Advisers need more cash solutions!

A survey from Investec, reported in Financial News, has revealed that advisers need more cash products.

Over the last five years, cash deposits and money market funds have benefitted from periods of market volatility. This is understandable, as these assets offer protection of capital (subject to credit worthiness and/or deposit protection schemes) and some income, admittedly at historically low levels!

The survey also revealed that many advisers do not spend a lot of time managing the cash portion of a clients portfolio. Is this because, clients tend to put their cash with their banks or there are insufficient products in the market to do the job?

RBS and more recently Gilliat are two providers who have successfully launched cash solutions into the IFA market. The latter paying over 3% AER for 4-6 month deposits with Arbuthnot Latham & Co.

These factors have also driven the growth in the use of structured deposits in the UK market. Post RDR, unless the rules change, they are likely to remain popular! When market conditions permit, 50:50 (or other ratios) bonds, whereby half the money goes into a short dated high yield deposit and the other half is place in a longer dated structured deposit, have proved popular.

I agree that the retail investors in general and platform users in particular can only benefit from a wider range of cash solutions! The questions are what form will they take and how will different platforms handle them?

http://www.ftadviser.com/2012/06/26/investments/alternative-investments/advisers-need-more-cash-products-investec-yt4XqFglCWzZzQQWl6ehNI/article.html?refresh=true

 

Over the last five years, cash deposits and money market funds have benefitted from periods of market volatility. This is understandable, as these assets offer protection of capital (including deposit protection schemes) and some income, admittedly at historically low levels! RBS and more recently Gilliat have successfully launched cash solutions into the IFA market.

These factors have also driven the growth in the use of structured deposits in the UK market. Post RDR, unless the rules change, they are likely to remain popular! When markets permit, 50:50 (or other ratios) bonds whereby half the money goes into a short dated high yield deposit and the other half is place in a longer dated structured deposit have proved popular.

Indeed, without upfront commissions, the interest rate (e.g. LIBOR) linked structures that have sold well in the high net worth space could be popular with retail investors. A typical example, depending upon market conditions, could offer an interest rate paying above LIBOR with a minimum and maximum rate. Alternatively, a call feature could be incorporated into the structure, however, in interest rate world the timing of the exercise of that call tends not to be as straightforward as an equity index kick-out plan.

I would agree that the retail investment market in general and platforms in particular can only benefit from a wider range of cash solutions. How flexible platforms can be in accommodating those solutions is a different question?

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