Plan B for Barclays? A review of Plan & Invest
Two years after Barclays badly managed a migration from its old Barclays Stockbroker service to the new Barclays Smart Investor service (which led to it haemorrhaging customers and assets to rival D2C platforms), the dust has finally settled enough for Barclays to launch Plan & Invest, an online digital investment service. In other words, a robo-adviser.
Barclays doesn’t like to describe its new service as a robo because although it uses algorithms to allocate investments, the investments and performance are actively overseen by Barclays’ investment team.
Barclays isn’t the only bank to have developed an investment solution for its client base. The biggest one, of course, is Schroders Personal Wealth, the joint venture between Lloyds Bank and Schroders, which leverages the robo expertise of Benchmark Capital, a Schroders subsidiary.
Santander launched its Digital Investment Adviser (DIA) service two years ago, offering financial advice on a limited range of Santander products. The DIA proposition is a hybrid of its Investment Hub (DIY) for confident investors and its financial planning service. It is also available to Santander account holders only.
Rather than developing its own solution in-house, Barclays has partnered with Scalable Capital, an established German robo-adviser with services in the UK, Germany, Austria and Switzerland. Unlike Barclays Smart Investor, Plan & Invest is only available to Barclays customers. It works through the Barclays Online Banking website and app, so investors need to be Barclays current account holders to access it.
Scalable Capital is one of the pricier robos in the markets and its minimum investment is £10,000, but fees through the Barclays Plan & Invest service are eye-wateringly high — probably why Barclays doesn’t want to describe the service as a robo. The overall cost for Plan & Invest ranges from 1.39% to 1.59% per year and is split into two types of costs: service and product. The minimum investment is £5,000.
Service costs encompass planning, investing and safekeeping charges. The costs are calculated as a percentage of the value of the portfolio (including any cash) and charged monthly. Planning is the advice element and ensuring the investment strategy Barclays selects is the right strategy for investors’ goals and financial services. It costs 0.25% plus VAT.
The investing cost covers the management of the investments ie the discretionary bit when it adjusts the overall mix of the investments in response to changes in market conditions. It also covers any dealing costs when they buy or sell investments on investors’ behalf. This costs 0.50% plus VAT.
Safeguarding costs is what is known as the custody charge. It covers the safekeeping of the investments, valuation and reporting, collection of dividends, distributions and interest payments. The charge for this is 0.20% plus VAT.
Product costs relate to the cost of the underlying investments. These will vary and will depend on which funds are selected and how much is invested in each one. Fund charges can range from 0.25% to 0.45%. Plan & Invest uses a mix of active funds and ETFs as the underlying investments.
How it works
We can’t see anything particularly innovative or different about the Barclays service. There are three steps: planning, investing and ongoing planning. In the planning stage, investors answer questions about their goals, finances and risk attitude.
In the investing stage, Barclays creates a ‘personalised’ investment plan and investors make a minimum lumpsum investment of £5,000 (the minimum top-up or monthly instalment is £100) into ISAs or a general investment account (GIA). Pensions are not yet available. The underlying investments are a mix of passive and active funds selected by the bank.
The third stage, the ongoing planning stage is an annual repeat of step 1. Every year the bank reviews investors’ finances, and every three years the bank reviews investors’ attitude to risk.
The nitty gritty
The annoying thing is that none of the team banks with Barclays, so we can’t comment on the look and feel of the service. We’re busy opening Barclays accounts so we hope to update you on the service next week. In the meantime, we’re relying on Google.
As well as the website, googling Plan and Invest brings up all the relevant documentation and FAQs. The documents are written in plain, easy-to-understand English, and the service is well explained. A lot of thought has gone into the marketing materials.
There is plenty of evidence to suggest that this hybrid approach is more likely to be more successful with consumers rather than a purely automated version — consumers want the reassurance that someone human is overseeing things — and it’s why the likes of Nutmeg and Moneyfarm have pivoted their service to include advice.
On the downside, the service is relatively expensive and in the volatile, low-returns world we’re likely to be living for some time, high charges could be a substantial drag on returns. Watch our video on why it’s important to keep costs down.
Like the smart investor service, Plan & Invest will be available through online banking and the app, making it very easy for consumers to sign up and start investing. Like all major banks, it has a huge captive audience of potential customers and it knows everything there is to know about them. It should be able to capture lots of clients in a short space of time. We’ll keep you updated.
Use our robo calculator to compare Barclays Plan & Invest alongside other robo-advisers.
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