Wealthy Americans Are Prioritizing Protecting Assets And Limiting Personal Taxes
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Wealthy Americans Are Prioritizing Protecting Assets And Limiting Personal Taxes

By V.L. Hendrickson
Fri, Oct 20, 2023 8:37amGrey Clock 2 min

Protecting assets and minimizing tax liabilities are the top priorities of wealthy Wall Street Journal and Barron’s Group readers, according to a recent personal finance study conducted by WSJ Intelligence.

Around 57% of the more than 3,600 respondents—who had an average net worth of just over US$3 million—said growing and protecting their wealth is their No. 1 priority going into 2024, the data showed. That stands to reason, as 55% of readers were most concerned about inflation and the rising cost of living, while 40% reported that market volatility was their biggest issue.

About 81% of participants were male, with 3,280 of them being over age 55—aka, Baby Boomers. The combined total of Millennial and Gen X respondents was 333. Across wealth bands, the largest number of participants—1,656—were high-net-worth individuals with assets between US$1 million and US$9.9 million, followed by 718 “emerging affluent” respondents (with a net worth of less than US$1 million) and 253 ultra-high-net-worth individuals, with assets of US$10 million or more.

“This study was really to understand the behavior of our financially savvy readers and explore how they improve their financial acumen and make informed investment decisions,” says Donna Zeolla, the associate director of Finance Intelligence for the Wall Street Journal and Barron’s Group.

Certain concerns are unique to those in the highest income bracket, the survey found. For example, members of that group are 22% more likely to be concerned about identity theft and financial fraud than emerging affluents, the data showed. Zeolla said that was a surprise, given how rampant it can be.

The wealthiest are also 28% more likely to be worried about cybersecurity risks in digital banking and three times more likely to be concerned with estate planning and inheritance, according to the report. They are looking to educate themselves on tax planning, private banking, and estate planning—and in turn seeking out content that helps them do that.

Survey participants across wealth bands use a variety of wealth management services, including brokerage, tax and estate-planning services. When selecting an investing company, key considerations are the fee and commissions charged (49%), expertise (44%), customer service (38%), and the company’s reputation (36%), the figures showed.

“Every survey we’ve done here, at least for the 18 years I’ve been here, it’s the same things that they’re looking for in the institutions,” Zeolla says. “They look at fees, right? I don’t care if you’re the wealthiest person, you’re looking at the fees…[and] they look at the trust and the reputation of the companies. That’s always on their minds.”

And while many are loyal to their financial institutions, the richest investors are more open to switching. Only 41% of ultra-high-net-worth individuals wouldn’t consider moving their money to a new company, versus 53% of high-net-worth individuals and 49% of the emerging affluent.

“Wealthier individuals use a variety of different services—they don’t just have one institution that they’re working with, they’re working with many,” Zeolla says. “But what we did find was that the wealthier people were, the more that they’re open for change. It could be because they’re not loyal to one institution.”

Other differences included their preferred credit cards—the wealthiest were concerned about foreign-transaction fees while low interest rates were more important to younger respondents—and the richest also craved the personal touch. About 47% of ultra-high-net-worth individuals don’t use an automatic investing service because it doesn’t cater to their needs vs. 27% of the emerging affluent.



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Cocoa and Coffee Prices Have Surged. Climate Change Will Only Take Them Higher.

Some chocolatiers and coffee makers say they will have to pass on the extra cost to consumers

By JOSEPH HOPPE
Sat, Apr 13, 2024 5 min

Global prices for cocoa and coffee are surging as severe weather events hamper production in key regions, raising questions from farm to table over the long-term damage climate change could have on soft commodities.

Cultivating cocoa and coffee requires very specific temperature, water and soil conditions. Now, more frequent heat waves, heavy rainfalls and droughts are damaging harvests and crippling supplies amid ever growing demand from customers worldwide.

“Adverse weather conditions, mostly in the Southern Hemisphere, have played an important role in sending several food commodities sharply higher,” said Ole Hansen , head of commodity strategy at Saxo Bank.

The spikes in prices are a threat to coffee and chocolate makers across the globe.

Swiss consumer-goods giant Nestlé was able to pass only a fraction of the cocoa price increase to customers last year, and it may need to adjust pricing in the future due to persistently high prices, a spokesperson said.

Italian coffee maker Lavazza reported revenue of more than $3 billion for last year, but said profitability was hit by soaring coffee bean prices, particularly for green and Robusta coffee, and its decision to limit price increases.

Likewise, chocolatier Chocoladefabriken Lindt & Spruengli said in its 2023 results that weather and climate conditions played a major role in the global shortage of cocoa beans that led to historically high prices. The company had to lift the sales prices of its products and said it would need to further raise them this year and next if cocoa prices remain at current levels.

