A research conducted by Investec Bank showed that 72 percent of IFAs focused on pensions and retirement planning want more cash deposits products made available to their clients via a wrap platform. Majority of the IFAs typically use two wrap platforms, although 15 percent of the respondents said they typically use four or more platforms.
“How platforms handle cash is hugely important for advisers as often they have clients who have a significant cash sum as part of a tactical or short-term asset allocation”, said Freddie Findlater, head of platform relations at Platforum.
“Today a typical IFA client may hold anywhere between 5 percent and 15 percent of total assets in cash and at the height of the financial crisis this reached 20 percent and 25 percent”, he added.
Majority of IFAs who presently use wrap platforms – two thirds (66 percent) of those surveyed, chose fixed term deposits as their first preference followed by notice deposits, and then structured deposits.
However, returns on cash deposits held on wrap platforms were typically very low, the Investec research found. IFAs said their clients were receiving only 1.15 percent interest on their cash deposits on an average while nearly one in five (21 percent) are receiving less than 0.5 percent – the present Bank of England base lending rate, on their cash deposits.