As 2024 draws to a close, the Bank of England has announced its final interest rate decision of the year - and as expected, it’s held the base rate at 4.75%.
Many clients will believe no action is needed in response to this news.
However, as any good adviser knows, effective financial planning isn’t about sitting back. It’s about staying proactive and regularly reviewing strategies - particularly in today’s uncertain economic climate.
While no one can predict with 100% certainty what will happen to rates next year, the general consensus among analysts is rates will fall throughout 2025.
With some experts projecting rates could plummet to 2.75% by the autumn, it’s crucial for advisers to guide clients towards options that will help them maximise returns before potential rate cuts.
If you believe rates are likely to fall next year, now’s a good time to discuss term-based savings accounts with your clients - either fixed-rate accounts, notice accounts or both.
In a market where interest rate movements are uncertain, locking in a fixed rate offers some certainty.
Fixed-rate accounts typically offer higher interest rates than easy access options, and by advising clients to secure these rates now, you can help protect them from anticipated rate reductions in 2025.
Key benefits for clients:
● Protection against rate cuts: fixed rates are guaranteed for the term, protecting clients from future rate reductions.
● Predictable returns: returns are guaranteed so clients know exactly how much they’ll earn, which helps with planning and budgeting.
● Promotes saving discipline: savings are locked away, stopping clients from dipping into their funds prematurely.
Right now, fixed rates on two-year terms are fairly competitive, such as the 4.3% AER* available on the Akoni platform. By locking in these rates, your clients could earn more than they would on variable-rate savings accounts, which are more susceptible to fluctuations.
For clients who need more flexibility - but still want to earn more than they’d get on an easy-access account - notice accounts are a good option.
Sitting between fixed-rate and easy-access accounts, notice accounts offer a balance of higher interest rates with a degree of liquidity.
Key benefits for clients:
● Higher returns: clients can earn better interest rates than on instant access savings accounts.
● Flexibility: while not as flexible as easy access accounts, clients can still access their money after giving the required notice.
● No long-term commitment: notice accounts are ideal for clients who don’t want to lock their funds away for several years but are still looking for higher returns.
Rates on notice accounts are also pretty competitive at the moment, with the top deal on Akoni offering 4.55% AER* on a 90-day notice period.
Each client’s financial situation is unique, and their approach to savings should reflect their goals, time horizon, and risk appetite. Here's how to guide your clients:
● If your clients believe rates will fall: advise them to consider fixed-term accounts to lock in current rates before they drop.
● If your clients are uncertain about future rates: recommend notice accounts, especially if they want higher returns but don’t want to commit to long-term lock-ins. Ensure they fully understand the terms and conditions of withdrawals before advising them to commit.
● If liquidity is essential: clients should still have access to funds for emergencies or short-term goals so encourage them to keep a portion in easy access accounts. However, fixed or notice accounts can be ideal for medium- to long-term savings goals.
As an IFA, managing your clients'savings effectively requires tools that provide both flexibility and transparency.
The Akoni platform offers the ability to monitor, switch, and manage multiple savings accounts across different providers, helping you track and optimise your clients’ returns with minimal hassle.
By using Akoni, you can ensure your clients are always on the best available rates and also automate the switching process when new deals launch.
Advising clients on how to manage their savings in the face of potential rate changes in 2025 is key to helping them achieve their financial goals.
Now’s the time to take action and ensure they stay on track.
Ready to simplify savings management for your clients? Let Akoni handle the rate hunting, so you can focus on what matters - strengthening client relationships. Get started today!
*all rates correct as of 16/12/24
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