UK wealth manager Brewin Dolphin names Scottish independence, European economic recovery, financial planning for retirement and an increased bearish attitude towards emerging markets, as some of its top investment predictions for 2014.

The industry must not become complacent in 2014, as the economy starts to recover and markets stabilize. At least that is the recommendation from the UK wealth manager, Brewin Dolphin, which names Scottish independence, European economic recovery, financial planning for retirement and an increased bearish attitude towards emerging markets, as some of its top investment predictions for 2014.

Particularly, the firm’s chief executive David Nicol foresees a tight race over Scottish Independence and warns financial services firm’s about remaining complacent, in this respect.

“There are a number of critical issues including the currency to be debated and many questions to be answered,” Nicol said. “We will be formally asking the Scottish Government about the reach of their proposed regulatory institutions for financial services in Scotland and their implications for clients”.

Global markets: 2014 is the perfect calm

Looking at the broader market, the firm said that gold is likely to drift lower as the economic recovery continues, and a reduced level of QE from the US central bank should see longer dated interest rates rise and raise the opportunity cost associated with the precious metal.

In addition, Europe remains cheap, unloved and under owned - a good bet for investors with ambition and a huge appetite for risk, the firm said.

“If 2008 was the perfect storm for investors, with just about every asset class falling, 2014 is shaping up to be its antithesis – the perfect calm. The economic environment looks stable and improving, central banks seem reluctant to choke off any nascent recovery, leading to a continuation of the ultra-low interest rate world. The background, then, is conducive for investors and is reflected in our expectations of decent returns for equity markets – particularly developed ones – over the year ahead,” said Rob Burgeman, Brewin Dolphin’s director of investment management.

To this end, the firm said that given the benign global backdrop expected in 2014, investors should shift their attention from income and yield, to capital appreciation.

Emerging markets continue downwards

In comparison, now is not the time to invest in emerging markets, the statement said,  as rising transportation costs, deteriorating energy competitiveness and general national unrest, makes investments in Thailand, the Ukraine and Brazil highly risky. Instead, the firm suggests that investors focus on more developed emerging markets like Korea, which is likely to rebound well following its recent slowdown.

The Asian region also offers a strong opportunity for investors looking to capitalise on Japan’s extraordinary inflationary policies, said head of portfolio strategy, Guy Foster.

“The yen is falling to 120 to the dollar; whether it gets there in 2014 remains to be seen, but we expect these extraordinary policies pursuing inflation to remain potent forces of value creation for investors.”

Lastly, the firm’s director of financial planning, Nick Oliver, suggested that now is the time to make grand-children millionaires through prudent financial planning and long-term pension funds.

“Putting £300 a month into a (grand) child pension could not only turn them into pension millionaires when they retire, but during their working careers, they can use their fund for commercial property, even if it is linked to their business. This will be good for a potentially debt-laden generation,” Oliver explained, referring to the on-going global rise in youth unemployment.

UK-listed Brewin Dolphin has over £28 billion of funds under management as at 19 December 2013.