Ed is a chartered financial planner with FLM, a young, vibrant firm looking after £1.4bn of their clients’ wealth. His passion lies in helping clients achieve what matters most to them, while also laying the foundations of a great ancestor for generations to come. He dedicates his time to heading up FLM’s advisory activities in the private clients space, and helping to train and develop the business’ early-stage advisers.
Why do you think it’s worth talking to your clients about cash?
Listen – I get it. It’s hard to get excited about interest rates currently. I still consider my cash proposition carefully, though, and here are the reasons why:
- For your larger personal clients that run a cash balance above the FSCS limits, it’s important that you help them ensure their deposits are wholly covered.
- For clients in retirement who may prefer to keep a cash buffer, you should really think about if this is best achieved in a wrapped Money Market Fund under your advice (incurring fees) or on a cash management platform with no such drag.
- Your SME business owners will often run a cash balance where not only is FSCS coverage through multiple institutions beneficial, but where even a 0.5 per cent difference in interest rates could be worth upwards of £5,000 a year.
- Even if a client’s cash, hypothetically, delivers no investment return, it still delivers a marked utility-based return. Holding cash can help boost the long-term returns achieved on one’s invested assets by moving further up the risk-reward curve, given the protection offered by the cash holdings.
Why is now a good time to talk to clients about cash?
Your clients are always going to hold cash, so there can literally never be a time where being efficient in this space isn’t relevant. Although interest rates may be at an all-time low now, market expectations are clearly set towards rising rates – through these years the savvy and well-positioned will undoubtedly achieve a better return on their cash than those who trust their bank to ‘see them right’.
How long have you been using a cash deposit platform?
I have been using Flagstone for around three to four years now, I believe. Do all of my clients use it? No. Do those of my clients for whom it is relevant appreciate the access and utility it provides? Absolutely yes.
What benefits do you find in using a cash deposit platform?
When I train the younger advisers in our practice I talk about “removing chinks in one’s armour” – the idea that in one’s relationships with clients we should always be seeking (i) to improve and (ii) to strengthen the breadth and depth of our proposition. Advisers who ‘navel gaze’ and only focus on core advice areas could, unwittingly, be driving their clients into meetings with competitors.
For my private clients, Flagstone is typically more valued as a way to achieve total FSCS coverage rather than for its ability to allow one to ‘rate chase’. For the SME owners I look after I would suggest the relevance sits much more equally across the two. One of the SMEs I look after has an absolutely top-drawer financial controller who is militantly-efficient with the business’ cash – his efforts in this space must be worth around £20,000 a year of incremental return to the business.
What are the scenarios where a cash deposit platform would be beneficial for your clients?
I would suggest that any client who runs a cash balance of six figures should strongly consider a cash management platform. While the incremental interest achieved, in the current environment, may be relatively suppressed, if/when rates rise I have little doubt that savvy shoppers will be able to achieve an incremental 1 per cent a year plus on their money again. FSCS protection is, of course, another key consideration.
Finally I must again note that, for SMEs that you would like to work with, a cash management platform really could represent a great first discussion point. You help your (prospective) clients to increase the interest they achieve while decreasing their financial exposure – what’s not to like?