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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

Should Barclays’ sub-£500k arm be applauded or abhorred?

As Barclays starts to transfer its sub-£500,000 clients into a new ‘lighter touch’ private clients division, senior figures in the industry are divided over whether the bank’s decision should be applauded or abhorred.

Some say sub-£500,000 clients deserve more than what the private clients division will offer in terms of service. As revealed by Wealth Manager in November of last year, clients will now be handled out of call centres in Glasgow, Birmingham and London. They will be given a new point of contact, known as a private client services manager, who is not regulated but is overseen by a regulated private client manager. The overhaul follows a 35% reduction in private banker headcount this week, down to 180 and a regional management restructure.

The bank said there will be no change to the investment proposition that those in this bracket receive. A spokesperson said the new division will continue to support existing clients ‘through a combination of services including discretionary portfolio management, advisory services and execution-only’.

Wealth Manager understands there will be no change to the charging structure.

Plan branded ‘outrageous’

John Howard-Smith, chief executive of PSigma Investment Management, has branded the launch of the new division as ‘outrageous’, arguing that £500,000 is still a lot of money and these clients should not be treated as ‘a commodity’.

‘This goes back to the age-old argument that people with this sort of wealth should be treated as clients and not customers,’ he said.

‘If we were to go through the same process, would I think it is right to be looked after by a call centre? In my mind you are treating those affected as customers rather than clients.’

Howard-Smith said Barclays’s strategic decision was ‘short-termist’ and he would look to capitalise on any opportunities that may arise from it.

For example, hiring any disaffected staff or attracting new clients, particularly given the potential these clients might have to increase their net worth over time.

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11 comments so far. Why not have your say?

D&W Consulting

Jan 20, 2014 at 10:27

Yet again a bank treats customers with reference only to their wealth. They have completely missed the rich advice opportunities which would have profited both the client and Barclays!

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Bob C

Jan 20, 2014 at 14:14

Great opportunity for the rest of us to show these 'customers' that there ARE investment firms interested in providing a full client service, irrespective of how much money they have.

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Anonymous 1 needed this 'off the record'

Jan 20, 2014 at 14:18

well they have to do whatever it is commercial to do. it doesn't initially sound good but if they can't make it pay for their shareholders then their decision is one that is sound. it costs a lot to give good financial advice.

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Anonymous 2 needed this 'off the record'

Jan 20, 2014 at 14:37

So how does this leave the principle of KYC?

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Digby

Jan 20, 2014 at 14:38

Barclays will in time regret the day they have made this decision . Sledgehammer to crack a nut comes to mind . £ 500k in most businesses eyes especialy wealth management is a lot of money and the opportunity such a client can provide to do other business is enormous .

The value of "relationship banking" is completely lost on Barclays do they not realise that clients with 400/50k are bound to have other assets.

Time will tell -- and to late I fear

The damage is being done both in practice and reputation -- so difficult to reecover .

not good for motivating staff either

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james field

Jan 20, 2014 at 15:52

Whilst the commercial decision is just that, it is a very short term view and increasingly confirms what many have said about larger institutions for years not wanting, nor being able to afford to service clients below half a million pounds because of their own inefficiency - except of course, to sell their own off the shelf products which, to my mind, is neither best advice nor honest in the way it is delivered.

Why not go the whole hog and write of anyone with less than five million?

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Nick McBreen

Jan 21, 2014 at 12:53

Nothing new here then--same old same old bank "advice" model lives on!

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Jack Lawton-Willett

Jan 22, 2014 at 09:39

I may be wrong here - however, as I see it, banks and building societies for too long have focussed on getting money in through the door. Their processes for looking after existing clients are woeful and the measures that are put in place for bonus take little regard for looking after existing clients. How many of us are bank clients - and HNW bank clients at that - and how often do we get a call?

Love them or hate them, at least Barclays are doing something different and it could be argued that at least customers (date I type clients?) now have an opportunity for regular contact - even if it is over the telephone. I suspect that they will still have field based advisers to swoop in and advise where there is a requirement Let's face it - stochastic modelling over the phone can't be that easy - nor explaining a 128 page reasons why document!

We have about a 10 year window IMHO for face-to-face advice in the current manner. No doubt advice will be conducted and transacted on some form or smart app sooner than we think. I suppose what Barclays are trying to do is adapt to that world in bite sized chunks. They may have got it wrong, however, at least they are having a go.

For the rest of us, there is a current massive opportunity. With banks and building societies continuing to focus upon new business (which mat include charging fees for moving the same fund from an old charging structure to a new one - with financial benefits after 5 years) - there are masses of people out there desperate to sit down and obtain rounded, (I'm going to use THAT word) holistic advice from an experienced adviser not associated with their bank or building society.

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Barry Bennett

Jan 23, 2014 at 17:14

Good news.

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Guy Usabreak

Jan 25, 2014 at 09:43

Good to see Barclays taking a realistic decision.. The regulatory costs which have been piled onto the industry require new thinking to keep the costs reasonable for customers who want or need advice. For those who can DIY lots of interesting new ETF's and low cost investment trusts out there to cut out the greedy and often inefficient middle man.

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Donkie

Jan 25, 2014 at 19:31

Typical bank thinking they are to big to fail.

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