The asset manager notes that while the cycle looks to be synchronised, it is important to note that central banks are at pains to emphasise that they remain data dependent – and this could see a degree of divergence across 2025.

Policymakers are rightly cautious and careful; fiscal uncertainties and geopolitical tensions are also keeping them on alert. Importantly, developed markets’ central banks are likely to keep rates restrictive for a while, steadily moving back towards neutral, while a negative shock will be needed for policy to become stimulative.

Regarding global growth, the asset manager predicts that this will slow slightly to around 3.1% for 2024, marking a small decrease on the 2023 figures of 3.3% growth, whilst the firm expects a similar increase of 3% in 2025. Real interest rates remain firmly positive for the time being, and this will continue to put some downward pressure on investment and rate-sensitive sectors such as housing and credit-fuelled consumption.

The global “soft landing” is quite heterogeneous as the U.S. and India outperform the other major economies; the U.S. is likely to grow faster than last year by a touch, clocking in a 2.6% expansion, and India will grow at nearly a 7% clip, according to consensus. Both have been steadily revised upward through the year, as most forecasts proved erroneously pessimistic. For next year, a lot will depend on the U.S. election and its impact on taxes, spending and regulation.

Growth in the Euro Area is expected reach around 1% this year, and be just below 1.5% in 2025, dragged down by Germany’s woes while Spain and Greece outperform.

The UK has found political stability, but its new government has yet to implement tax, regulatory, and spending policies, while the BoE is waiting for sticky inflation to abate after briefly achieving its 2.0% CPI target. GDP has recently surprised positively, but the risks seem skewed to the downside.

For emerging markets, the soft landing is a relief, with a troughing in commodity prices and the apex of bond yields ushering in a more benign landscape, especially after the battering that markets took from various election results through the past year. Tariffs, sanctions, and trade restrictions remain a threat, especially if ex-President Trump is re-elected and follows through on some of his more extreme rhetoric.

However, the macro backdrop is more supportive with a weaker dollar, lower rates, and many countries benefitting from better terms of trade. Positioning and sentiment are starting from very low levels, especially after the mid-year carry trade unwind, which crushed “carry” positions in EM, as well as Yen bears, Nikkei bulls, and vol sellers. While it validated earlier concerns about market fragility, the episode came and went quickly, and without spiralling into anything traumatic.

In Asia, Japan’s 2024 growth may print close to zero, but this has to do with some base effects from late 2023; underlying growth is a little over 1% and that steady progress should be expected for 2025 as well – enabling the BoJ to swim against the current and raise interest rates further. Finally, despite recent stimulus measures, China is in a structural slowdown and after straining to get to 5% growth this year, might slow further to around 4% next year.

With regards to asset allocation, Aviva Investors remains constructive on equities, but with expected bouts of renewed volatility, and has dialled back its overweights, favouring the US’s powerful growth drivers and Europe’s compelling valuations. Government bond yields are lower but have diversification benefits in case growth fears intensify, now that central banks are running free; the US and the UK are favoured for duration, but Japan remains an underweight. Credit has been a steady performer and assuming spreads are rangebound, High Yield is preferred to Investment Grade, though both asset classes, as well as Emerging Markets, are likely to turn in similar and decent risk-adjusted returns.

Michael Grady, head of investment strategy and chief economist at Aviva Investors, said: “As we head into the last quarter of 2024, growth has held up okay and inflationary pressures have diminished, leading to the major developed market central banks firing the starting gun on an interest rate cutting cycle. We expect a synchronised cutting cycle across major markets over the next 6-12 months.

“In the short to medium-term we see largely stable growth, and importantly, credit spreads and lending conditions also steady. Earnings have troughed and the tech boom, driven in large part by AI but accompanied by biotech, energy transition, electrification, and defence, are brightening the outlook.”

This highly anticipated evening will feature in-depth discussions on the implications of the new Labour government, hosted by the Rt Hon. Mark Field, former MP for the Cities of London and Westminster

James Quarmby (pictured), ATT (Fellow), TEP, Solicitor, is the founding partner of Private Wealth at Stephenson Harwood LLP and a recognised authority in the offshore arena, known for his robust defense of international financial centers.

Frequently appearing in the press and broadcast media, including Sky News, BBC TV News, and Bloomberg TV, he is also a Top 10 legal influencer on LinkedIn. Specialising in international tax and trusts advice for high-net-worth individuals and their businesses, international pensions, and HMRC enquiries, James is a prominent commentator on UK tax policy, public speaker, writer, and broadcaster. Described as “a fount of all knowledge” and cited as a “Leader in the Field” by Chambers Guide to the Legal Profession.

