Let’s talk about money

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.

JC: Nick, you’ve alluded to there being fewer safe havens, but do you think there is a general mistrust of investment vehicles that is fuelling a demand for something less sexy but more secure?

NR: There is a mistrust, I think, of some traditional investment vehicles at the moment, but I don’t think that’s going to last forever and I think when that does change there will be big shifts out of things like government bonds and perceived safe havens into other more risky, more attractive, more high-yield investments. And cash is going to start looking like the only true safe haven in my opinion.

AL: I think the thing that investors have to be careful of, and IFAs have to be careful of, is that cash has a sort of safe haven status in the short term but it does depend on what account you go into because in the long term [the value of cash] could be eroded by inflation. And this is where cash- management accounts actually come in, because instead of being in a bank account on a deposit rate of 0.1% or 1% or whatever it may be, you can actually look for more competitive rates. So we see a demand for good cash rates but also inflation-proofing income as well.

NR: The trouble with cash is it does offer very low yields no matter how well it is managed. However, its attraction as a safe haven, I think, is indubitable.

PB: I absolutely agree that you need to have it in a fluid enough state to move it into the market when it’s appropriate to do so, but then that comes back to the whole cash management thing; making sure that you have an apportionment of cash held for the right term in the right place in the right accounts.