For most of the past fifteen years, advisers and platforms treated cash deposits as a holding pen. Base rates sat close to zero, a deposit lost value in real terms every year, and the standard advice was to keep an emergency buffer and invest the rest.
Deposit rates are now at levels last seen before the financial crisis. A competitive deposit earns a meaningful return again, and clients have noticed.
What fifteen years of low rates did
Low rates changed how firms were built. Platforms designed their flows so that uninvested balances were a brief stop between investments. Advisers stopped modelling cash as a holding worth attention. The operational side of offering competitive deposits, from bank agreements to onboarding and reconciliation, fell away because there was little return on maintaining it.
What has changed
Three things brought deposits back onto the agenda.
- Rates rose sharply, so the gap between an idle balance and a competitive deposit became large enough for clients to see.
- Clients became more rate-aware and started comparing savings rates the way they compare mortgage rates.
- Regulators looked harder at how firms treat client money and what they pay on it.
Uninvested balances used to be ignored. Clients now expect their platform or adviser to do something useful with them, or at the least to pay a fair rate.
Deposits as an allocation
Treated properly, a savings holding is an allocation in its own right. It is protected, liquid, earns a real return and carries no market risk. For clients in or approaching drawdown, a sensible savings buffer is often the advice itself.
“The firms doing this well have made competitive, protected savings part of the experience they already own.”
What it means for platforms
Savings are now a reason clients move money. A platform that offers a competitive, protected place for deposits keeps the relationship and the balances. Without one, clients open an account with a savings app and their balances follow.
The difficult part has always been the operations: bank agreements, FSCS mechanics, onboarding and reconciliation. That is the part Bondsmith runs. You keep the client proposition and we look after the deposits underneath it.