Paul Fidell

Business Development Manager

Savers increase interest in cash account alternatives

6 February 2017

  • Nearly two out of three advisers report rise in demand for alternatives to traditional cash saving accounts
  • Smoothed multi-asset investment products rated as most appropriate alternatives with most  advisers expecting base rate freeze in 2017 

Advisers are seeing a surge in demand from clients who want low-risk investments that can generate higher returns than traditional cash-based accounts, exclusive new adviser research from Prudential1 shows.

Nearly two out of three (64%) of advisers have reported a rise in inquiries from clients about switching cash savings into low-risk alternatives, the new nationwide study for Prudential found.

The Bank of England’s decision in July to cut interest rates to 0.25% sparked increasing interest in alternatives to cash accounts. Just two out of five advisers (38%) expect the base rate to rise this year highlighting the need for savers to find homes for cash currently earning low rates.

The demand for better returns is driving interest in smoothed multi-asset investment products among advisers – about 60% of advisers rate smoothed multi-asset solutions as the most appropriate alternative for savers who are prepared to take more risk with their savings and do not need instant access to their cash.

The demand for better returns is driving interest in smoothed multi-asset investment products among advisers – about 60% of advisers rate smoothed multi-asset solutions as the most appropriate alternative for savers who are prepared to take more risk with their savings and do not need instant access to their cash.

The launch of new National Savings and Investments (NS&I) products outlined in the Autumn Statement also attracts support – 38% say they regard NS&I products as the most appropriate alternative for cash savers.

Paul Fidell, investment expert at Prudential, said: “The base rate has been at an historic low since March 2009 and the post EU Referendum rate cut simply added to the pressure on cash savers.  

“There is a real demand for advice from cash savers who believe that interest rates are unlikely to rise soon and are prepared to take more risk to get better returns. They value the support from advisers when finding a home for their money that can potentially generate better returns than cash.

“Smoothed multi-asset products had a strong year in 2016 and look likely to continue to prove popular this year given the continuing investment market volatility and low interest rate environment.”

Prudential’s study found just 6% of advisers say fixed-rate savings bonds are the most appropriate alternative for cash savers while only 2% would say cash ISAs are a good alternative. 

Notes to editors

1Adviser research conducted by independent researchers Pollright in October 2016 among 109 financial advisers nationwide.

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Louise Bryans

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David Gwyer

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