,000.
Miller says there's usually a flurry of activity when the bonuses come out, starting somewhere in December through March.
The usual suspects
Miller has regulars who visit him every three months to make a trade. They're really shrewd and know how to buy right, he says, explaining "You don't lose any sales tax if you keep trading them in. I used to have a guy who bought 20 to 30 cars a year from us. He'd drive anything that was new and fresh. He had to get it out of his system."
"Spending $200,000 flipping 30 or 40 cars a year is fun, and it's not a lot of money for these meshuganah Wall Street guys," says Miller.
Not all cars are for personal use. "I've had kids come in and buy cars for their parents," says Miller. Recently one customer brought his father in, bought him a Porsche and then drove it back with him to California.
Perhaps a greater luxury for New Yorkers is real estate. The modestly bonused may simply choose to use their $50,000 or so for a down payment on a studio in midtown. But more money means fancier home improvements.
One Wall Street executive recently spent his bonus money on a lap pool in the basement of his West Village home - an amenity that cost a cool $450,000. (Then again, think of all the money he'll save on gym membership. )
One classier option - a wine cellar to store those pricey bottles. Only the owner knows it's there.
When options at home run out, it's time to get a new place. "The super affluent own approximately three homes," says Scott Durkin, COO of Corcoran Group, a high-end realty company.
Both Johnson and Durkin agree that multiple home ownership is par for the course for Wall Streeters. They have "one in Greenwich, one in London, one in Aspen," says Johnson.
Lofts at lofty prices
Downtown luxury lofts start at a million and go up from there. "This type of Wall Street bonus buyer usually spends $1.8 million on his first purchase," says Durkin.
The particular appeal of lofts for single spenders is that they want an old facade with a new inside, says Durkin. And lofts are easy to gut and start anew.
For example, Corcoran recently renovated a loft building in SoHo with creature comforts galore. The developer put in aromatherapy rooms and think-tank rooms and private caves for wine cellars. These caves are temperature-controlled, lined with bricks and cost upwards of $50,000.
It's the amenities, stupid
"A lot of people want super luxury in terms of tactile amenities. A wonderful wood on the floor like a Brazilian Cherry, a wonderful stainless steel counter or a limestone bath or warmed slate floor," says Durkin.
When working with Wall Street types, you have to cater to their every whim, says Durkin. "You just can't put up sheet-rock anymore because they aren't going to fall for it. They have discerning tastes, not necessarily that they were born with, but that they've acquired from their new wealth and their new friends."
~ "There's a lot of peer pressure on amenities," he adds.
Having worked in the high-end real estate business for the past eight years, Durkin has seen his share of big-time bonus receivers on the make. "They walk in with their guns cocked," he says, their attitude being "I've got a lot of money, so pay attention."
"They're very free-wheeling and very proud of their bonuses," says Durkin. "They've worked hard and it's probably the biggest purchase they'll ever make. They really have to make it phenomenal."
Mars and Venus: A role reversal
Although Wall Street is predominately male, Durkin does have some women looking to spend some bonus cash.
The difference is that they're much more discreet about it than the men, says Durkin. Not surprisingly, when he was still out selling, he preferred to work with women. "Women just want to know they can afford it and may never tell you where the money came from," he says.
"They may have a million dollar bonus coming but they might want you to think that that's the million dollar dowry that they've been bringing with them from their family and that's their provenance, their breeding. In terms of fantasies, women dream more."
I do, I do
One thing that goes well with a brand new loft is a brand new bride. And no one knows that better than Harry Winston, jeweler to well-heeled stars and socialites. The company reports that there's an influx of engagement ring buying, mostly by the young Wall Streeters around bonus time.
Ever the savvy marketer, Harry Winston held several posh cocktail parties last year targeted to "bonus babies." The events were held at Bayard's, a posh restaurant in New York's downtown financial district with several hundred engraved invitations going out to these "six and seven-figure bachelors."
The average price for engagement rings is $1,700. But Wall Streeters and those with "e-money" are spending anywhere from $5,000 to $725,000, says Fred Cueller, president of Diamond Cutters International and best-selling author of How to Buy a Diamond.
Cueller recently had a young professional call and ask him to design a ring for his fiancee. He wired him $500,000, giving Cueller free reign as to the style, setting and diamond selection. The man then boarded a plane to Houston, where Diamond Cutters International is based, and met Cueller at the airport. Cueller handed over the ring to the young professional, who then turned around and got on another plane.
When all else fails, there are always elaborate presents. Several years ago a broker managed to catch the early stages of an emerging technology. He suggested his client buy a big position in the shares of this virtually unknown company. The broker watched those shares skyrocket almost from the day the customer made his investment. Shortly thereafter a uniformed chauffeur came to the broker's office to hand-deliver a small package. Inside this package was a solid gold watch with a card that said "Good timing."