The Bank of England has just lowered the base rate from 5% to 4.75%. This change will likely spark debate, but one thing is clear: savers will feel the hit.
For clients, a rate cut can feel like a setback, especially for those relying on savings for income.
However, it provides the perfect opportunity to reassess their finances and ensure their cash is working as hard as possible.
As their trusted advisor, you may find clients turn to you in the coming days worried about what the rate cut means for them.
Here are some potential talking points for those client conversations:
Explaining the reasons behind the rate cut helps clients make informed decisions. You don’t need to dive deep into the details, just stick to the key points:
● CPI dropped to 1.7% in the year to September, below the 2% target
● The Bank of England hopes the rate cut will boost spending and investment
● This should help stimulate economic activity and stabilise prices, preventing deflation.
Most savers know a base rate cut generally results in lower returns on cash deposits, making it harder to achieve real growth after inflation.
Remind them that while fewer accounts may offer inflation-beating returns, there are still options out there.
Advise them to stay proactive and compare accounts regularly, especially from newer, challenger banks, which often offer better rates and terms to attract customers.
This is a good moment to stress to clients that complacency can be costly.
Encourage clients to diversify their savings across different account types. While easy-access accounts are essential for liquidity, they should also consider fixed-rate or notice accounts, especially if they expect further rate cuts are on the horizon. These accounts generally offer higher rates but require a longer-term commitment.
Advise clients against keeping all their savings in one account. Spreading cash out allows them to take advantage of the best available rates, reduces the risk of losing access to funds due to bank issues, and helps them stay organised—especially if they have specific savings goals, like funding a child’s education.
Plus, diversifying ensures they stay within the FSCS protection limit of £85,000 per institution, safeguarding their funds.
One common pitfall for savers is sticking with the same account out of convenience. With rates shifting constantly, it’s worth advising clients to shop around regularly.
And if their existing deal doesn’t match the best on the market, encourage them to switch. Remind them: loyalty doesn’t pay.
If your clients find chasing rates overwhelming, or they simply don’t have the time, recommend a savings platform like Akoni. It lets them search and apply for the best rates seamlessly in one place, and monitor their accounts to make sure they’re always getting the most out of their money.
Alternatively, you could set up an account on their behalf and manage your clients’ savings for them, hassle free.
Ready to make managing your clients’ cash savings simpler with Akoni? Sign up today.
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