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Barclays to close advice arm

Barclays is closing its advice arm, Barclays Financial Planning, and exiting the advice market for retail consumers, Money Marketing can reveal.

The bank will continue to offer advice to high-net-worth clients through Barclays Wealth, but will no longer give retail clients advice through its branch network.

Barclays Stockbrokers, which offers an execution-only service, will not be affected by the move.

The bank is instead looking to develop an online execution-only service for mass market clients.

A Barclays spokeswoman says the bank conducted a review of its financial planning arm and concluded the business is no longer viable. Staff are being informed of the news this morning.

She says: “There has been a decline in the commercial viability for financial planning services over recent years and our expectation is that this will continue.

“Our decision to exit the market is not a direct result of the RDR, but we do anticipate that the outcome of the RDR may have an impact on the performance of the business.

“An internal review has been going on over recent months and we have concluded that given the changes to the retail investment marketplace, it is unlikely that this business will be able to deliver a return to justify the investment that is needed.”

Barclays says its move to an online execution-only service follows market trends.

The spokeswoman says: “We are seeing really strong trends amongst consumers to actually purchase and manage investments online and we are expecting this to increase steadily. This is contributing to why we want to offer retail investment services online. There will be further announcements about the online proposition early in 2011.”

Barclays says it will refer clients who require financial advice to IFA Promotions or the Consumer Financial Education Body’s website, Money Made Clear, which was established by the FSA to provide “practical money management advice and tools”.

There are thought to be around 1,000 staff within Barclays Financial Planning and they will all be placed on a six-month consultation.

Barclays says it will also consult with Unite during the consultation process.

Last week, the FSA fined Barclays £7.7m for failures relating to the sale of the Aviva global balanced income fund and the global cautious income fund, which were first exposed by Money Marketing in April 2009.

The FSA says Barclays is facing a further compensation bill of up to £42m, on top of the £17m it has already paid out to investors.

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Comments

There are 52 comments at the moment, we would love to hear your opinion too.

  1. Wow! Just Wow! I used to work with these guys when they were tied to one provider and was a major point of contact. Hope everyone I used to deal with has already left and set up businesses on their own already with their clients, or have somewhere else to go if they haven’t!

  2. So all those moaning that the fine was not enough… presumably it was.

    Now for some reflection on how a multinational business cannot find sufficient profit in providing advice to UK retail clients and the implications for us all.

  3. Barclays…it is gonna be a ghost town!

    Will the rest of the rubbish follow this strategy?

  4. Ancient Wisdom...is a mortgage broker in N3 26th January 2011 at 10:14 am

    Barclays must have realised the cost of being financial advisers.Since the recent huge misselling fine, and bad reputation, consumers should be ever more cautious then getting advice through poorly qualified high street bank advisers who are not wholly independent.

    RDR in 2013 will cause networks to fail as well and more advisers will exit.

  5. Here’s a warning to us all…

    “There has been a decline in the commercial viability for financial planning services over recent years and our expectation is that this will continue”.

    FSA please listen – if Barclays can’t make your regulations work commercially – no-one can.

  6. So what exactly has the FSA achieved in its plan to deliver cheap financial planning advice to average man on the street? Answer – bancassurance/IFA business models that only work dealing with the affluent. End Result – online execution only for those that need advice the most. FSA = destructive not constructive. Oh dear.

  7. So what are they going to do when a “customer” asks “What should I do with this investment you sold me?” in the future? No service/ No advice?

    Oh no change there then!!!

  8. Big was beautiful when they could get away with the non ethical way of selling, but maybe they’re now frightened that they can’t make the fast irresponsible bucks from the general public without giving TCF advice! Here’s hoping some more of the banks follow!

  9. Barclays are to be applauded in making this decision although the recent FSA fine will have no doubt hastened it. It will be interesting to see how the others banks respond as I would expect the same cost/benefit analysis by Barclays will translate
    to the others.The provision of financial advice is (and always has been) a serious business and this is at last dawning on those who have caused the most consumer detriment.Could decisions like this together with the prospect of banning execution only
    and higher qualifications finally make the transition process worthwhile ? Are we in the darkness before the dawn?

  10. Good grief, never expected this! If other banks follow suit where will people go? IFA’s? You’ll be able to count IFA’s on your fingers and toes soon!

    Great work FSA. At a time when well paying jobs are hard to come back you just keep carrying on.

    Massive protection, pension and savings shortfalls anyone?

