National treasure: the rising popularity of NS&I

Posted: 06/07/2018

A survey by National Savings & Investments (NS&I) has revealed some interesting changes in personal finance habits over the last 15 years as well as a growing emphasis on the long-term security of investments.

NS&I is Treasury backed, meaning investments are 100% secured.  It is one of the largest savings organisations in the UK with 25 million customers and around £157 billion invested.

As a brief history, in 1969 the Post Office was transferred to HM Treasury to form the National Savings Bank, which then changed its name in 2002 to National Savings & Investments, better known as NS&I.

NS&I first introduced premium bonds, its most well-known product, in 1956 and over the years has expanded into a wider portfolio. According to its recent statistics survey, conducted in January 2018, most financial advisers are now turning to its offerings, but why is this?

The main reason is that they are backed by HM Treasury, which provides security on the full amount invested, rather than the Financial Services Compensation Scheme (FSCS) limit enforced at just £85,000 on banking savings. This ensures piece of mind for both investors and advisers.  It is believed that market volatility in recent years has driven the rapid increase in people staying with cash deposit products rather than other options.

The survey reveals that 70% of financial advisers would be willing to provide some advice to clients with portfolios of under £50,000. However, most clients felt that a professional adviser was only needed with higher portfolio holdings and only 15% of people under 24 currently use an adviser (although 33% would consider obtaining advice in the future).  A very small percentage (just 6%) of financial advisers are advising on large portfolios (over £500,000) or more, meaning that there is a wide spectrum of income streams for them to assist on.

January 2018 records showed that NS&I recorded the highest number of advisers investing in cash deposits rather than its fixed term product ranges. If these were recommended to clients, it was likely to be for a one year term.

Following the banking shake up, consumers and advisers have become more financially aware in seeking security for their savings and therefore less people are being advised to spread their cash across multiple UK providers, especially as many have blended together to form one institution.

Overall 41% of British savers are choosing security over variety and returns, whatever the savings brackets.

As a professional deputy, Julie Burton, who heads Penningtons Manches’ Court of Protection team, regularly considers recommendations from a range of independent financial advisers when assisting in managing compensation awards or establishing deputyships. She comments: “Collectively we have noticed a higher level of security being used in recent months. This is a trend which seems to be consistent across all savings brackets. It is also encouraging for our clients to note that financial advisers are prepared to offer professional support on most levels of investment. Size really should not be an obstacle here.”

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