This week has provided some positive news for wealth managers. According to ARC, returns at private client portfolios are up on recent quarters. Combined with falling inflation – and the expectation of subsequent falling interest rates – many predict this will only be the beginning of more positive investment returns.

According to firms’ full year results, many of which are only just being published, wealth managers and private banks have weathered recent storms well. Most are reporting increases in profits and income, suggesting these firms will be well placed to capitalise on more positive financial markets.

Will it all be smooth sailing ahead for wealth managers though? Something tells me that – much like the recent weather – although Spring may well be emerging for wealth managers, the outlook will not be without a few April showers.

There are clearly a few major showers that could impact wealth managers and could dent future business performance. 

The most obvious of these is Consumer Duty. 

While some firms are confident this will not majorly affect their businesses due to already complying as part of their client service, many are likely to be impacted.

So far, St James’s Place (SJP) has taken the brunt of attention in regards to Consumer Duty shortcomings. Its over £400 million fund for client compensation for the non-delivery of advice attracted significant attention, both from the media and the industry.

However, it is very unlikely SJP will be the only firm that needs to compensate clients. It is clear others will find they may also have to compensate and/or face further interventions.

Regulation is not the only potential storm ahead.

It is well known that inflation falls are rarely linear. There may well be spikes ahead as it continues its fall towards the Bank of England’s 2.0 percent target. Any spikes will likely make the bank nervous and could lead to a delay in interest rate cuts.

Moreover, it would be remiss to not mention the UK economy’s current fragile state. While economists stress its technical nature, the country is in a recession, with growth outlooks relatively weak.

All this serves to dent confidence in the market, which can lead to problems for investors. Of course, taking a global, diversified approach can go a long way to reducing this risk, but with so much macroeconomic uncertainty worldwide, it is likely some uncertainty at least will persist.

Is it all going to be up from here for wealth managers? Without a crystal ball, it is impossible to tell. But, the optimist in me is confident that many firms will find a way to capitalise on any opportunities that may lie ahead.