View the article online at http://citywire.co.uk/wealth-manager/article/a728651
Should Barclays’ sub-£500k arm be applauded or abhorred?
by Danielle Levy on Jan 20, 2014 at 10:02
‘If I find the right investment managers who want a home, I would be very happy to take on people with clients with less than half a million pounds. I still think it is a lot of money. We are sitting here with open arms and saying “we think you are important”,’ he added.
Richard Whitehead, chief executive of boutique Dart Capital, echoes Howard Smith’s sentiments. ‘I think the decision they have made is incredibly arrogant. There are lots of well run and well managed wealth management businesses that would be perfectly happy to look after the needs of these individuals,’ he said.
Barclays’s open recognition that it wants to service its smaller clients more cost-efficiently flies in the face of the assumption that larger organisations can provide economies of scale.
Consultant Michael Maslinski points out that banks have historically struggled to provide a viable service for smaller clients due to the bureaucracy associated with them and the fact that management is distant from the end-client.
‘Sometimes these [smaller] businesses are capable of providing both the service and advice in a more cost-effective way than the big organisations that have all of the bureaucracy required to show that you know your client to your boss and your boss’s boss,’ he said.
‘It is difficult when management is very remote from the client. So much of the cost in these organisations is servicing that internal system.’
Maslinski is supportive of Barclays’ new division, arguing that the industry ‘should be more honest about what they can deliver to whom’.
‘We have all known that for some time clients with sub-£500,000 can’t afford the advice that is of a calibre worth having. Frankly, this is an acknowledgement that this is the case. I would say £500,000 is quite a low cut-off. It probably should be double that,’ he said.
A chief executive of a medium-sized wealth management company, who would prefer not to be named, has also welcomed the move, describing it as an ‘intelligent decision’.
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