Adviser Exchange: opinions on the cash market

In a twist to our Adviser Spotlight series, we spoke to two groups of advisers about their views on the cash savings market today.

In the first of two articles, Dominic Quibell from Lifetime Wealth and Ed Shardlow from Ablestoke Financial Planning explore the opportunities and challenges they cover when discussing cash with their clients.


Dominic and Ed, thank you and welcome to Flagstone. If we look at the market and the economic outlook first, what do you think will happen to inflation and interest rates in the next 12 months?


Dominic: I believe both inflation and interest rates will have to fall over the next 12-18 months.  In fact, as we’re now in a recession, they’ll need to fall. I expect inflation to settle at somewhere around 2.5% and interest rates to fall gradually and sit at around 3.5%.


Ed: Sometimes it’s more dangerous believing we know what’ll happen than acknowledging we don’t. As global events over the past five years have repeatedly demonstrated, life is full of surprises we can’t even imagine. While we can try to arm ourselves by looking at indications from central banks, yield curves, and current data, at best, we’re making an educated guess.  


That said, interest rates and inflation have a significant impact on numerous aspects of financial planning. Mortgage lenders have a lot to lose or gain based on getting rates right, so it’s useful to look at the spread across two, three and five-year fixed rate deals to gain insight into what they think is going to happen.


Even when factoring in the premium for the certainty clients enjoy on five-year deals, lenders appear to be expecting rates to start coming down towards the end of 2024 and during 2025 resulting in a sizeable reduction in the next few years. There’s the added complication of a general election and a presidential election in the next 12 months, but based on the rally we’ve seen in the last four, markets are optimistic about the near future.


How can IFAs use market analysis to build stronger client relationships and trust?


Dominic: I tend to focus more on the medium to long-term journey with my clients. So, although market analysis is important and clients like to hear opinions on the markets, it’s not the main contributor to building trust and strong client relationships.


Ed: Just as we can’t predict the future, we can’t change the past. For both these reasons, good planning is primarily about long-term strategy rather than short-term tactics. That said, by understanding the narrative and factors behind market movements and fund performance, we’re better informed and better prepared to make the right decisions. Such as when to withdraw funds, invest further funds, and where advice can be particularly valuable, especially when thinking about risk.


If clients haven’t invested previously, they may not understand volatility. They need to trust the voice of experience from advisers who have been through highs and lows, and bring the knowledge that booms and busts both end and reverse.


Moving on to client education and engagement, can you share a success story or a challenging case where a particular cash management strategy positively impacted a client?


Dominic: After selling a business, one client had a lot of cash that needed managing because they needed access at different times to pay tax bills and other outgoings. The amount involved meant we needed a strategy to ensure FSCS protection of their full wealth. We were able to invest it in a way that satisfied the client’s three outcomes. Making sure their money works as hard and as efficiently as it can with the best available interest, the peace of mind of full FSCS protection, and the ability to pay the bills as and when they become due – with no fuss.


Ed: One of my clients is in her 70s and received an inheritance a few years back. She’s in a financial position and a point in life where she doesn’t need growth from these funds, but needs them secure – and accessible.


She may use a significant sum to purchase a new property, but is unsure when. So while the capital needs to be available, it also needs to earn as much interest as possible in the meantime. A cash deposit platform ensures she has full FSCS protection by holding no more than £85,000 with any one institution. She’s also comfortable using a cash deposit platform to make sure she’s investing in accounts paying the best rates and to see the security rating of the banks she’s put her money with.


By keeping portions in a variety of instant access, fixed and notice accounts to cover various scenarios, she has control and oversight of her money. She can take advantage of the recent high interest rates, and has access to her capital when she needs it.


Looking to the future, what emerging trends or technologies do you think will have the most significant impact on cash and financial planning?


Dominic: As interest rates and inflation start to fall, I believe clients will once again look at investment solutions. Investment platforms are making it easier and easier for clients to access the products they want, but the need for professional long-term strategy and advice will remain an important part of planning.


Ed: Our industry can be very slow to move with the times, which is an inevitable by-product of regulation and the processes in place to protect clients. As such, we’re only gradually seeing the adoption of tech like apps and paperless processes. Some providers even still tell us that faxes are more secure than email!  


It may also be because clients are more likely to be from older generations who are more comfortable when things are the way they’ve always been, rather than younger generations keen to embrace change. This tech-savvy group is only just becoming the target market for many advisers. As a borderline Gen X/Millennial, I wholeheartedly welcome this development.


With that in mind, how can the financial advice industry better serve the needs of younger investors?


Dominic: I really believe that education needs to start at school and the financial advice industry needs to evolve to meet the requirements of younger investors. So, what products are available and how they can be accessed needs to meet the expectations of the younger generation. Products and processes are still a little archaic.


Ed: Thankfully, we do now have providers who are using technology to take a lot of the hassle and hard work out of dealing with one’s money. From challenger banks to money management apps, and cash management platforms to technologically enhanced investment platforms, there is an abundance of products, services and tools that can benefit everyone – not just the young.


The caveat is all that glitters is not gold. A trendy brand with a flashy app may be enticing, but sometimes the underlying product is substandard. Seed capital is spent on marketing to gain customers, neglecting the core service while the company struggles for profitability.


It’s always best to engage the service of a professional adviser to get an objective opinion on which products and services offer the greatest value and reliability.


Today, Flagstone helps 600,000 savers grow their cash deposits. Might your clients be next? Join our network of leading referrers today.



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