Let’s talk about money

AL: I think that’s a good point: if you’re an IFA giving advice to the client, you’re looking at the whole thing holistically. So when they’re charging, they’re not necessarily charging fees for the cash- management account, it’s for the whole solution that covers it, so the costs aren’t attached just for the cash element.

JC: A lot of the more established investment vehicles will be available through platforms, but that’s not going to be the case for a lot of cash management – is that sort of unavailability going to be a hurdle at all?

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AL: I think it’s going to be a challenge. I think post-RDR you might see things increase and we have seen a lot of platforms offer their own cash-management solutions. The other way you might do it is, when we run discretionary portfolios we hold the investments on one area and we can then chop around with the cash element within the wrappers elsewhere. So you don’t have to use a platform to hold cash, you can perhaps hold a bit aside. That then goes back to what are you using the cash for, because different pots will have different money and you want different levels of accessibility.

PB: And it’s interesting actually because if you look at the wrap population, most of those have actually adopted term deposits as a standard item. Where you run into difficulty is with the traditional fund supermarkets, because they are wholly wedded to OEICs or unit trusts and don’t provide the functionality for that. So you can, for example, access most of Cater Allen’s deposits through the well-known wraps without too much difficulty. What you can’t necessarily do is get the fluidity that you would create by having the client bank account and then the ladder of different term rates that could be operated. We’d like to get there but it’s going to take us time.

JC: Do you think it’s up to those traditional platforms to adapt themselves?

PB: I think it’s horses for courses, I really do. Do I see fund supermarkets moving? No I don’t necessarily think that will happen. They are going to be very much more wedded to the cash fund approach. Probably the key driver from the IFA perspective is our ability to pull this together through the back-office systems because that’s where the reports, the aggregations, where the functionality is. And this is also because RDR is going to be about saving costs; it’s not just about a transition to a fee-based world, it’s about making sure that businesses are run very smoothly.