Four in five plan to make portfolio changes in the New Year to reach financial goals

Despite fears of an economic downturn, the vast majority of high- and ultra-high net worth Americans plan to spend the same amount or more in 2023 than they did in 2022, according to a new outlook study from Clarfeld | Citizens Private Wealth released today.

Included among the key findings were that a majority (80%) of wealthy Americans surveyed plan to spend the same amount (51%) or more (29%). Respondents indicated they are most likely to allocate additional resources to travel (51%), their businesses and/or franchises (13%) and real estate (10%) in the new year. Additionally, 87% believe the U.S. is currently in, or will soon enter, a recession. Respondents cited inflation (31%), market volatility (27%) and rising interest rates (11%) as factors that will have the greatest negative impact on their financial portfolios.

“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, Clarfeld | Citizens Private Wealth. “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.”

New Year, New Allocations and Asset Classes

According to the survey, most respondents (81%) plan to make changes to their portfolio allocations in 2023, increasing and decreasing allocations to meet their goals. The three asset classes where respondents plan to increase their investments the most include equities (41%), fixed income (37%) and cash (29%). Respondents plan to decrease allocations to cash (16%), leverage or debt financing (14%) and equities (12%) in the year ahead.

Regardless of whether respondents planned to change their allocation, the study showed that three primary catalysts for changes remain the same. Adding protection from volatility, generating strong, long-term returns, and diversifying their portfolios were the top motivators for 2023 moves.

In addition to overall allocation changes, the top financial tools Americans plan to use in 2023 include Real Estate Investment Trusts, or REITs (20%), revocable trusts (17%), non-revocable trusts (11%) and spousal lifetime access trusts (10%). Additionally, 40% of wealthy Americans want to invest in alternatives next year. This interest was highest amongst millennials (63%), compared to their Gen X and boomer counterparts, at 52% and 29%, respectively.

Charitable Giving Dominates Financial Gifts

Nearly three quarters of wealthy Americans (72%) plan to make a charitable donation at the end of the year. The primary reason for donating is altruistic, as 78% are giving as part of their regular charitable giving. The tax benefits of giving also motivate 41% of respondents to donate this year.

Interestingly, fewer respondents (48%) plan to give a financial gift to the next generation this holiday season. Of those who do plan to give, 62% plan to gift a trust or contribution to a trust, 45% plan to make a charitable donation in their name, 35% plan to gift shares of stock and 25% plan to gift NFTs/Digital Assets.

Wealth Building Prioritized in Planning

To reach their financial goals and objectives, most wealthy Americans are pursuing a strategy of steady income and wealth building (62%). Additional methods wealthy Americans believe support their efforts include effective tax planning (20%) and comprehensive estate planning (17%).

While a small percentage (16%) of wealthy Americans sampled have no intention of meeting with any of their advisors before the end of 2022, those who do plan to meet with advisors are prioritizing meetings with wealth advisors (64%), tax advisors (38%) and estate planners (20%) to plan for the year ahead.

“If market instability of the past few years has a silver lining, it’s the importance of planning comprehensively for the unexpected,” added Ruffalo. “It’s important for all consumers to consider working with a qualified wealth advisor who considers their whole financial picture – from wealth accumulation goals to effective tax strategies – as they plan for 2023 and beyond.”

Methodology

The survey was conducted for Clarfeld | Citizens Private Wealth by Wakefield Research among 200 ultra-high net-worth individuals defined as those with $2M+ in investible assets, between October 18th and October 31st, 2022, using an email invitation and an online survey.

About Clarfeld | Citizens Private Wealth

Clarfeld | Citizens Private Wealth is a leading wealth management firm and multifamily office based in Tarrytown, New York. The firm provides private bank and wealth management services to ultra-high-net-worth individuals, families and foundations in support of their exceptionally individualized, complex needs. The business is the result of Clarfeld Financial Advisors, LLC, joining forces with Citizens Bank in 2019 to deliver banking, lending and trust services in addition to a broad array of high-end financial solutions.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $224.7 billion in assets as of September 30, 2022. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a full-service customer contact center and the convenience of approximately 3,400 ATMs and approximately 1,200 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com or visit us on Twitter, LinkedIn or Facebook.

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