Expanding Opportunities for Savers: Quilter Introduces Access to Fixed-Term Deposits
Introduction
In response to the increasing number of investors seeking low-risk returns, Quilter, a leading wealth management firm, has announced plans to expand savers’ access to fixed-term deposits through its platform. The growing combination of rising interest rates and volatile markets has prompted investors to allocate a larger portion of their portfolio to cash. This move by Quilter aims to provide clients with a wider range of fixed-term deposit accounts offered by banks, in addition to their existing cash account, which currently pays 3.38%.
The chief executive of Quilter, Steven Levin, mentioned in an interview with the Financial Times that clients’ preferences have shifted in recent months, with many paying off debts and investing in cash products. This change in investment behavior has led wealth managers to experience a slowdown in fund flows. For instance, Quilter’s flows decreased by 56% year over year, while Abrdn’s flows were down by 16%.
The Appeal of Cash Investments
Market volatility often triggers investors to hold a larger portion of their assets in cash. This behavior is also evident among investors using platforms, who choose to accumulate cash income instead of reinvesting it. By providing access to fixed-term deposit accounts, Quilter aims to enable advisers to take advantage of the competitive interest rates offered by the wider market. Additionally, Quilter ensures that clients’ deposits are protected by the Financial Services Compensation Scheme, which covers up to £85,000 in the event of a bank failure.
Interestingly, only eight out of the top 25 advisory platforms currently offer access to fixed-rate deposits on their platforms, Quilter being one of them. This highlights the unique opportunity and market advantage that Quilter is seeking to exploit.
The Upward Trend of Interest Rates
In the UK, interest rates have experienced a significant rise in the past 18 months. The Bank of England has implemented 14 consecutive rate hikes, bringing the base interest rate to a 15-year high of 5.25%. These hikes were a response to rising inflation rates, which reached 7.9% in June 2021, surpassing the Bank of England’s 2% target.
Notably, UK banks have recently faced pressure from regulators to improve rates for savers. Members of Parliament raised concerns that banks were increasing mortgage costs while failing to pass on the benefit of higher interest rates to savers. As a result of these pressures, average savings rates per £10,000 currently stand at 5.23% for a one-year fixed-term deposit, 5% for three years, and 4.77% for five years, according to data provider Moneyfacts.
Enhancing Access to Competitive Rates
While there are favorable savings rates available in the market, UK Finance, the industry group, emphasizes the importance of encouraging savers to “shop around.” Savings account aggregators play a critical role in assisting busy customers with larger balances in maximizing their returns. These aggregators provide an efficient way to compare rates and find the most advantageous products tailored to their needs.
With Quilter’s introduction of a cash hub, the platform aims to enhance access to competitive fixed-term interest rates and provide clients with increased options for managing their cash. By leveraging their wide network and expertise, Quilter seeks to deliver value to investors seeking low-risk returns.
Unique Insights and Perspectives
Expanding access to fixed-term deposits through Quilter’s platform is a strategic move that aligns with the current market dynamics and investor preferences. By enabling clients to hold and manage their cash investments within the platform, Quilter consolidates various financial services and offers a comprehensive solution to investors.
Furthermore, Quilter’s initiative taps into the potential for a redeployment wave when market sentiment improves. As interest rates stabilize, investors may consider moving their cash back into higher-risk assets to pursue greater returns. With its cash hub, Quilter is positioning itself to support clients in navigating this transition and capturing opportunities in the market.
Conclusion
Quilter’s decision to expand access to fixed-term deposits through its platform demonstrates a keen understanding of market trends and the changing investment landscape. By catering to the growing demand for low-risk investments and competitive interest rates, Quilter aims to enhance its offering and cater to the evolving needs of clients.
As investors increasingly prioritize cash investments, wealth management firms like Quilter have a unique opportunity to establish their platforms as comprehensive solutions. By integrating cash hubs and providing access to fixed-term deposit accounts, Quilter is well-positioned to capture market share in this expanding segment and deliver value to investors seeking stability and competitive returns.
Quilter will expand savers’ access to fixed-term deposits through its platform in response to the growing number of investors allocating more of their portfolio to cash.
The combination of rising interest rates and volatile markets means investors are increasingly turning to cash for low-risk returns.
Quilter announced this week that it will introduce a cash hub to its advisor platform this year, allowing clients to choose from a range of fixed-term deposit accounts offered by banks, in addition to its cash account, which currently pays 3.38%.
