IN response to the tidal wave of money moving into cash, product providers have been quick to release a range of new cash-based products designed for the adviser market.
Many platforms have added term deposits and cash products to their line-up, with Avanteos one of the first to market when it added term deposits in late 2007.
The flight to cash in the second half of 2008 resulted in huge inflows into term deposits and cash options.
In the December 2008 quarter for example, term deposits represented 28 per cent of gross inflows into Aviva’s investment and superannuation platform. Five of the platform’s top 10 funds for inflows last year were cash or term deposit funds.
Colonial First State (CFS) also responded to client demand by enhancing its FirstChoice platform with a cash deposit product, FirstRate Saver. This has proved to be a huge success, with the cash option attracting inflows of over $1 billion.
At the time, CFS chief executive Brian Bissaker said the firm had consulted advisers on what clients were looking for and the product reflected feedback about the need for a facility to “park cash funds and then move to other investments when investors are ready”.
While many cash funds are still bulging at the seams, some investment platforms and managers have started preparing for the day when the money begins to move out, particularly given the ongoing rally in the equity market.
Aviva has launched a new Progressive Switching Facility to make it easy for investors to gradually invest into other asset classes and funds from their cash investments.
The tool allows investors to use dollar-cost averaging through switching a set amount out of cash and into a selected fund or equities using a preset number of monthly instalments.
In June, NAB launched its Cash Manager product, a cash management tool designed to assist advisers and their clients manage their cash flow in a central account.
According to NAB Personal Banking executive general manager, John Salamito, the launch was largely in reaction to market demand and client disappointment over the performance of assets such as shares.
“The product is designed to be an investment in its own right and also as an enabler to assist effective portfolio management for clients and the adviser,” Salamito said.
“It offers the best features of wealth management and the banking world.”
– Janine Mace
