Why Getting to Know Your Independent Jeweler is Good Financial Sense!

Hi everyone, and welcome back to Melissa Making Cents!

As a CERTIFIED FINANCIAL PLANNER™ and a financial coach, I get to know many people in and around the "investment" sphere. For many people, jewelry isn't the first thing to pop into mind when you say the word investment. I totally understand that it isn't really your classic stock and bond investment, but you're putting a fair bit of money towards something that you want to retain value, right? If you have read any of my previous posts, you understand that I am passionate about educating others on interesting financial topics.  I also have a passion for supporting smaller local businesses, and sharing other's professional's knowledge. 

Since we're approaching Valentine's Day, I thought it would be an excellent opportunity to share a bit a bit of knowledge about the importance of knowing your jeweler and a bit of basic jewelry buying know-how.  

Before we really get started, I'd like to give a huge thank you to my friend Chuck Kazlow of Kazlow & Associates - Fine Jewelers in Dallas, TX. Chuck was a huge helping hand in this blog post's writing; he offered advice and in-depth knowledge of the jewelry industry to help me along the way! Kazlow & Associates is an independently owned wholesale diamond and jewelry salon that has been in business for over thirty-three years.  I can tell you first hand that it's obvious Chuck has a passion for jewelry, but what drew me most to him was his patience and desire to educate his customers before making a purchase!

(For the record… all the information provided in this blog post was provided for free, and no one was harmed or blinded by all that bling!) Although, I can’t promise I didn’t leave puddles of drool in the salon. Let’s face it… I’m a girl and I LOVE the “frosting”!

Purchasing Jewelry can be intimidating!

Many businesses have become large and impersonal; it can feel daunting, especially to young people, to buy jewelry. Just think, if you're only familiar with the colossal chain jewelry stores and their prices, you'd think you have to be out of your mind to buy jewelry, especially at what some of them would call a "great deal." It's more important than ever to really emphasize that there are alternatives to the massive box stores. 

Getting to know your independent jeweler can take a lot of the stress from purchasing jewelry and diamonds. Instead of doing whatever they can to get you in and out of the door with a new and expensive piece of jewelry that's entirely out of your price range, independent jewelers will take the time to really curtail every detail of the experience to the buyer's needs and budgetary restrictions. Having a good relationship with your independent jeweler also means having a professional in your corner who is more willing to help you make the right decision for yourself and possibly whoever you're buying (maybe a ring, wink wink) for!

Who you work with to buy your jewelry will have a serious impact on the quality of what you buy and how much you pay for it. They're also going to determine if buying jewelry turned into a good or a bad experience for you. Okay, it's time to cozy up next to your Valentine's crush and start shopping for a ring… I mean, learn more about independent jewelers, diamonds, and the importance of working with someone you have a trusting relationship with when making large commodity purchases. 

Is Bigger Better in Regards to Jewelry Stores?

You know how they say everything's bigger in Texas? They're right, but that doesn't necessarily mean bigger is better when it comes to who you buy your jewelry from. In fact, there's good reason to think that it may be the opposite. One reason being, large stores have enormous costs. These costs come in many forms - like renting out a huge space, water, electricity, a large workforce, huge insurance bills, etc. When it comes to buying and selling diamonds and jewelry, these costs often get passed on to whoever's purchasing the jewelry. 

Larger stores also have a more broad experience. That means that they try to do en masse what will make the most amount of people happy. They don't try to personalize each experience for the individual, and when they say that they do, that's just a fancy slogan to rally employees that quickly falls flat. 

Employees of larger jewelry stores also are one reason you may want to consider an independent jeweler. At large stores, employees have an increased tendency to view their job as transactional. They show up, do their job, get their money, and go home. I don't mean that's always a bad thing, but it doesn't inspire them to make sure you have the jewelry buying experience you should have. 

Lastly, larger jewelers don't really have control over their pricing. Almost all pricing is set at a corporate level. The amount employees are paid, the price of gold, the cost of diamonds, and the ring sets' price are all unwaveringly set in stone (ahem...see what I did there!) at the corporate level. 

Independent Jewelers are Community Staples 

Don't let all of the negativity about large chain-store jewelers get you down, and don't let it scare you away from jewelers in general either. While the large stores have some severe drawbacks, their independent jeweler counterparts do a great job bringing fantastic high-value propositions to consumers! Here are just a few reasons that it's fantastic to work with your local and independent jeweler. 

Independent jewelers are smaller and often family businesses. This means they're going to have relatively lower costs compared to that of the giant jewelry chains. They're also more than likely going to have a family reputation on the line to make sure your experience is superb. Many people who work at independent jewelers, family or otherwise, do it because they love doing it. Whether it's the look on someone's face when they see that special diamond for the first time or they just love being around all the shiny things, they're there because they love it, not only for the paycheck. 

