Using cash management systems

This article is part of
Guide to cash management

Charges include the cost of setting up an account, which requires a one-off administration fee of £150 for amounts deposited of up to £250,000 and £500 for deposits in excess of £250,000. The platform also charges an annual management fee of between 0.15 per cent to 0.25 per cent. 

Flagstone, which has placed more than £8bn in client assets, reports that it offers savers access to hundreds of deposit accounts, including instant access, notice account and fixed-term deposit accounts from a panel of up to 50 banks through one application. 

Simon Merchant, co-founder and chief executive of Flagstone, says: “Earlier this year, we reviewed the rates we were able to offer over the 18 months ending in August 2021.

"Compared to the UK market average, our fixed-term rates tracked three times above the market average and our instant access rates tracked nine times above the market average.”

Explaining how the system works, Merchant says: “The client funds their holding account (a segregated trust account, ensuring funds are protected), and chooses where to place their money from the range of available savings accounts.” 

Deposits placed can be moved around between selected banks, with FSCS protection for each account opened. Savers can place, move or withdraw money from their holding account at any time.  

For clients who may be looking to keep less than £50,000 in cash, there are options available such as Aviva Save, which allows customers to manage all their cash savings in one place.

It is currently offering a £75 bonus to the first 1,000 savers opening a fixed-term deposit account, with a minimum of £10,000, by December 14 this year.  

Hargreaves Lansdown’s Active Savings product also offers the opportunity for savers to ‘pick and mix’ accounts from a range of banks and building societies. Instead of charging savers, it charges its banking partners. Savers can start with just £1. 

Patrick Christie, graduate trainee financial planner at WealthFlow, says that cash management systems are worth considering for some: “For those holding large volumes of cash, and for periods where they can’t afford to be exposed to market risk, cash management is an effective option. Ensuring cash is moved to obtain the best rates is potentially worth significant sums for a client in this situation.” 

But others would be unwilling to use such platforms at all, as Keith Churchouse, director and chartered financial planner at Chapters Financial, explains: “We don’t use these systems and are not likely to. I’ve read less than glowing reports about them.”  

Fiona Nicolson is acting deputy features editor at FTAdviser