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Nutmeg criticises Barclays' handling of sub-500k clients

by Dylan Lobo on Nov 25, 2013 at 13:46

Nutmeg criticises Barclays' handling of sub-500k clients

Nutmeg believes the industry has much further to go to really adapt to the post-retail distribution review (RDR) world and is disappointed by the treatment of smaller clients.

At an event this morning, the online discretionary manager criticised Barclays following news the private bank intends to offer clients with less than £500,000 a reduced level of service as it repositions for higher net worth clients.    

Nutmeg chief executive and former Wealth Manager cover star Nick Hungerford (pictured) said he views decisions like these as an example of how clients are among the big losers from the RDR.

Hungerford said: 'We’ve seen a shift in the investment industry this year as a result of the RDR as companies make clear where their client priorities lie. You only need to look at Barclays’ decision to scrap wealth management services for investors with less than £500,000 to see that.'

He added: 'IFAs have been slower than predicted to respond to the new regulatory guidance but we expect to see many more businesses restructuring in 2014. Sadly this delay is not one caused by a client- centric mindset, rather the fact that advisers can eke out trail commission (fees often hidden from clients) for one more year.' 

Hungerford is less than impressed by the response from many established financial institutions, which have shown they are unable or unwilling to restructure to help less wealthy investors.   

'There are millions of UK savers out there looking for an intelligent investment service. But not many companies are filling the so-called ‘RDR advice gap’, Hungerford said.

'To us, deciding that people with £450,000 are too poor to be worthy of an expert investment service smacks of hubris and reflects incredibly inefficient operational processes.'

Hungerford expects to see more overhauls of business models next year,as regulation takes its toll, but believes some will try to squeeze out as much commission as they can for as long as possible.

'We will no doubt witness a lot more businesses restructuring in 2014, but we expect the independent financial advisers to continue to drag their heels. They’re reluctant to change and won’t do so until trail commission is taken away.'

7 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Nov 25, 2013 at 15:26

"Barclays’ decision to scrap wealth management services for investors with less than £500,000 " Since when have Barclays scrapped their service to sub-£500k clients? I think Mr Hungerford better check his facts before jumping to get some free publicity...

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Anonymous 2 needed this 'off the record'

Nov 25, 2013 at 16:58

Barclays have far from scrapped investment services for sub-£500k clients. This is factually incorrect and needs to be corrected. Barclays will continue to service these clients.

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Nov 25, 2013 at 18:47

If you click on the link in the article all is made "clear" if you can decipher classic industry speak as evident below;

As a result, the bank is moving clients with portfolios under £500,000 to a new dedicated proposition within the wealth & investment business called Private Clients. These clients will receive a softer touch service than they were previously used to, resulting in a reduction of private banking and analyst roles.

So it's all crystal clear then - softer touch is where it's at - sounds like an advert for hand cream to me.

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Anonymous 3 needed this 'off the record'

Nov 25, 2013 at 21:58

Barclays are moving clients with less than £500k from a Private Bank model where each adviser looks after 50-80 accounts to an Investment Management model (Brewins/Rathbones etc) where a single person is responsible for several hundred accounts. This is not a withdrawal of service. It's about limiting the highest standard of service to those who are willing and able to pay for it.

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Mike Woolfman

Nov 26, 2013 at 08:32

Who honestly believes that a single person responsible for several hundred accounts can offer anything resembling a service? You may as well manage your own affairs via the internet if you fall into this category (with possibly rather better outcomes). Surely the main point of the article is to illustrate how unprepared IFAs are for the 'new reality'. The opportunity is there for the taking - unfortunately it does require something this industry is particularly lousy at - responding to change and adapting business models.

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Anonymous 1 needed this 'off the record'

Nov 26, 2013 at 11:54

Nutmeg offering online / telephony service for their clients sounds "soft touch" to me too...

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Nov 27, 2013 at 09:47

If any benighted Barclays customer would like a good traditional discretionary service with advice available, please point them my way. We do it better and cheaper than anyone else I've seen, especially Anonymous 1 and 2 plc.

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