While many of us focus on drinking less and exercising more at this time of year, it is also a great time to consider your planning strategy, ensure your investments are on track and that you have the right protection and life insurance in place.
After a volatile year for the stock market in 2025, investors may be wondering whether 2026 is the year to take the plunge, particularly as the FTSE 100 climbed above 10,000 points for the first time since it was created in 1984 earlier this month.
The Chancellor would certainly approve if we did – she is said to want more of us to move our money out of cash and invest in British business by buying stocks and shares instead. In her delayed November Budget, she ended months of speculation by slashing the amount that can be saved in cash individual savings accounts (ISAs), with only £12,000 of the £20,000 allowance allowed to be held in cash accounts from April 2027. However, if the saver is over the age of 65, they will retain the full cash allowance.
While this was unwelcome news for those who prefer investing in cash ISAs, Ms Reeves had better news for farmers and business owners, announcing just before Christmas that the inheritance tax threshold for Agricultural and Business Relief will be set at £2.5 million from April 2026, instead of the previously announced £1m. While this was welcomed by many, those with a larger agricultural or business asset base will likely still have plenty of estate planning to do.
Below, we ask SPF’s Antony Cousins, Head of Wealth Management, and Life and Inheritance Tax Insurance adviser Rob May, what investors need to bear in mind this year (and beyond) and how best to prepare.
Investment – Diversification is Key
2025 was a bumpy year for investors, from Donald Trump threatening tariffs and concerns over the AI bubble. However, despite some volatility, stock markets performed strongly in 2025, with the FTSE 100 rising by more than a fifth – the question is whether it could do similar this year. However, Antony Cousins explains that while the FTSE 100 is an index of the largest UK companies listed on the London Stock Exchange, that doesn’t mean their earnings are made here: “Over 80% of the FTSE 100 is comprised of companies from overseas, so while it is performing well, it doesn’t necessarily reflect exactly what is going on in the UK.”
Antony adds that the composition of the FTSE is very “old school – financials, banking, industrials and pharmaceutical companies”. It is not that tech-heavy, making it a potential hedge for investors concerned about the valuations of tech companies.
“The currency trade-off is pretty decent and because there is not much tech, it’s a great hedge. If people take money out of America, due to the political ups and downs there, that could mean a flow of money into the UK, which would be beneficial. However, whether that will continue – who knows?”
There is lots of optimism with regards to stock market growth, at least for the first six months of the year or until the mid-terms in the US when it will be important for President Trump to ensure that the economy and stock market is looking healthy. However, Antony warns that the markets are “starting at fairly high valuations in some parts” and volatility may be greater than ever. He therefore advises investors to exercise caution: “Pick your markets carefully, be active and aim for a diversified portfolio. The US may have been the darling of the stock markets in previous years but in 2025 it underperformed other markets and in pound terms was one of the worst.”
Antony advises speaking to an independent adviser to help you plan your strategy.
“Whether you have a growth strategy or wish to focus on accumulating wealth, don’t forget about spending. We take clients through their cashflow plans to ensure they have enough put by even when the stock market hits a wobble so that they aren’t forced to make rash decisions. Having enough in cash so that you don’t have to sell shares at the ‘wrong’ time is a sensible approach.”
While the plan will look different for each investor, he advises investors to look at their pension, utilise their annual ISA allowance and pay off debt. “Only after you have done all of those should you think about other forms of investment planning,” he advises. “We have clients making net returns of 7% or 8% on the stock market. They complain that their mortgage rate is more than doubling from 1.5% to 3.8% and you think you shouldn’t necessarily be paying off your debt [when you are earning so much more on your investments than you are paying for your mortgage]. However, every client is different and every investment strategy should be bespoke.”
While it is often said that you should have six or twelve months of expenditure in a cash fund for emergencies, Antony thinks you may need as much as two years’ worth. “If there is a really big financial crisis – like a dotcom bubble bursting – it could take two years for your investments to recover. If a client has a portfolio with a balanced strategy whereby 65% of it is invested on the stock market, in that scenario they will be able to sell some of the other assets and won’t have to sell those shares which have plummeted in value. However, you also need to appreciate that what is left in the portfolio is no longer balanced but is higher risk and will need re-assessing.”
Ideally, he says, wealth managers need to work better with mortgage brokers and consider the debt side of things more to aid their clients. It needs a tripartite discussion. He also recommends looking at your overall portfolio as a ‘bare minimum once a year’ but investments themselves need looking at on a monthly basis. “How we work is that the underlying longer-term strategy is agreed and formally reviewed at least once a year but then we kick the tyres once a month: we have a committee which looks at the investments themselves – should they increase in an area, are they overweight or underweight?”
“How we work is that the underlying longer-term strategy is agreed and formally reviewed at least once a year but then we kick the tyres once a month: we have a committee which looks at the investments themselves – should they increase in an area, are they overweight or underweight?”
Estate and Tax Planning
Since the Budget, demand for life insurance has surged as those who held out to see what the Chancellor had in mind, particularly on the agricultural side, have taken action to implement estate planning. Rob May says: “The slight change just before Christmas [where the allowance was increased from £1m to £2.5m] threw a bit of a spanner into the works as some had already done some planning around the £1m level and then that was changed to £2.5m.”
This is where a life assurance solution can be flexible.
“If your circumstances, or legislation, changes, so the amount of cover you need is less than you implemented, it isn’t a problem – you simply reduce the amount you have insured for and your premium reduces. However, the other way round is not so easy. If you’ve under-insured, and therefore need to ask the insurer to take on more risk, it is not as straightforward as reducing cover. Your health may have changed, for example, and it may require further underwriting.”
One way to avoid this happening in future is to set up a policy on an indexed basis so that coverage will increase by a certain percentage each year. Either way, cover should be reviewed every five years at least, suggests Rob, although this is different for everyone and if you have a major life event or change in circumstances, such as a marriage, divorce or business exit, then that is a good time to review your provision.
Life insurance, as part of a broader estate planning strategy, is proving to be a useful tool for those who want a simple, effective way of planning for inheritance tax and estate liquidity on death, whether they be farmers and landowners; private business owners; long-term residents of the UK; those gifting assets; non-resident owners of UK residential property; and/or people with large uncrystallised pension funds.
While Rob says that the row back from the Chancellor with regards to the allowance for agricultural and business relief will be a ‘saving grace’ for some, small or private business owners could still be hard hit. “As well as what’s coming in this year, further changes in 2027 around pensions being bought into the IHT net will also have an impact. We are starting to see clients look at their pensions and wondering what they need to do – combining flexible drawdown/annuities with a whole-of-life insurance policy may be the answer. ”
Seeking Advice
When it comes to your investments and estate planning, expertise is vital. Rob notes that the number of advisers promoting life insurance has surged since the Budget but he is concerned that many lack the depth of knowledge required to advise clients effectively.
Another concern is that from April, registered banks and other financial firms will be able to offer targeted support so that people can make investment and pension recommendations based on what similar groups of people can do with their money. While this may be free, it won’t be individually-tailored advice specific to your circumstances, which can only come from an authorised financial adviser, such as SPF Private Clients, for a fee.
At SPF we have a team of advisers who can guide you through what can be a very complex process, ensuring you and your family are protected and provided for. Get in touch for more information.
