Our new platform is equipped with a modern cash account in each of our tax wrappers to give you more control and flexibility in how you manage your clients’ investments.
Plus, our innovative, automated cash management feature has been designed to optimise the performance of the platform.
Cash can be used to:
- Increase the transparency of transactions.
- Help preserve your client's investment strategy.
- Cover charges, fees and income.
See our helpful Straightforward Cash Management guide for more information along with our cash management flyer.
Features of cash
- It is your choice as to whether you actively manage cash. If not, our platform will do the heavy lifting.
- Cash can be held inside an account or inside a model portfolio.
- Fees and charges are funded from cash held in your client’s tax wrapper. This includes the Collective Investment Bond; however, cash will not be selectable for investment purposes within this tax wrapper.
- Cash inside a model portfolio will not be used for fees and charges.
- Interest is accrued on cleared cash and credited to the cash account once a month. Interest is paid gross for ISAs, JISAs and CRAs, but is subject to a basic rate income tax deduction on CIAs, except where the investor is exempt, in which case interest will be paid gross.
Which accounts can hold cash?
|
|
ISA | JISA | CIA | CRA | CIB |
|
Cash |
✔ | ✔ | ✔ | ✔ | Partial |
For the CIB, whilst cash will be used to fund fees and charges, it will not be possible to select cash as an investible asset within the bond. Other cash funds, e.g. Blackrock cash, will continue to be available.
Automated cash management
To reduce the number of transactions on your client’s account and to make it easier for you to trade, we are introducing automated cash management functionality.
This will involve the platform selling a small amount of units and holding them as cash on your client’s account, typically every six months. This will begin straight after the move to the new platform and will make it easier for you to place other trades on your clients account whilst ensuring the process of paying fees and charges runs as smoothly as possible.
How does it work?
|
STEP 1 |
STEP 2 |
STEP 3 |
|
The platform will attempt to deduct adviser fees or charges that are due. |
Where cash is insufficient, the platform sells units to fund approximately six times the fee or charge due. |
Fees and charges will continue to be deducted from cash until there is insufficient cash to fund a full fee at which point step 2 will be repeated. |
*Includes adviser regular initial and ongoing fees, plus Old Mutual Wealth product/service charge.
0.33%
This is the average cash holding that will be held in the product cash account in the six month period for an investor, based on fees and charges each year for an adviser of 1% and Old Mutual Wealth 0.3%.
Many platforms mandate a cash balance of one to two percent of client assets. Our approach ensures only a small amount of cash needs to be held by your client.
We will only sell units equivalent to a maximum of 0.75% of the value of an account at any one time.
Worried about cash drag? Don’t be!
On average clients will hold approximately three months' worth of fees and charges as cash. Analysis by our platform experts shows the effect of holding this cash is negligible, especially when applied across a diversified portfolio. See the second page of our cash management flyer for full details.
Funding income and regular withdrawals:
ISA and CIA:
- Assets will be sold proportionately (including cash and exchange traded investments) or you can choose specific assets to sell, including cash.
- Where a specific asset is selected, once the asset is depleted our system will default back to deducting from cash before then defaulting to proportional deductions (not including exchange traded investments), ensuring regular withdrawals are always paid.
CIB
- Assets will be sold proportionately (including cash) or you can choose specific assets to sell.
- Where a specific asset is selected, once the asset is depleted our system will deduct units from transactional cash, then proportionately in order to fund the payment. It is not possible to select cash specifically to fund income.
CRA
- Assets will be sold proportionately (including cash and exchange traded investments) or you can choose specific assets to sell, including cash.
- If you wish to fund income using specific assets, then you will need to ensure these assets are sufficient to cover your clients’ income payments. If the selected assets are insufficient, this could prevent the income payment being made.
- For tax efficient regular income options (TRIO), where a specific asset is selected, once the asset is depleted our system will default back to deducting proportional deductions (including cash but not including exchange traded investments), ensuring regular withdrawals are always paid.
- In addition, you will be able to specify specific assets for crystallisation and to fund tax free cash, where necessary.
More information on the income options available for the CRA can be found on our CRA webpage.
What else is changing on our new technology platform?
- If you have previously requested for regular withdrawals to be funded by unit deduction from your client’s ‘largest fund’, please be aware that on the new system these payments will be funded by deducting units proportionately across all assets held within the account or bond.
- As part of the move to the new technology platform, we will automatically move any holdings that are in cash deposit within an ISA or CIA into the account’s new cash account. This cash account will then be used as the primary source to pay any fees and charges (provided the cash holding is outside of a model portfolio).