NS&I survey reveals outlook for cash becoming brighter among financial advisers
- Advisers expect to increase their clients’ cash holdings in next six months
- Security still out in front as top priority for clients
- Mixed views on impact of Personal Savings Allowance on cash ISAs
The latest edition of NS&I’s Financial Advice Barometer shows that twice as many advisers (22%) expect to increase their clients’ cash holdings in the next six months compared to the last time the survey was conducted in October 2016, when the figure was 11%.
This score from NS&I’s latest quarterly survey, conducted in January 2017, is the highest recorded since the survey began in February 2016, when 18% of advisers responded in the same way.
NS&I’s survey of financial advisers also shows that for the fifth quarter in a row, security remains the most important priority cited by advisers on behalf of their clients in terms of savings and investment options. 47% of advisers ranked ‘security’ (protecting assets) as their most important priority.
Impact of Personal Savings Allowance on cash ISAs divides opinion
Advisers are split on whether the Personal Savings Allowance has permanently diminished the attractiveness of cash ISAs for their clients. 45% of respondents thought that cash ISAs had lost their lustre, citing, among a number of reasons, the fact that people can now earn more interest tax-free in non-ISA accounts that have higher investment limits, than is the case with cash ISAs. 55% of respondents thought that cash ISAs remained attractive, with several respondents citing their familiarity and simplicity.
Other key findings in this edition of NS&I’s Financial Advice Barometer are:
Adviser confidence reaches new high
91% of advisers are currently either ‘very confident’ (38%) or ‘fairly confident’ (53%) about the future prospects for the financial advice industry. This is the highest score recorded by the survey for confidence in the future of the industry since the Financial Advice Barometer began in February 2016.
FSCS limit trends reinforced
The proportion of advisers that recommend their clients spreading their cash deposit savings around multiple UK providers – to stay within the FSCS threshold – has risen marginally in the latest survey. In January, 69% of respondents chose this option (up from 66% in October). The proportion of advisers recommending that their clients invest more of their money in NS&I products than they might otherwise do, due to the HM Treasury 100% guarantee, has risen from 39% in October to 49% in January. These results suggest that advisers are taking a cautious approach to the location of their clients’ investments.
Andrew Pike, Head of Intermediary Relationships at NS&I, said:
“Cash is back – or perhaps had never gone away. The rise in the proportion of advisers saying that they expect to increase their clients’ cash holdings in the next six months shows that cash remains an important and robust element of any balanced investment portfolio. The latest NS&I survey also shows that most advisers still view cash ISAs as an attractive investment, despite the Personal Savings Allowance being introduced.”
Notes to Editors
- NS&I’s Financial Advice Barometer is conducted by sending emails to around 4,000 financial advisers each quarter who are either registered on the Unbiased email mailing list or on the NS&I database. Respondents are entered into a prize draw for a chance to win an iPad mini.
- For the January 2017 survey, 905 people opened the email and 93 people responded to the survey, giving a 10% response rate.
- NS&I’s Financial Advice Barometer asks a series of financial advice market tracker questions each quarter to build-up a picture over time of how trends within the financial advice market change, including advisers’ sentiment towards cash, how it is used within client portfolios and advisers’ views on the wider cash deposit market. Each quarter, one off topical questions are also asked.
- NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
- For further information, please contact the NS&I media team.