Tuesday June 07, 2011 at 12:00
Almost three quarters (72%) of IFAs focused on retirement and pension planning said the inclusion of deposit products, including structured deposits, within wrap platforms would enhanced their offering to clients, according to a survey by Investec Bank.
The bank's Lionel Ross said it is important that IFAs are able offer investment options that suit all types of client. Those looking for a more risk-averse approach need reassurance that the cash element of their portfolio will be deposited in an appropriate account and that it is generating competitive rates of return, he said.
Investec's research also shows that of those IFAs already using wrap platforms, two thirds (66%) preferred fixed term deposits, followed by notice deposits (55%) and finally structured deposits (38%).
Three quarters (76%) of participants said comprehensivity of offering would be a factor in their choice of platform platform. Two thirds of those already using a platform said they would be able to offer a better service to risk-averse clients if the platform they used offered a broader range of deposits.
According to the study, returns on cash deposits on wrap platforms are very low. IFAs said their clients receive an average return of 1.15%, and more than a fifth (21%) see returns of less than the current Bank of England base rate, 0.5%.
Freddie Findlater, head of platform relations at The Platforum said a 'typical' IFA client today may hold between 5-15% of total assets in cash, while at the height of the financial crisis this reached 20% to 25%: How platforms handle cash is hugely important for advisers, as often they have clients who have a significant cash sum as part of a tactical or short-term asset allocation, he said.