  11. Fergus Macpherson 26th January 2011 at 10:26 am

    Interesting. I felt that the banks would be much better placed than IFAs post RDR. The Barclays’ spokesperson’s comment that the decision is not linked to RDR is, I fear, simply not true. Of course it is. That profits will decline post RDR for them almost certainly is true. But the main point of the article is move to ‘execution only’, and ‘on-line’ business. So here is a classic example of the wealthier clients being looked after through their Wealth Management Team, and the rest of their clients having to ‘go it’ alone. I think we have all seen this coming. There will be an increasing number of people who will have to bumble around on their own, trying to sort out their finances. And of course, they will be reluctant to knock on the door of an IFA lest they should be charged a fee. Really, FSA, do take yourselves away for a weekend in the country, clear your minds of your own spin, and open your eyes to the silliness of some of your proposals.

  12. What they really mean is…
    I’m a Bank get me out of here.
    The fast buck days of selling flavour of the month product is over. I’m a Bank I’m only interested in making money if this is no longer making me money – get me out of here.

  13. I seem to remember that Barclays pulled out of giving independent financial advice to anyone with less than £50k to invest back in the early 1990’s.

    Then they re-entered when they thought that there was a few easy bob to be made. Now, the weight of regulation and having to do the job ethically means, once more, that financial advice to the masses has once again become unviable.

    Will they be missed ? I don’t think so !

    IFAs need to make sure that as many as possible of the wealthier people they meet know about Barclay’s decision and how they treat their clients.

  14. Oh Dear! So Hector Sants thought it was acceptable for 30% of the IFA population to disappear. Now the banks who were meant to fill this gap are laying off all their advisers as well.

    So apart from a few High Net Worth Clients that the remaining IFA’s will be looking after can the FSA please explain in simple terms who the RDR is going to help? Certainly not the average person in the street!

  15. As somebody who used to work within this organisation, my best wishes for the future to those I used to know.

    Mixed feelings on their exit from this market. On the one hand, the recent press has given a strong indication of the working practices that I came to know and loath. However the fact that Barclays has taken the decision that face to face advice is going to be replaced with an execution only service will lead to even less people ending up with the financial outcome that they so desperately need!

    I’m afraid to say I cannot see a positive outcome emerging from this decision.

  16. Fraser Brydon - IFA 26th January 2011 at 10:47 am

    The best new years present i’ve ever had, brilliant news, a whole load of middle affluent clients now being directed to IFAs for onging advice, happy as pig in poo.

    Not before time either……i’m profitable with the mass middle earners,why should that change?

  17. I work for one of the other big banks, and I know the cost of providing advice to customers with limited assets far outweighs the revenue it brings in. While it doesn’t make sense for ANY kind of business to offer a service that doesn’t generate revenue, this will only add to the financial ‘exclusion’ that the FSA was trying to eliminate for lower-Wealth customers not that long ago. Can execution-only online ever be a replacement for someone who understands the implications of the products on your tax/risk/future?

  18. Not to be a vulture here but any Barclays advisor that needs to look at opportunities then please do call me, James Rhodes at BWD Search & Selection. Tel: 01132743000. Our firm can help on a national basis and have some excellent relationships in the market. Have a look at our website to see our credentials: http://www.bwd-search.co.uk

  19. We will of course see other banks follow suit when they see what Barclays has realised: advising the smaller client on an independent basis, compliantly, is just not profitable enough for a large bank.

    RDR could in fact help IFAs a lot as these banks drop out of the competition.

  20. I wrote a blog entry last week “R.I.P. The local financial adviser”

    I honestly didn’t see this one coming and I thought that the banks would mop up post RDR and be the only players left in town.

    Bring back the man from the Pru for the masses – he didn’t do a bad job did he/she?

    He/She got people saving, provided simple pensions and life assurance – wake up and smell the coffee FSA. Your new RDR proposals are broken before they start.

    Lee Birkett
    CEO
    TrumpoMatrix.com

  21. It’s very easy to knock these guys, but 1000 people with families are now out of work!

    They have always done the best with what has been available to them. Lets not kick them when they are down and wish them all the best

  22. Well, the FSA have really blown it. In trying to make being an IFA unprofitable and throwing the public to the lions (read bankassurers), they have even made it unprofitable to their ‘masters’ to offer independent advice!!!! Looks good but….. Of course, their ‘pensions’ (IFA hirearchy future employers – read Banks), have online, direct buy sales, to take up the slack and provide their overpriced products directly to the RDR disadvantaged clients. HOPEFULLY when the dust has settled and Panorama etc. do an in-depth expose of the unholy connection between the FSA & Banks, the due law will finally bring justice!!!!!!!!!

