Search
Client Login
Four of Wren Sterling’s experts share their views on what we might see in 2025 in their area of expertise; investments, later life care, mortgages and pensions.
Chief Investment Officer at Magnus, Wren Sterling Group’s Discretionary Fund Management business:
We don’t go in for New Year’s resolutions at Magnus: if something needs changing, it should be done today. With that in mind, it’s no surprise that our mantra for 2025 is to keep invested and carry on!
We’ve highlighted 5 key themes that we believe will drive markets over this year and beyond, but the crux for us is that today’s stock market strength remains underpinned by rising corporate profits, a resilient consumer and Central Banks that are in a strong position to cut interest rates.
Whilst returns will likely moderate from the fast-paced gains of the last 2 years (as expectations have now caught up with reality), we don’t see evidence of the traditional “overs” that one would normally associate with an exhausted market. Stocks, whilst fully priced in certain areas, do not appear overvalued, we see little risk of economies over-heating and, finally, we see the risk of over-zealous Central banks making an overly restrictive policy error as being low.
The 5 key themes that shape our thinking for this year and beyond are:
Want more of Rory’s views? There’s more to this article available here.
Head of Later Life Advice
As far as Lasting Power of Attorneys (LPAs) are concerned, the waiting time for registering an LPA is virtually back to pre-pandemic levels of 8-10 weeks, from a peak of up to 24 weeks during the last months of the pandemic. Certainly, this matches my own experience with the turnaround of LPAs I’ve sent to the Office of the Public Guardian (OPG) recently.
However, the big news is that the OPG is actively working on a process to digitise the creation of an LPA from beginning to end, with Donors, Certificate Providers, and Attorneys/Replacement Attorneys “signing” the digital document using something similar to DocuSign. Not only will this speed up the entire process, but it will cut out many of the errors – missed signatures, wrong dates, misspelt names, etc. In 2022-23 the OPG rejected 50,918 LPAs for Property & Financial Affairs and Health & Welfare creating additional delays and extra expense.
Likely to come in during 2025 is a new Wills Act, which would only be a slightly overdue replacement for the Wills Act 1837! A topical issue that this may well address is the question of capacity. The 1837 Act stated that an individual had to be 21 to make a Will, which was reduced to 18 by the Family Law Reform Act 1970, but the Mental Capacity Act (MCA) 2005 doesn’t mention age.
The MCA defines capacity by four simple elements – does the individual understand what they are being asked; can they mull it over, can they make a decision; can they communicate that decision? If the answer to all four is in the affirmative, then the individual is deemed to have capacity. With Wills there’s also a bit of case law that comes into play, known as Banks & Goodfellow, which states that you should have some concept of the size of your estate, so what you are giving away, and who you may have a moral obligation to benefit.
What’s topical about this? Well, Luke Littler, the new World Darts Champion couldn’t make a Will under the current regime until 21 January 2025, being his 18th birthday, despite reports of him earning £1m+ in his first professional year! This isn’t the only issue expected to be addressed by the new Act, as it is intended to codify some form of electronic Will like the new LPAs.
Mortgage & Protection Adviser
Having been wrongfooted by a cautious BoE, which only cut rates in August and November last year, financial markets are now pricing in just one in 2025, in February. This time last year, swaps markets indicated six potential cuts in 2024. And just a few weeks ago, the expectation was for three cuts in 2025. Basically, nobody knows, but they’re all fairly sure there will be fewer cuts than anticipated back in 2024.
The winners of such a scenario will be customers who are coming out of a 2- or 3-year-fixed rate, as rates are significantly lower than late 2022 and 2023. The losers will be people coming out of five-year deals as they will still see a very large rise from 2020 interest rates.
Although the base rate is uncertain, fixed rates remain as low as they have been for almost 3 years and are around 4-4.5% with many lenders offering enhanced affordability for first time buyers in an attempt to kickstart the housing market.
Housing experts expect sales to increase over the next few months, ahead of stamp duty changes in April, before falling away afterwards.
This will deliver a particularly heavy hit to first-time buyers who will not only need to raise enough money for a deposit but also enough to cover the higher tax bill.
Head of Research
The Budget raised the spectre of a number of daunting reversals to received wisdom for clients considering how to use their portfolios, both to provide for their lifestyle in older age, and as part of any plans to pass on wealth to younger generations.
There remains plenty yet to be finalised as part of these changes, with consultations on the way in which changes to IHT relief for farmers and those invested in markets such as AIM, and the much-vaunted pensions changes will actually work.
What this means is that for a significant part of 2025, we will be faced with a desire to ensure our planning remains appropriate for our clients, while dealing with a changing landscape – some of which we know the outcome, some of which we are all driving in fog. As a result, a cautionary approach will be the best approach, and making radical changes to an existing plan is as likely to be a bad idea.
As the world becomes more complex it is tempting to believe that the solutions needed should match that complexity – that is often not the case, and the fundamental aspect of understanding what you want to achieve with your money is the key to successful planning. Simplicity should not be confused with ‘basic’ or easy – as Blaise Pascal (often mistakenly attributed to Mark Twain and others) said “I didn’t have time to write a short letter, so I wrote you a long one”. Our advisers exist to clear complexity for our clients and that work only continues to get harder, but that only hardens our resolve to ensure we’re delivering plans that are comprehensible and durable, as external conditions change.
IMPORTANT: Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of your investments can fall as well as rise and is not guaranteed.
The content of this article does not constitute financial advice. You should obtain professional advice based on your individual circumstances before making any financial decisions.