Jewelers that are independent also have a personal stake in making your experience a good one. Unlike the huge jewelry chains, independent jewelers don't have the same massive advertising budget (which they pass on to the markup on your jewelry) as large box stores. Many of them rely heavily or solely on word of mouth advertising. They also set their own prices for labor, products, and everything else, meaning they're more able to work with you on the price of something. 

Inside Advice from an Independent Jeweler, Certify Your Diamonds

More often than not, the diamond is by far the most expensive part of a ring, necklace, or whatever other kind of jewelry you're purchasing. It's imperative to know what you're getting and what you're paying for, especially if you're paying a lot for it. 

According to Chuck Kazlow, who contributed a large portion of the information in this post, and has been in the jewelry industry for 33 years.  If your diamond is 1/2 of a carat or larger, you absolutely need to be buying a lab certified diamond. Not all labs are created equal; many labs have inconsistent quality standards and will "upgrade" certain aspects of a diamond in their lab results. When labs "upgrade" the clarity or the color of a diamond, it essentially means you're paying extra for the features and quality you aren't receiving. 

Chuck recommends diamonds that are certified by the Gemological Institute of America or the GIA. The GIA is one of the most well-respected names in certifying diamonds and jewelry world-wide, and they uphold the strictest quality standards of anyone. They also do not participate in "upgrading" the clarity or color of diamonds. Because of their reputation, purchasing diamonds that are certified by GIA, or getting a diamond certified by GIA, is slightly more expensive than other independent labs. However, you know without a doubt you're paying for precisely what you're getting and that because of the outstanding reputation of the GIA, your diamond will retain a higher value than those certified by other labs. 

Keep in mind that the grading by GIA is the strictest, but it is subjective by their gemologist, so there CAN BE a discrepancy (although 3 gemologist have to agree with the same grade).

Inside Secrets from a Jeweler

Have you ever wondered what little tidbit of information a jeweler would give if they could? I asked Chuck to share whatever he thought would be important information for people looking to buy diamonds, and this is what he came up with!

When it comes to diamonds, round cut is the most expensive. Because round is the most sought after cut of diamond. Most consider the round shape to be the most brilliant and looks the largest compared to the same weight in a fancy cut (ie: a 1 CT. round is approximately 6.5 mm in diameter , a 1 CT. Princess is approximately 5.5 mm , 1 CT marquise is 10 mm long by 5 mm wide.. etc.)

Supply and demand leads to sellers and distributors in determining their prices. Generally, you could expect a round cut diamond to be anywhere from eight to ten percent more expensive than other cuts. Price can fluctuate month to month because of supply, but don't shop price month to month because there are other factors that could effect pricing.

As an example, Chuck explains that ovals have been the hot shape now for over a year, so there is a current premium price on them. Before that it was cushion cut for a year or so, before that Princess for several years. Popularity tends to depend on any ad campaigns run by DeBeers, or pieces purchased by celebrities like JLo.  Your trusted jeweler can let you know what the hottest shape is at the moment!

DeBeers influence on the Diamond Market 

As a young girl I remember seeing the DeBeers ads on the television.  It's hard to forget the words "A Diamond is Forever", and to a certain extent that ad and ads like it are responsible for creating the hype and desire to own a large rock!

When DeBeers was established in 1888 had a monopoly on the diamond market selling 80-85% of the world's rough uncut diamonds. This monopoly lasted until the beginning of the twenty-first century, and has not been without controversy. Although DeBeers now controls only 20% of the distribution, they still have a bit of control over the supply and demand of the diamond supply world wide.  Which can sometimes lead to apparent shortages that are a result of availability. It's a very interesting story, that I'll let you read on your own!  It's worth mentioning to you so you understand that the price of diamonds is sometimes out of your jewelers hands.

The Four C’s of Diamonds

Okay, we've thrown around some fancy jewelry and diamond terms here and there, so let's quickly visit something that jewelers call "The Four C's." The four C's are categorizations and classifications that help jewelers (and consumers) gauge diamonds' value and price. In the order we'll be discussing them, the four C's are color, clarity, cut, and carat weight. 

Color, the first of the four C's, is precisely what it sounds, the color of a diamond. It can also be deemed the MOST important, especially among consumers, because it's the most noticeable characteristic of your rock! There are tons of diamond colors, but some of the common ones are white, yellow, and brownish. 

If you look at the chart above from the GIA, you can see that the color scale starts at D (whitest) and goes to Z(yellowish, but still not considered a "yellow fancy diamond").  Colors D-F are considered colorless and are very hard to differentiate with the naked eye. Stones classified as G-J are near colorless, and you may start seeing a difference with a very slight yellowish tinge.  Commercial grade stones carried in bigger box retailers are usually in the I-K classification ranges.