The Right Honourable Mark Christopher Field, a former MP and FCO Minister, represented the Cities of London and Westminster from 2001 to 2019. A graduate of St Edmund Hall, Oxford, Mark has extensive experience in the City of London, financial and professional services, and international economic diplomacy. Since leaving parliament, he has taken on various roles, including non-executive Chairman of Capital International Bank and senior independent NED positions at AIM-listed companies.

The event will delve into several pressing topics, including:

• Whether the new Labour government will govern as they have campaigned or if there will be a softening of their approach, particularly regarding the UK’s domicile rules.

• Labour’s stance on the Crown Dependencies, especially concerning public beneficial ownership registers.

• Concerns about Labour’s planned committee for taxation, which includes Margaret Hodge MP, a long-term adversary of the Crown Dependencies.

• How Labour plans to raise the additional funds promised for front-line services – through borrowing or raising taxes.

These and other critical questions will be explored, with the opportunity for audience members to engage directly with the esteemed speakers. This event promises to provide valuable insights into the UK’s political landscape and the potential impact of the new Labour government on various sectors.

This is a fantastic opportunity to gain insights from leading experts. Stay informed and ahead of the curve by attending this significant event.

Tickets are still available for purchase here, so don’t miss out on this unique opportunity to gain valuable industry insights.

The site’s modern design leans heavily on imagery and video. It features detailed information about IFGL, its values and history, as well as the investment, savings and protection solutions provider’s brands – RL360, Ardan International, Friends Provident International, RL360 Services, IFGL Pensions, IFGL Global Trusts and IFGL DIFC.

“It is a huge step forward for us,” said Nigel Danzelman, IFGL’s Head of Marketing Services and Communications. “The new site is much more comprehensive than its predecessor. It talks about our size, strength and ambition, which is vital for customers who are being introduced to us for the first time by their financial adviser.

“We believe it is a worthy introduction to the ever-growing world of IFGL and its brands.”

The site also features information about IFGL’s executive team, its awards and office locations worldwide.

There’s a news section, as well as information about careers at IFGL.

And there’s also a handy link to the IFGL Corporate Video, as well as the Corporate Brochure, which details information about the company’s award-winning solutions for financial advisers around the globe.

In fact, a finish line has not even been marked out on the course. Consumer Duty was a key phrase used in 2023 but don’t think you’ll hear any less of it this year – if anything, it will be referred to more frequently.

With the Financial Conduct Authority having invested a lot of time and effort into the new rules, it is going to be looking very closely at how firms are putting consumers’ needs front and centre.

There was a lot of attention on Consumer Duty in the run up to the open book implementation date in July last year, but anyone who thought that marked the end of the race was mistaken.

The regulator is not afraid to hammer home its message that Consumer Duty is “not a once and done exercise” and I can understand why.

Keep on running

The regulator says consumers are already reaping the benefits of the changes made so far. These include the development of new data to measure outcomes, ensuring the right products reach the right customers and improving communication to boost consumer understanding.

But it wants to go much further. It hopes that with higher standards and more firms innovatively competing for consumers, we will see greater trust and confidence in markets which in turn will support economic growth.

FCA director of cross cutting policy and strategy Nisha Arora strongly hinted that we should all challenge ourselves on whether the implementation exercises that were carried out have “really delivered what’s needed”.

See also: All I want for Easter is the findings of the FCA’s thematic review

None of it should be viewed as a tick box activity. Instead, it needs to be reviewed on an ongoing basis.

While no medals will be handed out for this marathon, the regulator suggests “the prize is huge if we can get this right”.

It can be easy to get so caught up in the policy, process and system changes required by the Duty that companies risk losing sight of the consumers we are here to serve. It’s paramount that does not happen.

According to Arora, the Duty is an “integral part” of the FCA’s approach and mindset at every stage of the regulatory lifecycle from authorisation to supervision and enforcement. It is a “golden thread” that runs through all its work, so we can expect to keep hearing about it.

As we all line up for the start of this marathon, we must each interpret the rules of the race and apply it to our own businesses, customers and circumstances. The FCA will highlight good and bad practice along the route, but it won’t tell us what running style we should adopt or what trainers to wear.

See also: Defaqto launches Consumer Duty profiles

One thing for certain is the regulator is taking the Consumer Duty seriously and its message to firms is to do likewise. We will all need to try to keep up the pace and no doubt navigate a few hurdles and obstacles as we do so.

