With savings rates fluctuating and competitive rates usually only available for short periods of time, many clients are missing out on savings interest. In addition, keeping up with the administration needed to open new accounts and switch each time rates drop is overwhelming for some.
In the wake of the banking crisis in 2008, savers saw that competitive rates were not the only consideration, and actual security of their money played a major part in the selection process. In fact, the ongoing monitoring of banks and building societies was, and still is, considered a priority for many savers.
The Dynamic Cash Management (DCM) business was launched by Jonathan Fry (now Gale and Phillipson) directors David Carr and Adam Galache-Brown in 2010 to fill this gap in the savings market. Using Cater Allen private bank, DCM now manages over £800 million in savings.
The original service was created predominantly for high-net-worth clients who required a significant element of cash to be included in their overall financial portfolio. As well as individuals, the service is also marketed to businesses and charities as well as individuals who held all their assets exclusively in cash. Currently, DCM provides accounts for private clients, power of attorney clients, businesses, charities and academies.
The service developed further with the introduction of an adviser and client portal. Advisers and clients can check the balance, current providers, interest rates, and access tax-year-end reporting.
Clients’ cash accounts are switched whenever rates become uncompetitive, or if DCM has reason to believe the institution has become too risky for the client. As part of the initial process, it will discuss when clients need access to cash, what risk they are willing to take and how much they want to hold. It will then open a number of savings accounts in the client’s name, with building societies, banks and National Savings and Investments.
A specific system scores institutions on a scale of zero to 60 points, depending on their ratings from agencies including S&P, Fitch Ratings and Moody’s. Combining those ratings with parent company information, financial accounts, and press coverage gives a good indication of the overall strength of an institution. The ratings system is updated monthly, or sooner if any significant information becomes available.
For example: at 1 April, DCM quoted rates from 1.44% for accounts that require no notice to withdraw, to 1.61% for six months’ notice and so on up the scale to 2.33% for a 60-month notice period. An ‘ethical rate’ is also offered which is slightly lower, for example, 2.03% for 60 months.
There are separate rates for businesses (1.78% for 60 months); charities and academy clients (1.4% for 60 months); attorneys, deputies and guardians (2.25% for 60 months); express private clients (maximum 2.25% for 24 months) and express attorneys etc (max 2.25% for 24 months).
The service also includes a team of personal client managers and savings specialists who pay attention to the clients’ liquidity, security, existing savings accounts and ethical requirements.
This year it has launched a new savings management service, Dynamic Cash Management Express. Clients apply for the service once and do not have to deal with ongoing paperwork. The new service will be available initially for private clients and power of attorney cases, with an entry deposit level of £50,000.
Alan Sneddon is director at Gale and Phillipson