*There is a really neat interactive chart on the GIA's site that will help you see the difference! 

Money Saving Tip!

In most cases consumers want to buy the whitest stone they can afford. Chuck suggests that it's possible to save a little money by purchasing an F color stone instead of a D. They are still in the range of colorless, and unless you have friends that walk around with a jeweler's loop... no one will know the difference!

Clarity ,is the existence or nonexistence of "inclusions" in a diamond. Inclusions are little imperfections that are stuck within the rock itself. The level of clarity a diamond has depends on how many inclusions there are, the size and shape of inclusions, and their placement within the diamond. 

Clarity is graded under a 10x lens , there is Flawless ( clean on the inside and on the surface), then Internally Flawless (nothing inside the stone , but can have very minor blemishes on the surface), VVS-1 and VVS-2 ( very, very slight inclusions ) which are very difficult to see with a 10x lens. VVS-1&2 does not mean there is 1 or 2  inclusions in the stone; instead it refers to size, location , and type . Then comes VS-1, VS-2 ( very slight inclusion) Again VVS is not the number of inclusions but refers to where, size of inclusion, and type. This will still be difficult to see the inclusion under a10x lens.  Next we have SI-1 and SI-2 that share some of the characteristics of the other 1’s and 2’s, but the inclusions will be bigger, more numerous or certain kinds of inclusions that lower the clarity grade . You should easily see the inclusions under 10x. Last are the imperfect grades , I-1 , I-2 , I-3 . I stands for imperfect and should be able to see the inclusion with the naked eye . The I-2and I-3 will be VERY easy to see and those imperfections can effect light dispersion enough to hurt the brilliance of the diamond .

Money Saving Tip!

Keep in mind , when buying a stone, a flawless to SI-1 will all be EYE CLEAN without using a 10x lens. So depending on your priorities, you can save money buying a SI-1 instead of VVS or VS stone and it will still look beautiful. Put your money into the characteristics that are important to you, and let your trusted jeweler guide you to purchasing a beautiful stone that is also budget friendly!

The cut is a characteristic of diamonds that is misunderstood and often overlooked by purchasers. Many believe the cut of a diamond is simply its shape, but that isn't the case. It is actually the symmetry and proportion of the diamond. The cut primarily affects the diamond's "brilliance," "fire," and "shine." If a diamond is cut poorly, it won't do as well, giving off that special brilliance.

Carat Weight is the least important of the four C's, according to Chuck. When people focus too much on the carat weight, they end up getting a mediocre rock. While carat weight will have a significant impact on the diamond's price, it is really just the size of the diamond itself. If you focus too much on the carat weight, you could end up with a large diamond, but not necessarily the quality you want.  

Diamond Cost isn't "Pound for Pound."

When it comes to buying a diamond, prices aren't linear. You're not going to walk into a jewelry store and pay double the amount of a one-carat weight diamond for a two-carat weight diamond. This is because, for a similar quality in a diamond with larger carat weight, it becomes even rarer to find stones that fit the bill. The more you restrict your search for a diamond in any way, the harder it is to meet your specifications. Thus, when keeping quality consistent and increasing carat weight, the price of a diamond increases in an exponential way. 

Work With a Jeweler You can TRUST

Whether it's working with a money manager or working with a jeweler, you need to be working with someone you can trust. Buying jewelry gives means you have a lot of skin in the game, and the more expensive a piece of jewelry is, the more skin you have in the game. You want a jeweler who views you as more than a commission or a transaction. 

Working with a quality independent jeweler ensures that you're going to have a good interaction and that you're not going to get burned on buying a piece of overpriced jewelry. It's also important to keep in mind that it's always best to have your diamonds tested independently by a lab when buying. Keeping the four C's in mind when purchasing will also ensure that you get a well-rounded diamond of good quality. 

A CERTIFIED FINANCIAL PLANNER™ Can Create a Comprehensive Financial Plan That is Unique to Your Needs

Your financial plan needs to be as unique as you and your jewelry preferences, don't skimp out when it comes to picking a financial planner. You'll benefit in many similar ways by working with someone you can trust as a financial planner. Don't leave your financial plan or your financial success up to someone you can't count on; please call or email to schedule an appointment with me. I work with my clients to make sure they're covered in every way possible and that they're making the most out of their money.

Until next time...this is Melissa Making Cents!

Melissa Anne Cox, CERTIFIED FINANCIAL PLANNER™, is also a College Planning and Student Loan Advisor and Financial Coach in Dallas, Texas.