  23. I used to work for Barclays Life and in my experience they were no worse than anyone else in the quality of advice given.

    The Government and FSA, however, have demonstrated that they do not understand the Financial Services market, the sales process or the definition of advice. They have already created a potential pensions disaster and are now working hard to do the same with savings. This news indicates that they are sure to succeed.

  24. I think Barclays are being tactful when they state
    “There has been a decline in the commercial viability for financial planning services over recent years and our expectation is that this will continue”.

    What I suspect they are saying is that the Regulations are so bias towards the consumer that the risk of advice is too great, so they simply wont give any, am timely warning to us all

  25. Firstly – I wish those advisers impacted the best for the future – give HSBC a bell

    Secondly – what does this say about the FSAs aim to provide financial advice to everyone? Products that have no profit in them and Joe Average being asked to pay a fee is not helping anyone…

  26. No doubt this is something to do with the recent FSA fines and probably more to come.

    What it does show without doubt it that more and more advice will go online (or should I say people taking their own advice) and buying online.

    Quite how this helps consumers obtain suitable advice staggers me but there is little doubt this IS a direct result of the FSA and also RDR and all the implications this has.

    Advice will only be for those who can afford it.

    Well done FSA looks like you too will have to start looking at your costs as at this rate there won’t be may left to pay them.

    Keep up the good work in killing your golden goose.

  27. At this rate it will leave only one form of advice, “the fully qualified but unregulated mode that nearly everyone uses”

    Quote “I was talking to this fella in the pub the other day and he reckons……………………”

    Haven’t we all heard it. The only flaw is that there aren’t all that many Pubs left open.

    Perhaps Adair Turner hit on it. Maybe the way forward is for the CPMA to regulate all products and to cap fees/commission to a % taken from the product.

    Removes commission bias and let every IFA qualify at a more considered pace.

    Must goggle Utopia and fina out just where it is.

  28. Why should the FSA wake up and smell the coffee?

    Just because there are advisers who make people save and buy life assurance doesn’t mean people necessarily end up being better off. Ok, it does if they die early…but in reality what all these sold contracts did was make money for the providers – so when you understand how those work you will wake up and smell the coffee!

    The banks are a waste of time. Most youngsters want to do things themselves and will happily research and transact online for minimal charges. Nothing wrong with that as people should be allowed to decide for themselves.

    Eventually what will happen, as it usually does with HNW individuals, is that they begin to realise that quality advice does make a real difference and that they can’t really manage it all themselves. Enter the fee based financial planner…

    The future looks bright

  29. It is to be seen by the Barclays move away from giving advice over the counter other than to the wealthy, that the future provision of most financial services to the man in the street will be on execution only basis and online.

    It is no wonder that the FSA has recently become more interested in the design of the products in readiness for its future regulator’s role supervising execution only business. Where does this leave the IFA? In simple terms they need to compete for the HNW business with the banks. It goes without saying that the need to regulate general IFAs nationwide will be less of a priority for the FSA as RDR will eventually reduce the numbers to a manageable few.

    There will of course be a market for financial plans to be sold by Chartered Financial Planners where the customer can at his/her own volition purchase the desired products online from the cheapest provider. I envisage that these Financial Planners will probably work closely with professional practices such as Accountants and Solicitors offering financial planning advice or estate planning to their HNW clients.

    Where will this leave the ordinary man in the street, unless he has access to an IFA, he will of course be at the mercy of the Online Money Supermarkets, making ill informed choices on products and charging structures that he will not probably understand. (Hence the FSA’s stance on tandem mortgage accounts and its sudden interest in the product design of financial products).

    Or am I just being cynical!!

  30. I’m not sad to see Barclays leave the market but I am angry that the regulator will allow this company to operate and execution only basis.

    When is the regulator going to get real about stopping this type of practice as this is even more dangerous as the literature in these particular products tend to be biased.

  31. I am no a bankassure fan but this is the first of the dominos going down following FSAs unrealistic & continual meddling in areas they no nothing about.

    The forcasts could be proved right that there will be an advice void for the average working man.

    I think there will be a mass exodus from the industry either through individuals sick of the iept dabblings & unrealistic costs or through major player realising that the outlays not worth the return or ongoing liability!!!

    Keep going Miss FSA!!!!

