Dynamic cash management was designed for clients who have around £100,000 or more that they want to hold in cash across a range of interest-bearing accounts, including National Savings & Investments. It takes into account the cash needs of each client and creates a range of accounts to meet these needs and also generate the highest rate of interest possible by searching the whole of the market for the best products.
As it becomes ever more important for advisers to offer a full financial planning service for their clients, providing a means of dealing with cash management is key.
Many clients will have been concerned about the safety of their deposits in light of the near failures of banking giants such as Northern Rock and Halifax at the start of the banking crisis. Before this you probably could have asked most people in the UK about the level of protection under the Financial Services Compensation Scheme and few would have any idea. The situation is very different now and is one of the reasons why the service has become more popular with advisory firms.
Jonathan Fry, private wealth director of Jonathan Fry, said: “The idea came from providing cash management services for our own clients. We realised once the banking crisis started to develop in 2008/2009 that clients became much more concerned about having their cash deposits more diversified and were giving more thought about which deposit-takers to use.
“We were already providing something in the way of a cash management service for our very high net-worth clients and decided to offer it in a more structured way for our other clients. Then we got some interest from other intermediaries.
“The traditional architects of financial services products and solutions have been the major institutions, particularly the likes of Standard Life, Scottish Widows and Fidelity. But there are now more opportunities for advisers to create their own services that clients want.”
The ongoing financial stability of an institution plays an important part in the decision-making process for clients. If they have a large amount they wish to hold in cash it becomes problematic for them to spread their deposits widely enough to ensure they are still protected. Under the FSCS safety net the first £85,000 is protected in full but that covers banking groups, not individual brands.