Despite their belief that the U.S. is either in a recession or will soon enter one, ultra-rich Americans do not plan to cut back on their spending in 2023, according to a survey by wealth manager Clarfeld | Citizens Private Wealth.
The data showed that 80% of respondents plan to continue their spending habits in the new year; 51% indicated they would spend the same amount, and 29% said they would spend more. A little more than half of the respondents (51%) said they would allocate additional resources to travel. Thirteen percent said they plan to put resources into their businesses or franchises, and 10% said they would allocate resources to real estate.
The survey included 200 individuals with investable assets of $2 million or more.
Among other things, the survey found that 72% of the respondents said they would not hold back on making a charitable donation at year’s end. The donations are driven by altruism, with 78% of respondents indicating that they are a part of their annual giving, the survey said. It also noted that 41% said their donations are motivated by tax benefits.
In terms of their portfolio allocations, four in five of the wealthy respondents said they would make investment changes to meet their goals. Forty-one percent said they would increase equities, 37% said they would increase fixed income and 29% said they would increase cash. Sixteen percent of respondents also plan to decrease cash allocations, 14% said they plan to decrease leverage or debt financing, and 12% said they plan to decrease equities.
In addition to overall allocation changes, the survey found that wealthy Americans plan to use investments such as real estate investment trusts (cited by 20% of the respondents), revocable trusts (cited by 17%), non-revocable trusts (cited by 11%) and spousal lifetime access trusts (cited by 10%). Also, 40% said they are interested in investing in alternatives next year. Nearly a third of millennials (63%) indicated that they have an interest in alternatives, while only 52% of Gen Xers and 29% of baby boomers did.
“Wealthy Americans have more tools at their disposal to ride out a recessionary environment, but they're not immune to volatility,” said Matt Ruffalo, head of investment solutions at Clarfeld | Citizens Private Wealth, whose comments appeared in a company statement. “The biggest planning priority for wealthy investors in 2023 should be to ensure one’s portfolio allocations and savings strategies are prepared to weather both short- and long-term headwinds.”
To plan for the year ahead, most respondents said they plan to check in with advisors before the end of the year. Sixty-four percent said they will meet with their wealth advisors, 38% plan to meet with tax advisors, 20% will meet with estate planners, 19% plan to meet with their attorneys and 9% with their philanthropy advisors. Sixteen percent said they have no intention to meet with an advisor before year’s end.
The email invitation and online survey was conducted by Wakefield Research in October.