  32. I may have played a part in their exit from ‘independent’ advice in 1994/5.

    Other banks are busy recruiting for their own ‘pyramid selling’ outfit. I can’t work out why.

    I predict that banks will have computers in each branch that can hide behind the potted plants and pounce on the customers as they walk in, or tellers who ask certain questions and lead the customers down the ‘non-advised’ route. Consumers believe they are getting advice whether it is an online service or a guided tour of three shades of grey in branch.

    Whay can’t the banks employ people who ‘advise’ their own customers for free on a generic basis as part of the service instead of having to stump up millions for the moneymadeclear advisers?

    Do they know something you don’t?

  33. I think their current FSCS levy, plus they are very aware of future liabilities to come has helped focus their attention to get out of the general market to save not only the annual FSA fees for a 1000 Advisers but future FSCS levies that will make their fine look like small change in comparison.
    It will also lead to greater FSCS liabilities for the remaining IFA’s !!!!!!

  34. I use to work for BFP for many years until I saw the light! The expertise was often excellent although the target culture inevitably drove cetain advisers to find their ‘niche’ and those that didn’t, found their sales figures suffering as they were trying to ‘advise’ their clients properly. The advisers were told they HAD to see 15 people a week and were micro managed to the point where desperate selling was taking place.

    I am gutted for the staff and their families but sadly the bigwigs that run the banks are as ruthless as ever and do not see the benefit or true financial advice to their customer base and prefer to measure this on sales. I hope that the clients walk away from the Banks and get the time spent on them that they deserve.

    Whilst the FSA is partly to blame with RDR, the Bank itself is ultimately the one that has shot itself in the foot. Look after your staff and they will want to look after your customers!

  35. As an ex Barclays man, i am very surprised to see them go. Where does this leave their clients? Opportunities for the IFA marketplace i hope.

  36. Ancient wisdom…or noy as the case may be. so how do come to the conclusion that networks will all fail come 2013? Being part of a network that has changed its charging structure to a menu of services coupled with being a buffer to potential liabilities is good enough for me and the many advisers whoare actively seeking a move away from DA. MORE SCAREMONGERING NONSENSE

  37. This is unfortunate for the people working there, but this is a blessing for the costumers, now they’ll be able to get good and independent advice.
    We are in this economic mess because of the banks GREED.

  38. Anon @ 11.20 am

    thanks very much for your considerate post. I am one of the families affected by this as my other half works in BFP. He is a normal customer service worker not an adviser, his salary is below £20k per annum and most of the staff at BFP will be in a similiar situation.

    I’d like to add that he saw very little of the bonuses banded about over the years, he also saw very little in the way of pay rises over the years yet he is the one, like so many others that will suffer.

    Lets try to remember that with every bank/IFA business that folds people will be struggling, and I mean normal workers not those on crazy wages and bonuses, whilst the FSA continues to try and improve the service/advice for the consumer! I think they are forgetting that those of us in this god forsaken industry are the consumers as well!

    All I have left to say is good luck to all BFP staff over the coming months!

  39. There is a possibility that the Barclays Board have reacted badly to their recent fine and compensation claims and in a fit of piqué decided not to play anymore. More worryingly if they really have done their sums and decided advised sales are no longer profitable then we haven’t heard the last of this. The FSA really ought to look quite hard at the RDR and consider again whether the path we are being led down is the right one. I’m not against qualifications at all, quite enjoying it really, but I am against being forced to charge fees, what’s wrong with letting the clients chose how they want us to be paid. I also feel for the advisers. We have employed ex bank advisers and have mostly found them to be good and that they prosper in the IFA world. So, if I’m allowed to get away with this, give us a call, we might have a role for you; check this page on our site. http://www.charlesderbywm.com/advisers/

  40. I genuinely feel for those affected for the advisers at Barclays today.

    I doubt whether the FSA feel the same.I do feel they know they are on the titanic and all they want to do is take down as many advisers with them as they possibly can!!

  41. as one of the staff who has just been made redundant today i would like to thank all the comments from people who seem to have taken great joy from a 1000 people being sent down the road. having worked in the industry for 14 years, diploma qualified and never had a upheld complaint against me. i disagree with the sentiment of many but most of the advisers do the best they can under difficult circumstances. just think recruitment consultants are calling now to get us to become ifa’s so standards are dropping

  42. Maybe the FSA will now wake up. Many other will now follow. Is this the beginning of the end?
    Like Bank Advisors or not they often provided great advice to many people who would never of recieved any advice otherwise. Is this the beginning of the death of advice to the man in the street? Will good quality advice now become only for the rich like good quality legal or tax advice?
    A sad day for Financial Planners across the industry.

