Happy April, siblings. Today is the last day of the tax year; a sacred day to the ancients when traditionally mid-level accountants would braid P11Ds into their hair, strip down, climb the nearest hill and await the first tendrils of the sickly, silvery filaments of dawn light of the new tax year; huddling together for warmth and muttering sacred and profane incantations which those not inducted into the cult cannot understand, but which always seem to result in yet more accountants and invoices for about 20% more than expected. The Way of Wyrd is strong with these ones, but balance is all and Woden looks down and laughs and sends his messengers to feast for he, too, has had an unexpected celestial invoice and while he knows costs are going up, he feels that somewhere the micturate is being extracted.

Mysticality and the ineffable is in my mind this week – the substance of things hoped for and the evidence of things not seen. (A crisp high five if you can identify the source of that quote – one which doesn’t often crop up in the Update – without searching online. And no, it’s not The West Wing.) What can it be, this will-o’-the-wisp which so exercises your faithful Updater on a wet Wednesday?

It is one of the few remaining truly opaque areas in this business we call show, and that’s the perennial issue of cash on platforms. Whimsy aside, the real reason I’m writing about this is that m’colleague Rich Mayor has also been doing same in the lang cat’s 2023 State of the Platform Nation guide to platforms that is coming out this week. (Punting: if you’re an adviser and you’d like to see it, the only way to get a non-hooky copy is to sign up to Analyser; every subscriber gets a free copy and also a sense of deep spiritual fulfilment. And a more robust way to do due diligence. If you’re a provider then you can buy it outright, priced to own, just get in touch sort of thing. End punting.)

There’s a special section on cash in this year’s guide, and it’s third eye-opening. It’s certainly true that in the era of close-to-zero interest rates no-one cared too much about what was going on despite our best attempts to show that in many cases rates were negative as providers paid the square root of sod all and charged their platform fee on cash. But now rates have started to climb and there’s actual money on the table, suddenly firms are asking us about cash much more often. This has to do with some kind of behavioural finance thing I think – hidden losses not so important, maximisation of visible gains very important. Isn’t it the case that you’re meant to be immune to these biases so you can tell clients how much they’re slaves to them? I might have misheard.

Anyway, rates vary wildly for operational cash on platforms. Operational is the key word here – these are the accounts clients leave 2% or so in to cover fees, charges, tips to the plongeurs and all that. We all know you’d have to be fully wired to the universe to treat these accounts as somewhere to leave cash as an asset class in hope of a decent interest rate.

Or would you?

The lowest rate is zero. The highest rate is 3.85% gross. Checking Moneysupermarket I see that Tandem is the top paying instant access account at 3.5%. The best high-street rate is Nationwide and the Post Office at 3%. No-one picks a platform based on cash rate, but still…

Rates are only part of the story of course – how platforms treat cash varies wildly too. Some force selldowns to keep the cash account healthy; some don’t. Some charge the platform fee on it, some don’t. Interest rate sharing and its morality or otherwise gets the headlines, but this ain’t no hippy commune and the net rate is the most important thing; a shared rate of, say, 1.5% is better than a ‘pure’ rate of 0%.

Cash has always, always been weird in platform-land. That’s because it doesn’t turn up on illustrations, or fee sheets, or performance graphs. It’s also because it’s a source of revenue for many providers and that allows them to keep the visible, headline costs more competitive. We can move to a much more transparent framework for cash, but platform prices in some quarters will need to go up. Do we want that for something that is impactful in aggregate but less so individually? Maybe – but if we do want it to change then the pressure will need to come from you.

THE LINKS OF WYRD

• We need you to rate your platform and provider experiences please. Takes next to no time, makes a massive difference. Some well-known ratings can be based on as few as 8 responses. We’re trying to make this better, please help us out? Thank you.
• The FCA published its business plan this morning. It’s not a fun read, though is very Consumery Dutery. We’ll publish more on this soon.
• Tom’s got ANOTHER new podcat up. The man is on fire, in a metaphysical sense at least. This one’s on workplace pension reform with Nathan Long of HL and Philip Brown of The People’s Pension. Listen here.
• Interesting stuff from Calastone on the recovery of equity fund flows after some tricky times. We’ll see this reflected in platform market stats soon enough, I think.
• And your music choice – well, fans of eighties pagan thrash will have spotted some signposting earlier in this Update. So please do enjoy this from the best British thrash band ever on their best album ever – it is of course Sabbat with Mythistory from Dreamweaver. Unbelievable stuff. And for the completists this live version is niche but worthwhile.

See you next week

Mark