Eight wealth specialists share what they will be talking to clients about as we transition into 2024.
With a historic 76 elections planned around the world, a potential change of UK government and more movement predicted for interest rates and central bank policies, the next 12 months look set to be pivotal from an economic and geopolitical standpoint.
Eight HSBC Global Private Banking experts in the UK share their top insights as we move into the new year. What are some of the most pressing wealth management considerations in 2024? How can you get ahead of the curve and ensure your financial plan is ready for what lies ahead? Find out more below.
Chief Investment Officer, HSBC UK & CI Global Private Banking
Jonathan is the CIO for UK Private Banking and Wealth. The CIO team manages the tactical asset allocation for our advisory portfolios as well as selecting our highest conviction investment ideas. Communicating these investment views to clients is at the heart of his day-to-day role.
“A key consideration for clients is to try and avoid getting caught in cash this year. Policy rates are forecast to fall as inflation continues to ease. Meanwhile, consumer demand is holding up well in the US and sentiment is improving, thanks to easing pressures on the cost of living. This means that companies can grow earnings this year, helping equity returns.
We will be keeping an eye on the more cyclical companies as the risk is growth in the US beats expectations. Alternatively, sticking with cash faces reinvestment risk at lower rates – we expect the Fed to kick-off a falling rate cycle in June, with the BoE following a couple of months later.
When wealth planning through 2024, it is important to manage risks. Politics will play a pivotal role as over 1.5 billion will head to the polls, including both in the US and UK. With ongoing conflicts in the Middle East and Ukraine, the chance of another geopolitical shock also has to be factored into portfolios.
Diversification is key, with a healthy weighting of alternative asset classes a sensible choice. Indeed, the balanced portfolio has reasserted itself as the first port of call for protecting wealth after a stronger finish to 2023. However, clients should be more aware of currency risk this year. GBP gained almost 6 per cent last year against the USD and we think that much of this will reverse by the end of 2024.”
Director in Investment Wealth Solutions and Product Specialists for Equities and Funds, HSBC Global Private Banking
Anna heads up our Equity Advisory team in London, which offers clients bespoke portfolio solutions that invest in direct equities on an advisory basis. This proactive service allows us to be dynamic in our approach, taking advantage of market movements.
“When it comes to 2024, it will be important for clients to ensure they are – in some way, shape or form – invested. Returns on savings accounts and money market funds were great in 2023, but this will likely come to an end as interest rates start to fall in 2024. As such, clients should be considering their investment objectives and risk profiles to make sure their portfolios can meet their needs for the next few years.
I would go a step further and say that clients should make sure they stay invested. Markets move in waves – with last year being a great example of this. When markets were low in October, many investors felt very uncomfortable. But had they sold they would have missed the +15 per cent bounce that has happened since.
It’s extremely hard to time the market. In fact, statistics suggest that if an investor were to miss the 10 best days in the market, they would shed over 50 per cent of their end portfolio value.
With a difficult year of interest rate hikes behind us – and +10 per cent corporate earnings growth expected – we have a reasonably constructive outlook for 2024.”
Head of Investment Counselling, HSBC Global Private Banking
James is Head of a team of Investment Counsellors who are responsible for advising on and managing investment portfolios for High & Ultra High Net Worth clients across a range of asset classes, including equities, fixed income, mutual funds, structured investments, private equity, real estate, hedge funds and commodities.
“As we head into 2024, it has become clear that, bar a further outbreak in inflation, the major central banks in the US, UK and Europe are finished with raising interest rates. Instead, attention is now turning to when interest rates will begin to be cut. This means cash rates will come down, and we therefore suggest clients with large amounts of cash look for alternatives.
Historically, the period of time between the last rate increase and the first rate cut has been a good one for both equities and fixed income. In our view, clients should consider adding to fixed income, and to increase the duration of their existing fixed income positions, to take advantage of falling yields. We also see equities making further progress but have a preference for US equities. We forecast a better year for earnings growth (+8%) as we expect the US to avoid recession, whilst also expecting margins to improve as inflation comes down – allowing for further favourable moves in valuations. We have a price target on the S&P500 for the end of 2024 of 5,000.
Our recommendation that clients continue to increase their exposure to alternatives will further diversify their portfolio and provide downside protection. Since 2021, we have seen the launch of a number of open-ended private market funds in real estate and private credit. Further funds will be launched in 2024, including in private equity.
This opens up a suite of asset classes to clients who are less comfortable with unpredictable cash flows and the long-term time horizons associated with closed-ended funds.”
Alternatives Investment Specialist, HSBC Global Private Banking
As the Alternatives Specialist for HSBC Global Private Banking UK, Emma delivers solutions across private equity, hedge funds, real estate, and private credit and is responsible for the clients' journey in this asset class.
“A consistent feature of alternative investments is the importance of manager selection, with the dispersion of returns between the best and the worst managers far larger than other asset classes.
Not only is this likely to continue, but with key events such as a potential fall in interest rates being expected by the markets, that gap may actually widen in 2024 as managers take different outlooks and approaches. We have been fortunate at HSBC to partner with top tier managers over our long history in this space.
Through our partnership with HSBC Alternatives, which is part of HSBC Asset Management, we look forward to expanding the range of solutions available to clients in 2024, particularly with open-ended private market solutions, which can provide more convenience and subscription flexibility than traditional closed-ended drawdown structures. We will also be adding new sub-asset classes that will benefit from the higher inflationary environment.
