Adviser-to-client template: For clients sitting on cash

For financial advisers to use with clients.

This document is intended to support your service proposition to clients. It is produced by our investment writers with a deliberately light tone and structure. However, these are guidance paragraphs only. It is not guaranteed to meet the expectations of regulators or your internal compliance requirements. If you wish to remove or amend any wording, you are free to do so. However, please bear in mind that you are ultimately responsible for the accuracy and relevance of your communications to clients.

Dear client,

We have seen recent research that suggests people are sitting on high levels of cash. We acknowledge that some of your clients may also be sitting on excess cash, perhaps worried about inflation or a recession. To support you, I’d like to share some financial tips for your interest, which may help you given the current state of the economy and markets. If any of the following interests you and you’d like to explore our professional opinion, please reach out as we’d be delighted to help.

Review Your Goals Post Pandemic

It is a healthy exercise to review your goals at regular intervals, but this is especially important today. Research shows that as much as 71% of people change their top 3 goals by doing a simple review exercise, which is quite remarkable and appears especially likely as we come out of the pandemic.

Focus on Purchasing-Power After Inflation

Inflation is now a major issue for household budgets. By focusing on your purchasing power, you are successfully thinking in what we call “real terms” (which adjusts for inflation pressures). Reviewing your budgets and retirement funding needs are two worthwhile pursuits, but it is also worthy of reviewing portfolio progress to ensure it has a fighting chance of beating inflation.

Ask Yourself… “Am I Nervous or Fearful?”

Every investor will endure downturns on their journey, yet it is the ability to reflect and learn from the lessons that make for sound investing. Having gone through another downturn, it is worth marking down the lessons, including the fears or questions that drove your thinking. Research shows that behavioural coaching can add meaningful value – acting as a steady hand when you need it.

Review Tax Arrangements

All too often, investors think in pre-tax terms. Whether we look at our wages or our investment returns, many of us fail to consider tax implications. A financial tip that is often disregarded or under-appreciated is to consider your tax structures during market setbacks, which research shows can help increase after-tax returns.

Portfolio Combinations, Matched to Goals

Meeting goals is an individual experience and tracking the market is not for everyone. By thinking through your goals and financial position individually, without comparison, you often get the best picture of financial health. Combining different portfolio combinations to match each goal or milestone can be effective.

Assess the Best Product Options for New Money

We always want to keep your financial aspirations and risk tolerance in mind, with different products available. Whether you want to “sleep at night” or “capture the discount”, we are able to guide you through some of your best options.

Just Dollar-Cost Average

Sometimes, we can be guilty of analysis paralysis, or simple overthinking. By taking action in a building-block type approach, we can gradually break down our mental barriers and potentially increase the probability of success in reaching our goals. Dollar-cost averaging means topping up your existing holdings on a gradual basis, which is often statistically better than doing nothing.

Rebalance with a Total Viewpoint

As markets move, you should adjust. Rebalancing is not fool proof, but research shows that it can help manage risks, avoiding unwanted market drift. It is mostly used at the portfolio level, but you can do the same at a personal level – looking at everything from property to cash, and the ratios of each that you hold.

Summary

The above ideas are intended to give you a broad perspective on your financial journey. We hope you found them insightful. To reiterate, if you’d like our professional assistance in implementing, we’d be delighted to help.

Kind regards,

Adviser