2024 feels like a garden after a hailstorm. Green shoots of growth poke through, but storm clouds still linger. Interest rates might hold steady, inflation could chill, and global growth might shrink.
In the UK, we should finally have a clearer view of the main political parties’ manifestos and what to expect from whoever forms our government. We are already seeing clearer statement around tax policy being released piecemeal, with Kier Starmer confirming that Labour would reverse any changes to reduce IHT that the current Government may bring in, and the Chancellor’s team commenting that all coverage of this point is pure speculation. But let’s face it: with ongoing geopolitical instability still rumbling and conflict unlikely to disappear, we will probably continue to operate in a very bumpy economic landscape.
Adapting to change
That said, regardless of the environment, financial advisers still have a job to do and will need to think about how to position their client portfolios for capital preservation, recovery of losses and opportunities for growth and/or income within this shaky economic backdrop. Additionally, this must be considered within the Consumer Duty regulations.
To any seasoned adviser, working within an uncertain geopolitical environment won’t be unchartered territory, and some may remember when interest rates were even higher! However, it is likely that in the UK, we will continue to be subjected to a very high tax regime, which can feel restrictive for clients’ financial planning, making it difficult to find solutions for clients wanting a growth element in their portfolios.
The crucial role of tax planning
It is difficult to see a political environment where UK taxes are reduced, and an increasing number of people are finding themselves dragged into higher tax brackets. For advisers, incorporating tax and estate planning into their service is likely to become even more crucial in 2024 to demonstrate their value to clients under Consumer Duty.
If the broad financial markets show signs of recovery as expected, this may bring opportunities for companies to raise capital and continue to grow. Smaller and unquoted companies that have suffered dramatically from a risk-off environment and have been hampered by a lack of liquidity may see these problems start to diminish in 2024, and advisers may find some very compelling opportunities for growth. Many companies, quoted or otherwise, have strong fundamentals and are trading at heavy discounts to valuation.
The focus for Octopus Investments in 2024
Our focus in 2024 will be on helping advisers understand the opportunities available for their clients. Whether they want to take advantage of recovering markets and need help navigating UK smaller companies or are keen to explore venture capital and unquoted company investments that could offer some highly compelling growth opportunities. As things stand, inheritance tax will continue impacting clients, so estate planning remains an opportunity for advisers: it is both a value-add for clients and a growth opportunity for an adviser’s business.
As specialists in tax and estate planning, we will work with advisers to incorporate tax planning into their everyday services, helping them drive value for their clients.
Tax-efficient investments put capital at risk.