Cash Management by Andy Collinson

Have you got your thinking cap on? It’s time to learn about cash management! Individuals with large amounts of cash often find themselves struggling when trying to find competitive interest rates, as well ensuring protection of their funds. This is a topic which resonates with a number of our clients, so we have asked Informed Financial Planning’s Senior Financial Planner, Andy Collinson, to provide us with some further information. Have a read and let us know what you think!

With interest rates remaining low, clients are constantly frustrated with the poor rates available on deposit accounts these days, as well as potentially finding themselves struggling to ensure all of their funds remain fully protected within the FSCS limits. The current limit of protection per banking licence is £75,000, though care needs to be taken as some banks operate under the same licence (e.g. HSBC and First Direct operate under the one licence and therefore maximum protection is restricted to £75000 per person in total across both banks). The government are going to raise the level of protection to £85,000 with effect from 31st January 2017.

With this in mind, the financial planners at Informed Financial Planning have been keen to provide a simple solution to these common issues and we are now delighted to announce that for cash sums of at least £250,000, we are able to offer a rounded solution which we can tailor to meet the needs of our clients.

The solution we have engaged with monitors over 125 institutions daily and importantly, is completely unbiased. The service accesses each institution directly with the power of instruction over the money remaining solely with the client. This is deliberately designed to give clients the utmost confidence that they are holding funds directly with each counterparty. We seek to diversify each portfolio in a well thought out manner, and clients wishing to limit their exposure to the FSCS limits can use the service to easily diversify their holdings across as many institutions as they require to protect the full amount of capital held.

The accounts are constantly monitored to ensure they remain competitive against current rates. The service can conveniently layer cash holdings across different time periods and adapt as the time to each maturity naturally changes. This achieves an optimal balance of sufficient cash on demand, with better rates for longer term deposits where utilised.

Importantly this is an entirely independent fee based service that does not receive any payments from any providers utilised. This ensures that any provider in the marketplace is accessible for selection and means the service does not restrict its offering to only those institutions prepared to pay to be on a panel or shown on a website.

The portfolio can be set to precisely align to each clients, be it return, liquidity or security (or more often than not a mixture of all three elements!).

One of the key benefits of the service is that it avoids the natural stagnancy that is good for banks, but bad for a client’s return and particularly in recent years we have all come to realise that the banks to an extent do rely on our inertia.

We can provide personalised illustrations based on personal liquidity preferences, as well as security preferences in constructing each portfolio. Please take into account that the effects of inflation can erode the value of your capital in real terms.

If cash management is an area you would like to know more about, give Andy a call on 01482 219325 or alternatively drop him an email by clicking here.

This article was originally published on 13/01/2017.  Taxation reliefs, levels and bases can change in the future and the content of the article refers to our understanding of taxation legislation at the date shown.  Tax is dependent on your own personal situation and circumstances and is subject to change based on UK legislation and taxation regime.