What are advisers most concerned about in 2024?

What are advisers most concerned about in 2024?

Consumer sentiment has been on the up since we’ve entered the second half of the year.

According to GfK’s long-running consumer confidence index, the UK’s overall consumer confidence score in June was up ten points from the previous year and up three points from the month prior.

Though the score remained in negative territory at minus 14, it was the third month that the headline consumer confidence score in the UK had increased. Joe Staton, client strategy director at GfK, explained that the score was bolstered by UK consumers’ improved expectations for the economy.

But how do financial advisers feel? And what do they think their clients are really feeling?

According to the latest Schroders Pulse Survey, advisers are also feeling sunnier about the economy. The study, conducted between 25 April and 8 May, found that 28% advisers are expecting equity market returns to be higher than historical averages over the next five years.

This is the highest level in the past five years of the annual survey and is well above the proportion of advisers (14%) that think equity market returns will be lower than historical averages.

Growth expectations for the next five years are also positive. 69% of advisers are predicting higher global growth over the next five years, with just 5% predicting growth to trend lower.

Despite the positivity, most advisers still expect a good deal of disruption over the next five years. Just over half of advisers (57%) expect higher disruption related to technological advances, while 73% expect considerable disruption due to geopolitics.

The expectation of geopolitics-related disruption has been on a clear upward trajectory in the Schroders survey since Russia’s invasion of Ukraine and has been exacerbated in recent months by the ongoing conflict in Gaza. In addition, of course, there are elections in 64 countries this year, including the recent UK election and the upcoming US election. These elections will naturally shape the future of geopolitics to varying degrees.

When asked by Schroders what advisers think their clients were most concerned about, capital loss, inflation, generating sufficient income or rising interest rates, there was one clear answer. According to advisers, clients remain most concerned about the prospect of losing capital.

47% of advisers ranked this as their clients’ number one concern, down from a peak of 63% in November 2022. Schroders suggested this downward trend may be a result in calming market volatility and the recent improvement in market sentiment, particularly around the expectations of a ‘soft landing’ for the global economy following periods of stagnant growth.

Inflation ranked was the second biggest concern, with 26% of advisers reporting it as their clients’ top concern.

Rising interest rates were of least concern, meanwhile, with only 10% of advisers ranking it in first place for clients. Schroders suggested that as most adviser’s clients tend to be older and wealthier, many won’t be impacted should interest rates increase mortgage rates.