It is the regulator’s hope that the work we have all put in to implement and embed the Consumer Duty means we will spot problems before they arise. We have to take the initiative without relying on the regulator to tell us what to do.

But just because there’s no finish line in sight doesn’t mean we can’t all keep working on our personal best.

On your marks, get set, go.

Steve Owen is director of product management at Morningstar Wealth

This article was written for our sister title Portfolio Adviser

Recent research by Oxford Risk shows that many advisers claim to understand their clients’ psychology well. Yet the same survey shows 70% of advisers are surprised by clients’ behaviours. This suggests they can enrich their understanding of investors’ personalities and behaviours, for the benefit of their clients, themselves, and their companies.

Other studies show these benefits could be huge.

The challenge with current processes

Many advice processes still treat clients like robots, trying to force them into “technically correct” solutions without understanding the behavioural barriers to optimal outcomes.

Most approaches assume advisers simply need to discuss clients’ financial circumstances and give them a risk tolerance questionnaire, which spits out the “perfect” asset allocation and portfolio solution.

But these “right solutions” can quickly go wrong if they ignore what each investor is comfortable with, and their ability to stay the course. Traditional approaches do not account for clients feeling so afraid of moving 100% into unfamiliar stocks and bonds that they put it off completely, nor the possibility of being diverted from the right path by fight-or-flight reflexes to short-term news stories.

Clients need to stay invested even through pandemics, wars, and market crashes. They also need to avoid the temptation to increase risk in their investment portfolios during soaring bull markets, or to follow ill-judged advice from social media, news, friends or family.

This requires an understanding of financial personality well beyond a simple risk tolerance questionnaire. Often investors need to reach the “right answer” via a series of more comfortable steps, and a behavioural guidance system can keep them on track.

The role of personality

Studies show the cost of behavioural errors is between 3% and 4% a year. The biggest part of this comes from missing long-term investment returns by staying in cash simply because it feels safe, which typically costs 4% to 5% a year on the uninvested cash. If 50% of assets are in cash, which is common, that equates to 2% to 2.5% overall in missed returns.

The remaining errors come from emotionally-led decisions people make once invested and throughout their financial journey, which typically cost people a further 1% to 1.5% per year on invested cash.

Being underinvested could happen for many behavioural reasons, such as anxiety about market conditions, lack of confidence making financial decisions, or fear of repeating past mistakes.

See also: Revealed: All the winners of the IA Best Practice Adviser Awards

Biased investment decisions can also arise from a range of personality-linked behaviours, such as wanting to invest in familiar assets, chase past performance, or prioritise income over returns.

Investors also tend to follow comfortable narratives such as “I got it right last time, I know what I’m doing”, or “my brother knows about finance, he told me to do this”. The common factor in all these behaviours is that investors are acting in ways that make them comfortable in the moment, but at the cost of long-term returns.

When you study the emotions investors can go through over the investment journey, you can see how feelings dominate the process – from reluctance to optimism, excitement, denial, fear, insecurity, panic, and even apathy.

Treating clients more like humans involves recognising how personality traits play into this rollercoaster to help intervene at the right moments. It helps advisers identify what emotions are pulling an investor off course and how to remedy that. Then it helps move them towards the right path contextually in a way that maintains emotional comfort and likely leads to much better financial outcomes over time.

Behavioural finance isn’t just about telling clients what the right portfolio is, but speaking to them in a way that, given your knowledge of their personality, lowers their behavioural barriers to it.

How to be more human-centred

This more humanised journey could involve a vast number of different approaches. For some, it may begin with drip feeding into the market; for others, it might mean starting with some home bias; or it might involve sustainable investing.

Classical finance tells us drip feeding is technically inefficient. But if the alternative is doing nothing, it’s a good way to start and add emotional comfort for someone who fears investing.

Investing 100% into home country assets might reduce diversification, but if it helps persuade a client to move out of cash, that’s a good first step. You can build international diversification later.

Allaying ethical concerns with a sustainable/ESG approach can also break down barriers to investment.

It’s critical to understand what these different comfortable steps will be for each person you advise. In Anna Karenina, Tolstoy wrote, “all happy families are alike; each unhappy family is unhappy in its own way.” Humans are unique in their individual flaws and inefficiencies. Though the right answer is the same for most people, the emotional barriers they need to overcome to get there are different.

Greg B Davies, PhD, is head of Behavioural Finance, Oxford Risk