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Barclays rolls back on robo-advice plans

Barclays has rolled back on plans to launch a robo-advice service, Money Marketing understands.

The bank launched a new self-directed investment platform, Smart Investor, in August last year.

Sources tell Money Marketing that the bank was also planning to complement this with a hybrid advice offering that would combine online services with a face-to-face element, providing wider financial planning than just an investment service.

Money Marketing understands that while Barclays has not made any internal staff redundancies, contractors who were working on the project have seen their arrangements ended as the bank has pushed back its plans to extend the direct platform to fuller advice.

When Money Marketing initially reported on plans to launch the hybrid advice service last year, Barclays said its direct investing launch would be “the first step towards a suite of new services that will help address the savings and investing knowledge gap in the UK” but would not comment on future plans.

Barclays declined to comment this week on dropped plans for an additional robo-advice service.

A Barclays spokesman told Money Marketing: “We would not comment on speculation about our business strategy, which is unchanged. We prioritise our work to ensure we satisfy our customers’ needs, and we are leveraging the capabilities of Smart Investor, which continues to develop and grow.

“We continue to explore and develop new products and services to help address the savings and investing knowledge gap in the UK.”

An industry source says: “It is staggering that banks keep throwing tens of millions at failed advice projects. There seems to be no end to this cycle of waste. Increasingly the best software suppliers are forming a view that banks aren’t worth having as customers because they do frequently tie up massive amounts of resources on projects that never deliver.”

In its latest financial results in February, Barclays made no mention of any plans with regard to full financial advice.

Last April, Barclays sent out a letter to a number of clients of its shuttered financial planning arm, notifying them that it was to review the suitability of investment advice given in the six years to 2011.

Smart Investor also encountered a number of problems just after its launch. For example, clients were reportedly not provided with correct log-in details and suffered long delays on customer service lines. Some clients also reported that transactions were missing from their accounts.

Barclays continues to run a high-end private client wealth management service.

A number of banks have attempted to return to advice with partly automated services that still deliver fully regulated advice.

Nationwide, for example, successfully applied to the FCA’s ‘regulatory sandbox’ last June to test the development of an “automated solution providing digital savings guidance and investment advice.”

Bank advice gets personal

Harbour suitability system creator David Roberts says: “I think the problem the bank assurers have is a pretty poor track record of managing suitability. Barclays, Coutts and Santander all got called up for it. I think it’s been a major concern. The real issue they’ve got is a challenge over how they manage client relationship.”

Roberts notes that adviser overrides in the Harbour system mean that any automated elements can always be double-checked, but that the right incentives would have to be in place to stop financial planners inputting more risk into the system.

He says: “If you were responsible for regulation in a big bank like that, I’m not sure you can’t trust the management process and the staff.

“There’s a lot of inherent risk for a bank, which is down to culture; the way they see things.

“Banks’ reputations aren’t very strong with investors; there are a lot of challenges for them. My view is I’m not sure wealth management suits their scale and size. I don’t think it works like that for them.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Robert Milligan 20th April 2018 at 11:41 am

    The problem with Robo Advice in the banking world, it can not create any bonus for line management, so clearly as no incentive will be paid from this source of business, no one wants to use it!!

  2. They could do it properly but never have, must be a culture thing. I joined BISCO thinking it was an IFA, soon found out it wasn’t. Shortly after SIB found out it was closed. Banks are in a fantastic position to deliver but they have failed over and over again.

  3. The likely reason is that slowly the penny is dropping and people are latching onto the reality that the concept and word/s Robo Advice is an oxymoron..an algorithm cannot have a real conversation therefore cannot give Advice, despite what all those with vested interests say.Human beings do not always behave or think rationally and need Advice!

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