Octopus sees surge in cash deposits

Octopus sees surge in cash deposits

Octopus Investment has seen assets under management in its cash management solution surge to more than £125m as investors looked to weather the political and economic storm. 

According to Octopus Cash, its total assets deposited are growing at more than 15 per cent month-on-month, with 450 advisers using the platform. 

Sam Handfield-Jones, head of Octopus Cash, said: "For many people, cash offers the ultimate security, yet the vast majority of high street banks continue to offer paltry rates on people’s hard-earned savings.

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"Awareness continues to grow and, in the current political and economic climate, it’s no surprise that we are seeing so much interest in smart cash management solutions."

Octopus Cash is the latest to highlight the cash-weighting trend. In December FundsNetwork revealed the Fidelity Cash Fund was the best-selling product on the platform. 

Meanwhile, an adviser poll conduction by National Savings & Investments showed security as the top priority for advisers and their clients. 

Alistair Cunningham, financial planning director at Whingate Financial Planning, said he was concerned by the trend. 

He said: "For those with low capacity to loss we might recommend three or even five years of their income needs in cash, but for the majority of our clients cash holdings should be a very small part of their overall portfolio.

"It’s a concerning trend that more people are moving to cash, and I do not understand the merit in an adviser managing on their clients’ behalf – surely the cost of doing this on either an advisory or discretionary basis erodes any benefit?"

But Adrian Lowcock, head of investing at Willis Owen, said: "A lot of this cash flow is a temporary thing and it is very hard for advisers to make good investment decisions ahead of Brexit."

He said putting a little bit of money on the side made a lot of sense from an adviser’s perspective.

"An advantage to having that cash on the sidelines is that you can deploy it. One of the downsides of that is you could miss that opportunity very quickly," he said.

"The rate of flow [with Octopus Cash] is interesting as 15 per cent month on month isn’t a small amount. Given where markets have been the past couple of months getting a return on cash, even if it is minimal, could be seen as the lesser of two evils."

Octopus Investments has also confirmed that Shawbrook Bank and Teachers Building Society have joined Octopus Cash, alongside Metro Bank, Bank and Clients, Cambridge and Counties, Oaknorth and Aldermore. 

The solution offers fixed-term deposits of between 35 days and 24 months, with rates of up to 2.16 per cent. 

The firm is also launching a ‘Cash Hub’ for advisers, offering access to key client information, updates on imminent rate changes, client illustrations and real time client application statuses. 

Mr Handfield Jones, added: "We want to make it as easy as possible for advisers to manage their clients’ cash, and our new Cash Hub is another big step towards that goal."