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