Quilter’s chief executive Steven Levin told the Financial Times the size of the ‘inflow pie’ had shrunk in recent months. “Clients are paying off debts and investing money in cash products,” he said.
Wealth managers signaled a slowdown in fund flows in the first six months of the year, with Quilter’s flows down 56% year over year and Abrdn’s down 16%.
In times of market volatility, investors tend to hold more of their assets in cash, with those on platforms choosing to allow cash income to accumulate instead of reinvesting it.
Quilter, which will make a small margin on any cash invested through the hub, wants to enable clients to hold and manage their cash through its platform and is also looking to prepare for the redeployment wave when market sentiment starts to improve .
The change will allow advisers to take advantage of the fixed term interest rates offered by the wider market, as well as manage deposit protection guaranteed by the Financial Services Compensation Scheme, which covers up to £85,000 of savers’ cash in the event of a bank failure .
Only eight of the top 25 advisory platforms offer access to fixed-rate deposits on the platform, including Quilter, according to data from Lang Cat.
This includes M&G’s Transact, Nucleus and Wealth Platform, with Abrdn’s Wrap platform and AJ Bell’s Investcentre offering deposits through Sipps.
Interest rates have risen sharply in the UK over the past 18 months with the Bank of England making 14 consecutive rate hikes to take the base interest rate to a 15-year high of 5.25%.
The hikes were a response to rising inflation, which was 7.9% in June and exceeded the Bank of England’s 2% target from May 2021.
UK banks recently improved rates for their savers after pressure from the regulator after MPs raised concerns that banks were raising mortgage costs but failing to pass interest rates on to savers.
Average savings rates per £10,000 are currently 5.23% for a one-year fix, falling to 5% in three years and 4.77% for five, according to data provider Moneyfacts.
UK Finance, the industry group, said although savings rates have risen recently and there are plenty of good products on the market, savers are still being encouraged to ‘shop around’.
“Savings account aggregators can be a good way for busy customers with larger balances looking to maximize their returns to do so,” he said.
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Quilter will expand savers’ access to fixed-term deposits through its platform in response to the growing number of investors allocating more of their portfolio to cash.
The combination of rising interest rates and volatile markets means investors are increasingly turning to cash for low-risk returns.
Quilter announced this week that it will introduce a cash hub to its advisor platform this year, allowing clients to choose from a range of fixed-term deposit accounts offered by banks, in addition to its cash account, which currently pays 3 .38%.
Quilter’s chief executive Steven Levin told the Financial Times the size of the ‘inflow pie’ had shrunk in recent months. “Clients are paying off debts and investing money in cash products,” he said.
Wealth managers signaled a slowdown in fund flows in the first six months of the year, with Quilter’s flows down 56% year over year and Abrdn’s down 16%.
In times of market volatility, investors tend to hold more of their assets in cash, with those on platforms choosing to allow cash income to accumulate instead of reinvesting it.
Quilter, which will make a small margin on any cash invested through the hub, wants to enable clients to hold and manage their cash through its platform and is also looking to prepare for the redeployment wave when market sentiment starts to improve .
The change will allow advisers to take advantage of the fixed term interest rates offered by the wider market, as well as manage deposit protection guaranteed by the Financial Services Compensation Scheme, which covers up to £85,000 of savers’ cash in the event of a bank failure .
Only eight of the top 25 advisory platforms offer access to fixed-rate deposits on the platform, including Quilter, according to data from Lang Cat.
This includes M&G’s Transact, Nucleus and Wealth Platform, with Abrdn’s Wrap platform and AJ Bell’s Investcentre offering deposits through Sipps.
Interest rates have risen sharply in the UK over the past 18 months with the Bank of England making 14 consecutive rate hikes to take the base interest rate to a 15-year high of 5.25%.
The hikes were a response to rising inflation, which was 7.9% in June and exceeded the Bank of England’s 2% target from May 2021.
UK banks recently improved rates for their savers after pressure from the regulator after MPs raised concerns that banks were raising mortgage costs but failing to pass interest rates on to savers.
Average savings rates per £10,000 are currently 5.23% for a one-year fix, falling to 5% in three years and 4.77% for five, according to data provider Moneyfacts.
UK Finance, the industry group, said although savings rates have risen recently and there are plenty of good products on the market, savers are still being encouraged to ‘shop around’.
“Savings account aggregators can be a good way for busy customers with larger balances looking to maximize their returns to do so,” he said.
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