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Financial Planning > Behavioral Finance

Where the Wealthy Plan to Spend, Invest More in 2023

By Michael S. Fischer

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What You Need to Know

  • Over three-quarters of wealthier Americans surveyed plan to spend at least as much in 2023 as they did this year.
  • Eighty-one percent said they plan to make changes to their portfolio allocations in 2023.
  • The majority of respondents plan to make a charitable donation at the end of the year.

Eighty percent of high- and ultra-high-net-worth Americans plan to spend the same amount or more in 2023 than they did this year, according to research released this week by Clarfeld Citizens Private Wealth.

The study found that 51% of wealthy Americans will allocate additional resources next year to travel, 13% to their businesses and/or franchises and 10% to real estate.

The findings also showed that 87% of study participants expect the U.S. to enter a recession soon, if it has not already done so. Thirty-one percent said inflation will have the biggest negative effect on their financial portfolios, while 27% cited market volatility and 11% rising interest rates.

“Wealthy Americans have more tools at their disposal to ride out a recessionary environment, but they’re not immune to volatility,” Matthew Ruffalo, head of investment solutions at Clarfeld Citizens Private Wealth, said in a 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.”

Wakefield Research conducted an online survey between Oct. 18 and Oct. 31 among 200 individuals with $2 million or more in investable assets.

Which Assets They’re Buying

Eighty-one percent of survey respondents said they plan to make changes to their portfolio allocations in 2023. Forty-one percent will increase their investment in equities, 37% will do so in fixed income and 29% in cash.

Sixteen percent plan to decrease allocations to cash, 14% will reduce leverage or debt financing and 12% will cut back on equities in the year ahead.

The study showed that three primary catalysts for changes remain the same for 2023, regardless of whether respondents planned to change their allocation: adding protection from volatility; generating robust, long-term returns; and diversifying portfolios.

Besides overall allocation changes, a fifth of participants said they plan to use REITs in the new year, while 17% will employ revocable trusts, 11% irrevocable trusts and 10% spousal lifetime access trusts.

In addition, 40% of the wealthy Americans surveyed said they want to invest in alternatives next year, including 63% of millennials, 52% of Gen Xers and 29% of baby boomers.

Financial Gifting

Some three-quarters of wealthy respondents said they plan to make a charitable donation at year-end. For 78%, the primary reason is altruistic, as they will be giving as part of their regular philanthropy. Forty-one percent also said they will be motivated to give by the tax benefits of doing so.

Interestingly, less than half of participants plan to give a financial gift to the next generation this holiday season. Of those who do plan to do so, 62% said they would gift a trust or contribution to one, 45% will make a charitable donation in the family member’s name, 35% will gift shares of stock and 25% plan to gift NFTs and other digital assets.

Wealth Building

As to how they hope to reach their financial goals and objectives, 62% of respondents said they are pursuing a strategy of steady income and wealth building. About a fifth each said effective tax planning and comprehensive estate planning would support their efforts.

Only 16% of wealthy Americans in the sample said they have no intention of meeting with any of their advisors before the end of 2022. Of those who do expect to meet with advisors to plan for the year ahead, 64% are prioritizing meetings with wealth advisors, 38% with tax advisors and 20% with estate planners.

“If market instability of the past few years has a silver lining, it’s the importance of planning comprehensively for the unexpected,” Ruffalo said.

“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.”

Michael S. Fischer

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