CPD CoursesAug 12 2021

Savings deposits and an introduction to cash management platforms

  • Explain how cash management platforms operate.
  • Identify the benefits to clients holding significant amounts in cash.
  • Describe the shortcuts a cash management platform provides to clients wanting to move money to a different account.
  • Explain how cash management platforms operate.
  • Identify the benefits to clients holding significant amounts in cash.
  • Describe the shortcuts a cash management platform provides to clients wanting to move money to a different account.
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CPD
Approx.30min
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CPD
Approx.30min
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CPD
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Savings deposits and an introduction to cash management platforms
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Clients may not have the time nor energy to do so and may not even realise that they are not making the most out of their cash, thinking they are benefiting from the best rate available. Cash management platforms have been created to take away the laborious process of completing multiple bank application forms to be able to move cash deposits at the click of a button, mitigate risk for the client and have a holistic view of some of the best rates on the market.

This can be a great solution for individuals and businesses but especially for advisers who work with attorneys for power of attorney, court-appointed deputy and trust clients.

In these cases the attorney will generally insist that the beneficiary's funds are fully protected by the Financial Services Compensation Scheme, generally capped at £85,000 for individuals.

A cash management platform aims to provide a simple, seamless process providing clients with access to multiple cash deposits in a safe, secure manner.

For example, a client who only has to onboard once through a one-time application process will only take a few minutes to get started. All they need to do is input their details and once they have passed the necessary checks within minutes, can access many cash deposit options instead of spending time applying to each individual provider.

As this is powered by technology, it is a hassle-free way for advisers and clients to interact with each other and receive a service that may have once been complex in an uncomplicated, automated way.

Risk management

On the legal and regulatory side, cash management platforms are required to treat all monies deposited on their platform in a manner that ensures that, at all times, there is no exposure to their balance sheet or its creditors.

Specifically, they will establish a number of trust accounts with each bank providing a letter of assurance that the monies are held for the benefit of customers only trust letter. These trust letters are similar to what banks provide other regulated and professional businesses holding client monies and provide the legal security for customers against the service provider and their creditors.

A flow of funds perspective

Funds will come from the client’s account to what is often referred to as a 'hub' account. This will generally be offered by a well-known High Street bank. Once funds are cleared into the hub, clients will then be able to allocate those funds out to the panel banks.

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