What was exciting in 2023 was that even among a historically low deal volume backdrop in private equity, we saw some strong exits. Likewise, in 2024, we expect to see managers being creative when it comes to delivering returns to investors.”
Director, Ultra High Net Worth, HSBC Global Private Banking
Nick advises the Bank’s top tier of Ultra High Net Worth clients as a Senior Relationship Manager, with a particular focus on entrepreneurs.
“Each client has their own fascinating story, and I am incredibly privileged to work with such interesting people and to be entrusted by them to protect their wealth.
Until we can predict the future, the best strategy for everyone is to position their investments on the chess board with as much resilience and adaptability as possible. For me, there are two clear strategies to consider – diversification and private equity.
In the year ahead, diversification will be crucial to both capture opportunities from positive market indicators, and cushion the impact of ongoing uncertainty and volatility. Clients should also have private equity on their radar in 2024. Private equity returns have outperformed public equities over the past 20 years, as the number of listed US companies has fallen from around 8,000 in the mid-1990s to around 4,300 today. Private equity has also generated a 14.4 per cent gain in the past 15 years – that’s nearly double the 8.8 per cent of the MSCI World equity index.”
Head of Wealth Planning & Advisory, UK & EMEA, HSBC Global Private Banking
Jeremy leads the Wealth Planning & Advisory (“WPA”) teams in the UK and EMEA. WPA help clients with all aspects of their wealth planning needs from wealth structuring, financial planning, family governance to philanthropy and Family Office Advisory.
“With an upcoming general election in 2024 and party manifestos in the making, political winds of change are blowing across the UK once again. While the difference in tax policies of the main political parties may not be as stark as in 2019, lots of the next year currently remains a crystal ball gazing exercise around what might happen in respect of tax policy. Looking forward, we must consider the potential impact of tax policy changes on the existing arrangements or structures many of our clients may already have in place.
As we approach the election, we will receive far more detail on key taxation policies as the key political parties publish their manifestos. We will look to communicate the headline points to our clients as succinctly as possible.
We remain close to our clients by making sure that we are well-informed, considered, and quick to guide them on options relevant to their circumstances. We are here to support clients and their families throughout this uncertain period. Building or enhancing flexibility around structure diversification, ensuring we have a consolidated view of our client's wealth, in whatever form this takes, and if the selected ownership structure allows them to meet their objectives, updating estate plans and governance affairs are just some of the key areas we see as fundamental for the year ahead.
And while we do not provide tax advice, we will continue to support with the coordination of local and cross-border advice and act in our client’s best interests. We will assist them in protecting and growing assets and action succession plans alongside their other trusted advisors, irrespective of what changes may occur in relation to the personal taxation of both UK and non-UK domiciled clients.”
Relationship Manager, HSBC Global Private Banking
Ed advises UK individuals and families on their wealth – specialising in business owners and entrepreneurs, particularly those from a technology-related background.
“Clients use our services because we specialise in building investment portfolios and advising on estate planning.
Heading into 2024, the conversations I’m having are on the direction of interest rates and geopolitical events.
With more elections to be held in the upcoming year than ever before, 2024 will be a big year for geopolitics. In particular, many clients are preparing for a UK election. While the details of a future government are unknown, it is worth stress testing estate plans.
On interest rates, our expectation is that as inflation subsides major central banks will start cutting rates.
The impact of interest rates and geopolitical events on portfolios will depend person to person. I would suggest reviewing investments early into the New Year, and keep focusing on opportunities… it can sometimes be easy to just focus on the downside!
For those looking to sell their business last year was a difficult one. Rising interest rates combined with higher inflation led to a reduction in business sales across the board. This meant some frustrated owners did not get the value they expected or experienced delays in exiting.
There are however opportunities in certain sectors going into 2024. For instance, the mid-market technology sector has maintained organic growth, keeping pace with pre-COVID growth trends.
With this in mind, pre-sale planning should be on every business owner’s agenda to make sure their family and finances are prepared.”
Head of Credit Advisory, HSBC Global Private Banking
Gary is the Head of Credit Advisory for HSBC Global Private Banking in the UK. His team is responsible for guiding clients through their borrowing needs.
“For me, the year ahead can be broken down into stages. We spent a vast proportion of 2023 making sure our affairs are in order. We watched where interest rates would peak closely, so we could decide on the level of debt we should maintain. We watched asset prices fluctuate, then stabilise as supply and demand gripped the global economy. We educated anyone under the age of 40 on what the world looked like when interest rates were ‘normal’ and not zero. And anyone under the age of 40 didn’t hesitate to respond by reminding the rest of us that the world moves on at such a pace that there’s another world called the metaverse we didn’t spot coming around the corner.
So, what do we do now? The first stage is to get ourselves ready. I would encourage everyone to take stock of their affairs. Assess the level of commitments you have and review assets that should or shouldn’t have leverage. 2024 will no doubt open opportunity and it will be important to be ready to move quickly when they arise.
Innovative businesses may find success. Ventures that produce liquidity events for those who have previously invested are a particularly advantageous position. London and other global stock markets will likely entice back their share of new business listings from the previously dominant New York.
It will also be key to ensure you have the right team around you, whether that is a professional family office or a complement of trusted advisors such as your HSBC Credit Advisor and Relationship Manager.”
No matter what 2024 holds, your Relationship Manager, Investment Counsellor, and Credit Advisor will be on hand to help you navigate the markets and to support you in protecting, managing, and growing your wealth.
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