Predictably, a Labour government coming to power has really ramped up interest in professional wealth management advice. Interest rate changes and the implications of tech firms entering the dividends arena are high on the agenda too.
Tax increases top the wealthy’s concerns
A new Labour government augurs big changes to the wealth management landscape, with all manner of tax increases being spoken of from along with other financial blows like the addition of VAT to private school fees. As a result, we’ve seen a huge uptick in enquiries from first-time users of our matching service.
People are wanting to get the fullest possible understanding of their tax exposures so that they can make more informed life and business decisions, and put plans in place for whatever the Autumn statement might bring.
Others who run their own companies and who wish to keep up the pace are asking us to match them to financial planning experts who can help them arrive at a prudent mixture of dividends, director and employee salary so that they can maximise the amount of money they can keep out of the taxman’s clutches if a range of tax changes come to pass
Interestingly, our conversations are also going into lifestyle territory. If taxes are going to rise even higher for strong earners, many people are coming to consider working less and enjoying life more to be an appealing choice.
Others who run their own companies and who wish to keep up the pace are asking us to match them to financial planning experts who can help them arrive at a prudent mixture of dividends, director and employee salary so that they can maximise the amount of money they can keep out of the taxman’s clutches if a range of tax changes come to pass.
It would be easy to become paralysed with worries, but these are the kinds of conundrums that wealth managers relish solving. What’s more, they can adjust your strategy rapidly, so that you are always one step ahead of the latest tax raid. If trimming your tax bill is your main concern, just let us know when completing your wealth manager matching questionnaire.
Investors ponder how falling interest rates will impact their portfolios
Investment experts are predicting that the UK interest rate will fall to somewhere around 4.75% by the end of 2024, leading our users to ponder how this will impact on their investment portfolios and cash savings.
The 5.25% rate implemented in August 2023 was the highest in 16 years and came as something of a shock to Britons used to cheap money. Remortgaging properties was a particular pain point, although savers were finally able to get decent returns on their cash holdings (at some institutions at least – banks were notoriously slow to pass interest rate rises on).
As interest rates fall, it is their level relative to inflation which is key. If your cash savings aren’t at least keeping pace with inflation, you are effectively losing money fast, so you should compare the interest rates on offer carefully. Fixed-term savings accounts may also be worth exploring if you can realistically lock up your money for a few years.
As interest rates fall, it is their level relative to inflation which is key. If your cash savings aren’t at least keeping pace with inflation, you are effectively losing money fast, so you should compare the interest rates on offer carefully
On the investment portfolio side, it’s a matter of how market sentiment is affected by falling interest rates and how cheaper money affects the balance sheets of companies. Many are saying that this will be a further factor boosting UK equities, which have been rather unloved in recent years.
There are many ramifications to inflation and interest rate changes which you may need to discuss with a wealth manager.
Why not let us arrange some no-obligation conversations with investment experts from our panel to help you chart a course?
Top Tip
Lee Goggin
Co-Founder
Tech dividends pose new questions on income versus growth
Our users have noticed that technology companies including Alphabet, Meta, and Salesforce have started to pay dividends, marking a departure from the kind of slow and steady companies traditionally thought of as dividend payers like banks.
Tech companies are usually ploughing profits back into research and development, so their arrival on the dividend scene is a welcome one, particularly as the Artificial Intelligence boom continues to build. However, experts are warning that investors should consider the full effects before altering dividends-focused portfolios too much. Tech stocks might start to become more highly correlated with the rest of the market, for instance, and may lose their power as diversifiers. The yields on offer are also quite low, for the present at least.
Finding the right balance between dividends and growth can be a complex calculation, and what’s more the answer will have to change as your time horizon does
Finding the right balance between dividends and growth can be a complex calculation, and what’s more the answer will have to change as your time horizon does. What suits someone in their wealth accumulation phase seldom does as they decumulate their wealth in retirement.
We can help you have the in-depth conversations about portfolio strategy and asset allocation you need to have with experts who really understand the markets. Simply complete our short wealth manager matching questionnaire to get started.
Approach your wealth holistically
As this month’s Client Trends emphasises, you cannot afford to neglect any element of your wealth management plan. Macroeconomics and fiscal policy, how individual equities sectors are behaving and hidden tax exposures are just a few of the considerations swirling in our users’ minds – as well they should be.
Effective wealth management is centred on being able to look at your finances through multiple lenses so you can plot portfolio management and tax planning in a unified way. There is a reason that people choose to delegate this complex task to a professional adviser backed with institutional grade research and interdisciplinary expertise via their wider team.
Save yourself time – and stress – by joining the thousands of individuals who have found their ideal wealth manager match through us.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
