Lion’s share of cash on platforms is ‘stupid’

The founder of platform consultancy and research firm Lang Cat has urged advisers to hold no more than 3 per cent of the overall balance in cash holdings. Speaking as he launched a 46-page guide to platform pricing, Mr Polson said operational accounts “suck” in terms of offering interest right across the platform market.

He said: “Many advisers hold large amounts of cash on platform for long periods of time but that is stupid.

“They need to get it out into a better paying account, because it is hard to do worse than the platforms in this area. The expectation is that the interest will be competitive with what’s out there, but that is simply not true.”

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Adviser view

Peter Chadborn, director of Essex-based Plan Money, said: “It is incumbent upon advisers to get a better return off-platform on deposits unless the money held in a platform cash account is serving a short-term purpose. Whether you decide to hold money in an operational account should depend on a client’s needs. Someone who is 25 years from retirement, with a risk profile that is less cautious, won’t be affected by poorer interest rates as much someone who has a very cautious profile and is nearing retirement.”