NS&I adviser survey reveals security and liquidity are driving behaviour

• At the end of 2018, security remained the top priority for advisers’ clients
• Advisers recommend that cash takes a bigger share of investment portfolios
• 38% of advisers expect to increase their clients’ cash holdings as we enter 2019

The October survey also confirmed an upward trend, observed since April 2018, in the number of respondents recommending that their clients should hold 20% of an investment portfolio in cash deposits. In October, more than a quarter (27%) of respondents said they would recommend holding 20% of an investment portfolio in cash deposits, compared to 23% who said this in July and 18% who said this in April.

The only way is up for cash

The October 2018 survey revealed that 38% of respondents expect to increase their clients’ cash holdings in the next six months. 31% said that they expect to slightly increase their clients’ cash holdings (compared to 22% who said this in July and 12% who said this in April). 7% of respondents said that they expected to significantly increase their clients’ cash holdings (compared to 6% who said this in July and 4% who said this in April).

Over the same period, there has been a steady decline in the proportion of respondents who said that they expect to make no change to their clients’ cash holdings in the next six months, with 58% saying this in October, compared to 65% in July and 77% in April.

Modest appetite among advisers to adopt new strategies in 2019

For the topical question in October’s survey, NS&I asked advisers whether they were considering adopting any new strategies in regards to their clients’ financial plans in the next six months. 19% of respondents said that they were considering adopting new strategies in regards to their clients' financial plans in the next six months, with 59% saying that they were not going to do so, and 22% who were ‘not sure’.

Confidence about future prospects for the advice industry still high but appears to be cooling off

October’s survey showed a change in those respondents who said that they were ‘very confident’ in the future prospects for the financial advice industry, compared to those respondents who said that they were ‘fairly confident’. 28% of respondents said that they were ‘very confident’ in October, down 14 percentage points from 42% in July. Conversely, 51% of advisers said that they were ‘fairly confident’ in the future prospects for the financial advice industry, up 11 percentage points from 40% in July.

Andrew Pike, Head of Intermediary Relationships at NS&I, said:

“Our most recent adviser survey indicates that security remains the top priority for advisers’ clients. There also appears to be a clear trend towards cash, reflected in both an increase in the proportion of advisers expecting to increase their clients’ cash holdings heading into 2019 and an increase in the proportion of advisers that recommend that cash takes a bigger share of investment portfolios.”