NS&I adviser survey shows that cash is king in client conversations

  • Advisers more likely to recommend growth than income products as clients switch priorities
  • Security remains the top priority as FSCS limit taken into consideration when advising
  • Cash now features in all adviser-client conversations

NS&I’s latest edition of its Financial Advice Barometer indicates that while security remains the top priority for advisers’ clients (55%), there has been a drop of 10 percentage points, from 14% in January 2018 to 4% in April 2018, in those citing income (regular and consistent returns) as the most important priority. At the same time, the proportion of respondents choosing growth (achieving moderate returns) increased by nine percentage points, to 37% in April 2018, from 28% in January 2018.

Other key findings in this edition of NS&I’s Financial Advice Barometer are:

Fixed-term products are the most frequently recommended cash deposit product

While the popularity of fixed-term products had slowly been declining since October 2016 according to NS&I’s barometer, shorter fixed term options have become more of a priority for advisers and their clients since January. This quarter’s data shows that 2-year fixed term products have slightly increased in popularity (from 26% in January 2018 to 30%), at the cost of 5-year options (from 3% to 0%). 1-year fixed term products continue to be the most popular product to recommend overall (57% in both January and April 2018), and this may reflect the uncertainty in the market place and reticence for clients to lock into long-term deals.

 

Almost all advisers now discuss cash with clients

Almost all advisers (99%) either include cash in their holistic financial planning process or provide the guidance for clients to invest in cash deposits themselves. No advisers said that they did not discuss cash with their clients, down from 3% in January 2018.

NS&I continues to be attractive to savers

There has been a further increase in the percentage of advisers responding to the survey who indicate that the FSCS limit of £85,000 has led them to advise clients to invest more money in NS&I products than they might otherwise do. 55% indicated they advise clients to invest more in NS&I than they might otherwise do so, due to NS&I’s 100% security guarantee, backed by HM Treasury. This is up from 51% in January 2018.

However, the number of advisers who recommend clients spreading cash amongst multiple UK financial product providers (so they don’t place the full FSCS limit in one financial institution) is showing signs of recovery (67%) following a dip from 75% to 60% in January 2018.

Premium Bonds are still a popular product among adviser recommendations, coming fourth after fixed-term (79%), easy access (77%) and cash ISAs (75%). Three quarters (73%) of financial advisers frequently recommend Premium Bonds to their clients, an increase of nine percentage points from 64% in January 2018.

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

“Cash now appears to be close to an automatic talking point when it comes to discussions between advisers and their clients, and indeed part of the holistic financial planning process in many cases. Our latest research shows that not a single adviser said that they did not discuss cash deposits with their clients, while there seems to be a change in priorities in recommending growth products over income all the while making sure clients’ money remains safe.”


Notes to Editors

  1. 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.
  2. For the April 2018 survey, 927 people opened the email and 75 people responded to the survey, giving an 8% response rate.
  3. 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, a one-off topical question is also asked.
  4. 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.
  5. For further information, please contact the NS&I media team.