Hershey ’s chief executive, Michele Buck , said in February that historic cocoa prices are expected to limit earnings growth this year, and that the company plans to use “every tool in its toolbox,” including price hikes, to manage the impact on business.

In West Africa, where about 70% of global cocoa is produced, powerhouses Ivory Coast and Ghana are facing catastrophic harvests this season as El Niño—the pattern of above-average sea surface temperatures—led to unseasonal heavy rainfalls followed by strong heat waves.

Extreme heat has weakened cocoa trees already damaged from heavy rainfall at the end of last year, according to Morningstar DBRS’s Aarti Magan and Moritz Steinbauer. The rain also worsened road conditions, disrupting cocoa bean deliveries to export ports.

The International Cocoa Organization—a global body composed of cocoa producing and consuming member countries—said in its latest monthly report that it expects the global supply deficit to widen to 374,000 metric tons in the 2023-24 season, from 74,000 tons last season. Global cocoa supply is anticipated to decline by almost 11% to 4.449 million tons when compared with 2022-23.

“Significant declines in production are expected from the top producing countries as they are envisaged to feel the detrimental effect of unfavorable weather conditions and diseases,” the organization said.

While the effects of climate change are severe, other serious structural issues are also hitting West African cocoa production in the short- to medium-term. Illegal mining poses a significant threat to cocoa farms in Ghana, destroying arable land and poisoning water supplies, and the problem is becoming increasingly relevant in the Ivory Coast, according to BMI.

The issues are being magnified by deforestation carried out to increase cocoa production. Since 1950, Ivory Coast has lost around 90% of its forests, while Ghana has lost around 65% over the same period. This has driven farmers to areas less suited to cocoa cultivation like grasslands, increasing the amount of labor required and bringing further downside risks to the harvest, the research firm said.

The Ivory Coast’s cocoa mid-crop harvest—which officially starts in April and runs until September—is expected to fall to 400,000-500,000 tons from 600,000-620,000 tons last year, with weather expected to play a crucial role in shaping the market balance for the season, ING analysts said, citing estimates from the country’s cocoa regulator. Ghana’s cocoa board also forecasts a slump in the harvest for this season to as low as 422,500 tons, the poorest in more than 20 years, according to BMI.

Neither regulator responded to a request for comment.

Meanwhile, extreme droughts in Southeast Asia—particularly in Vietnam and Indonesia—are resulting in lower coffee bean harvests, hurting producers’ output and global exports. Coffee inventories have recovered somewhat in recent weeks but remain low in recent historical terms. Robusta coffee has seen a severe deterioration in export expectations, while Arabica coffee is expected to return to a relatively narrow surplus this year, said Charles Hart, senior commodities analyst at BMI.

The global coffee benchmark prices, London Robusta futures, are up by 15% on-month to $3,825 a ton. Arabica coffee prices have also surged 17% over the last month to $2.16 a pound in lockstep with Robusta—its highest level since October 2022. Cocoa prices have more than tripled on-year over these supply crunch fears, and risen 49% in the last month alone to $10,050 a ton.

“Cocoa trees are particularly sensitive to weather and require very specific conditions to grow, this means that cocoa prices are especially vulnerable to extreme weather events, such as drought and periods of intense heat, as well as the longer-term impact of climate change,” said Lucrezia Cogliati, associate commodities analyst at BMI.

Cogliati said global cocoa consumption is expected to outpace production for the third consecutive season, with intense seasonal West African winds and plant diseases contributing to significant declines.

Consumers hoping for a return to cheaper prices for life’s little luxuries in the midterm may also be in for a bitter surprise.

“There is no sugarcoating it—consumers will ultimately be faced with higher chocolate prices, products that contain less chocolate, and/or shrinking product sizes,” Morningstar’s Magan and Steinbauer said in a report.

“We anticipate consumers could respond by searching widely for promotional discounts, trading down to value-based chocolate and confectionary products from premium products, switching to private-label from branded products and/or reducing volumes altogether.”

The record-breaking rally for cocoa and coffee is likely more than just a flash in the pan, according to Citi analysts, as adverse weather conditions and strong demand trends are likely to support prices in the months ahead. The U.S. bank estimates Arabica coffee futures in a range of $1.88-$2.15 a pound for the current year, but said projections could be lifted if the outlook for 2024-25 tightens further.

At the heart of it all, climate change is set to play a major role, as the impact of extreme weather events could exacerbate the pressure on cocoa and coffee supplies, according to market watchers.

“I don’t expect prices to remain at these levels, but if we continue to see more unusual weather as a result of global warming then we certainly could see more volatility in terms of cocoa yields going forward, which could impact pricing,” said Paul Joules, commodities analyst at Rabobank.

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This stylish family home combines a classic palette and finishes with a flexible floorplan

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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