Advisers who claim there is no point trying to get their clients a better rate on their cash savings have been criticised as “lazy”.
Andrew Thatcher, managing partner of Flagstone Investment Management, said he often comes up against the mindset that all banks offer the same products for cash savings.
His company offers a management service which can help advisers get the best rate for their clients’ savings.
“When people say all the banks are the same they name the same five or 10 banks, but there are something like 380 licensed deposit takers at the Bank of England’s latest count, so when you name Lloyds, Barclays, HSBC or Natwest it is not even the tip of the iceberg,” he stated.
“If you are talking about half a million pounds in cash that’s quite a big dispersion if you get a slightly higher rate.
“There is a much bigger market than people give it credit for and it is lazy when people say all the banks are the same.”
Mr Thatcher said “very few” wealth managers or advisers take an interest in what their clients do with their cash savings, but Flagstone is currently having “constructive dialogue” with several of the 10 largest wealth managers in the UK.
He said there have been instances where wealth managers using his service have been able to increase the interest rate their client gets from 0.1 per cent to 1 per cent.
“This means that on savings of £500,000 we have given them an income of £5,000 versus the £500 they were getting,” Mr Thatcher pointed out. “On average across our book most of our clients increase their interest from anywhere between two and five times, but extremes do happen and they come up quite often.
“For wealth managers there is a whole range of wider benefits. If you create for me an extra £5,000 a year of interest income that’s a really big offset against the investment advice fee, at a time when those fees are coming under greater pressure.
In April, Flagstone launched a reverse auction-style service which promised clients with a minimum of £5m in cash the opportunity to get better rates on their money.
It charges a fee of 0.175 per cent per annum for deposits between £5m to £10m and 0.15 per cent per annum for deposits in excess of £10m. More than 20 banks are currently using the system, including Santander, Investec and Metro Bank.