  43. I have worked in the industry for over 20 years, initially for Barclays Life, and then as an IFA. I feel really sorry for the BFM employees, and I hope all will be able to find new employment. Having said this, I also find myself getting angry at the comments made by numerous IFA’s who, for some reason, believe themselves to be all high and mighty. My training at Barclays Life was second to none and the advice my clients received from me was of the same standing. All the ‘Andy Gray’s’ who have used this sad day for their own purposes should be ashamed. I have worked with hundreds of advisers over the 20 years, and I can hand on heart state that the best advsiers were all from my Barclays Life days. Clients are well aware that they are not receiving Independent Advice, yet are still happy to invest with the Banks. Have you asked yourself Why? Mr IFA, Sir? I am now Independent, but have no wish to be associated with your comments.

  44. Can I suggest that any Barclays advisers take the time to write to Hector Sants and explain the affect that his regulations have had on them and their family.

    You could also mention the clients you looked after that are now going to be given a web address. How do you think they will fair in future?

    I’d like to say something positive now but until the RDR is properly sorted I think the future is bleak for us all.

  45. This could be the end of the sytem we know. The banks provide most of the funding for the industry structure and regulation. Without them on board the industry can only go execution only, but to a new standard Similar to Hargreaves Lansdowne, leaving us as IFAs in a position where we simply wont be able to afford the fees to run the industry.

  46. Looks like what we expected is now already beginning to happen. It is costing us around £500 per individual to take the higher exams multiply this by 1,000 as in Barclays case. Half a million quid just does not stack up plus study leave days, the advisers they have who will not pass and the additional costs of RDR if Barclays can’t offer advice to the public and the IFA’s left in the industry will not because we can now cherry pick the highest net worth clients, who will be providing any advice at all.

    Back to the RDR drawing board FSA and don’t say we didn’t tell you so.

  47. Presumably Barclays’ clients who do not manage their affairs online and visit branches are persons seeking to borrow money or are not internet savvy (the over 70s) who were the easy prey of their financial planners er salesmen? With the elderly excluded from further sales who will they sell to? – close it down then.

  48. Some advisers in BFP might remember my name from my time at Aviva, good luck to all those affected by this closure.

  49. Anyone got hold of their client list????????

  50. I have to say having read every comment on here regarding BFP – there are lot of biased ones mainly coming from IFA’s.

    I work for a major high street bank and all the advisers I work with provide high quality financial advice, I find it dissappointing to see that people are slating the advice that bank financial planners provide in a time where it is difficult for everyone – especially Barclays advisers.

    To be honest I dont really know the ins and outs of RDR and costs associated with it, other than Fee/Commision changes & exam standards – but it seems having done just an hour research it isn’t hard for me to see that it will not be good for the consumer. The Banks will win in the end and IFA’s will be asking for jobs with the banks – Barclays hadn’t even started to upskill there Advisers for RDR – 1000 advisers would cost a fortune to upskill let alone training costs aswell.

    Barclays Financial Planning will be back – but post 2012, they will cherry pick the best advisers but without the associated training costs to upskill them. Did anyone know that Santander bank ( which I don’t work for) made an operating net profit of over £4B in 2009 – 2010 ? Wake up the banks will find a way around all of this – and the answer definately insn’t online execution only – how ridiculous this idea is. Barclays will trial it and fail, other banks will not follow this route, plus I bet the FSA will impose some sort of fee for providers providing online services!

    This RDR mess needs to be cleared up, with no Advisers left – or HNW clients only being serviced then this surely isn’t solid reform, this is an area of priority for the FSA I feel.

    All the best to Barclays Financial Planners.

  51. Raphael Kozlowwski 29th January 2011 at 5:14 pm

    Having read all the comments on this piece and now as a retired IFA, because of my total lack of faith in the FSA the outcome of Barclays decision should not come as any surprise. Once again the FSA has shot itself in the foot if not both feet. Remove this regulator once and for all and replace with people who understand people and the market place. The FSA has no credibility left let alone any support. Good luck to al those who have to find new jobs at Barclays. Lloyds staff watch out !

  52. So who is going to look after the, now orphan, clients of Barclays??
    Just shows how little regard these large financial institutions (and makers of fiscal policy) have for customers.
    The bank has had its initial commision and will no doubt continue to receive its trail…for what??

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