Adapting wealth management strategies amid political shifts

Whatever your ultimate aim, effective wealth management strategies should be considered as part of a long-term financial plan, one that takes into account not just today, but the years ahead. 

We expect our relationship with you to last decades, and a great deal can change over that time. The last 25 years have seen “A-day” and Pension Simplification, the introduction of the ISA, and Pension Freedoms legislation. The same period has brought a global financial crisis, countless conflicts, and the Covid pandemic. 

Short-term changes will occur, but they need to be seen in the wider context of a generation (25 years, say) or even your lifetime. This might require us to make short-term decisions to best serve your longer-term plans, and it’s something we’re always on top of, behind the scenes. 

Keep reading to find out how we make changes today to help you reach your future goals. 

      1. Navigating political risk with confidence

According to the Guardian, more than 80 countries headed to the polls in 2024. The so-called “year of elections” saw Labour win a landslide at home and President Trump returned to the White House. 

From chancellor Rachel Reeves’ Autumn Budget (more on which later) to Trump’s “Liberation Day” tariffs, the geopolitical landscape has been in flux of late and ignoring the noise has been arguably more difficult than ever. 

Taking the long-term view can be as simple as reassuring you during uncertain times. Short-term market volatility can be concerning and might even lead to emotional decision-making or knee-jerk reactions. These can be damaging. 

Using our knowledge of markets and risk management, we can help you to stay calm and patient, protecting your assets by switching your focus to the long term. Staying invested means your money will still be in place when markets recover, as historic trends suggest they will, and you’ll benefit not only from investment returns but compound growth too. 

       2. Portfolio diversification and asset allocation

Global uncertainty reinforces the need for a diversified portfolio designed to spread your investment risk. The unpredictability of Trump’s tariffs and levies, for example, could impact different asset classes, sectors, and geographical regions at different times.  

Through closely monitoring market movements, we can track your asset allocation and ensure it always aligns with your risk profile. If adjustments are needed in the short term, we’ll let you know and explain why so you have all the information you need to make the most suitable choice for you. 

       3. Inheritance Tax and pension changes

Rachel Reeves used her 2024 Autumn Budget to propose changes to the Inheritance Tax (IHT) treatment of pensions. Due to come into force from April 2027, the changes could have significant implications for your long-term retirement and estate planning, so it’s only right that we act now. 

Making changes in the present – to your pension beneficiaries or by revisiting your life insurance – could offer long-term protection for you and the generations that follow. 

Your plans are long term, but they also need to be robust and adaptable enough to change when legislation does. This is why we’re always on top of imminent and proposed changes, helping to mitigate the impact on your tax bill, and your ability to achieve your goals. 

       4. Tax changes and VAT on private school fees

In the past, you might’ve provided yourself with an income via regular dividend payments. In recent years, though, the tax-free Dividend Allowance has been slashed and currently stands at just £500. Likewise, recent years have seen changes to Capital Gains Tax (CGT) – most recently an increase in rates announced in the chancellor’s Budget.  

Changes to thresholds and allowances occur all the time, but they can still affect your plans and might need a shift in thinking. Finding other ways to provide an income or looking at the timing of asset disposals might be required to keep your long-term plans on track. 

Household budgets can change too, as we all saw during the cost of living crisis. A more recent adjustment to your expenditure might’ve been caused by the government’s decision to add VAT to private school fees. 

Cashflow modelling can help to evaluate the impact of changes to your income and outgoings, making it easier to find areas where changes or savings can be made. 

      5. Sustainable investing in a shifting world 

Over the last few decades, the public consciousness of climate change and sustainability has shifted dramatically, most notably thanks to high-profile figures like David Attenborough and Greta Thunberg.  

As the number of ESG (environmental, social and governance) funds has increased, so too has the number of investors who want to align their money with their values through sustainable investing. Doing so doesn’t have to mean sacrificing returns either, but it is an area still growing and undergoing change.  

Political shifts have a significant impact here, in the shape of Donald Trump withdrawing the US from the Paris Agreement (for the second time) and Kemi Badenoch’s recent speech (reported by iNews) in which she called the UK’s 2050 net-zero target “impossible”. 

In a growing and evolving field, we can help you remain on track to your long-term goals while staying true to your values today. 

Get in touch 

Have questions about adapting your wealth management strategies to today’s political and economic environment? Please reach out to your Foster Denovo adviser by emailing advise-me@fosterdonovo.com or calling 0330 332 7866 for more information. 

Please note 

This article is for general information only and does not constitute advice. The information is aimed at retail clients only. 

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstance. The Financial Conduct Authority does not regulate estate planning and tax planning.