Charities, businesses, local authorities and individuals often don’t have the time to manage their cash in order to get better rates and some don’t think it’s worth it in such a low interest rate environment.
Cash is often overlooked in a financial asset portfolio as the return is perceived as low in relation to other asset classes. The administration of cash in order to get a better interest rate is very time-heavy and therefore not seen as an adequate return on investment. However, current volatility in the equity markets have led to a number of large wealth managers increasing cash allocations and utilising platforms to maximise returns. They have recognised that there is a huge deficit in the management and consequent uplift that cash can bring to the table for their clients and can go a way towards decreasing the gap.
What’s in it for the client?
Stating the obvious: they’ll get more interest for their savings. But cash platforms are not only about getting the best rate at the time of opening the account, it’s the continual management of that cash to ensure it always gets the best interest rate. That takes time, monitoring and patience, all of which platforms have.
A number of clients are not aware or wary of the smaller ‘challenger’ banks in the market at the moment. They have rapid growth objectives and as a consequence often offer better returns than the traditional high street names to attract deposits. Market uncertainty is another reason that clients should take advantage of a cash management platform and the FSCS protection that each bank, under their own license, offer clients. With a cash management platform, you are able to open multiple bank accounts, with only a single sign up. Ideal for when you have a balance of over £85,000 or a temporary tranche of cash that could be working harder such as the proceeds of the sale of an asset, money set aside for a tax bill or an inheritance.
As a Wealth Manager, there are also a number of benefits to managing client cash with the help of a cash savings platform:
Clients have traditionally segregated their banking from their financial advice. Having a cash product gives the advisor the ability to incorporate cash deposits into a holistic overview of clients’ portfolios and allows an advisor to see the ‘whole of the moon’. Many advisors are now incorporating the cash proposition into their annual review processes and their client service descriptions or propositions. Adding material interest income to a client’s cash position can be a great part of the overall proposition discussion. For example, a client had sold a business and was unsure what to do with the proceeds. Her advisor suggested she open an account with Insignis to hold the funds in cash, earning interest and fully eligible for FSCS protection, whilst they decided how to distribute her funds long-term. Six months later, a percentage of the funds were withdrawn from the Insignis service and distributed across different asset classes. The cash set aside to cover the tax liability was placed with Insignis until January 2020 to enhance the return and security.
Not only does a cash management platform give advisors full visibility on existing clients’ portfolios, but it also gives them the opportunity to prospect new clients. This can start from an existing client base but, more excitingly, can be achieved through professional partner firms, such as accountants and solicitors to prospect new clients. Most client scenarios that solicitors and accountants deal with start in cash; powers of attorney, inheritance cases, tax bills, trusts and divorce cases to name a few. These cases can often be complicated, and it can take months to open a single bank account to host the funds. A Cash Management Platform partner has direct lines into banks meaning that any complicated cases can be discussed, and bespoke solutions offered. “With the increased attention that cash management is receiving in the current market, it’s the next logical step in a firm’s armory to help clients. Don’t let cash be someone else’s door opener.” If an advisor can offer a straightforward solution to problems your partners so often encounter, it builds a strong relationship and also gives you visibility on clients that may be in need of a financial advisor.
Finally, a cash platform can protect existing relationships with clients. This protects the advisor from client contact from either a bank or a competitor. If a large deposit hits your client’s current account, it is highly likely that they will then be contacted by the bank. Also, with many nationals building in-house cash propositions, the timing could not be more pertinent. Don’t let cash be someone else’s door opener.
The Insignis award-winning UK platform is designed for individuals, companies, charities, and local authorities to earn better interest from their hard-earned cash. A single sign-up process means as little hassle as possible for clients and businesses alike to benefit from better interest rates due to the effective management of the cash deposits. Find out more by emailing us at firstname.lastname@example.org.