With the new year only days away I thought it timely to share our review of 2013. While some people would group 2013 in with the volatile years that went before it, the underlying theme of 2013 was recovery.
While the UK has officially been out of recession for some time now, 2013 would for most have felt like the year the recovery really bedded in. The forecasts for the UK economy look promising going into next year and lets hope that worst of the current “downturn” is truly behind us.
As far as the markets are concerned 2013 was a fantastic year. The FTSE 100 opened on 2nd January at 6027 and is sitting as I write (30th December) at 6,740 for a gain of c11.9%. The US market faired even better with an opening figure of 13,412 and a close on 26th December of 16,479, which is a gain of c22.8%. For some reason the media painted a rather more gloomy picture of western economies but the numbers never lie with both the UK and US enjoying a good year for market growth.
The start of 2013 also saw the introduction of the FSA’s “Retail Distribution Review”. This was the biggest legislative change in the financial planning profession for some time with the ban on product based commission coinciding with the need for a higher level 4 standard of qualifications in order to provide professional investment advice. At Buckingham Gate this caused us less concern then most due to our fixed fee charging structure and commitment to an even higher level 6 qualification and Chartered Financial Planner status.
Also in January, the government announced the move to a single tier state pension, which will be around £144 per week in todays terms. While some people will be worse off under the new rules I feel that this is a good move for state pension provision in the UK. The flat rate pension removes all of the ambiguity and uncertainty from the previous system of a basic state pension along with many over complicated top up plans. What this means is that people can clearly see what level of provision the state will provide and, as such, make suitable private plans on top of this.
Also in the pensions arena was the introduction of auto-enrolment for the largest UK employers. This new legislation means that most people not currently contributing to a workplace pension will be automatically enrolled into a plan with contributions taken directly from salary. 2014 will see this legislation apply to smaller employers and Buckingham Gate has an exiting proposition lined up to provide professional advice and assistance to those employers. Look out for more details in early 2014!
Property prices also resumed their seemingly never-ending upward climb in 2013. Already there is talk of a further housing bubble and this will be watched closely by policy makers in the new year. With house price growth already predicted to average around 8% in 2014 they could have their work cut out.
We have a number of financial planning issues already on the radar for 2014 and will provide our thoughts on some of these in the first of our new year planning posts early in January.
In the mean time the whole team at Buckingham Gate would like to wish our clients a happy and prosperous new year!