Barclays Stockbrokers is the second-largest direct platform, with over £15bn in assets under administration. It is also the UK’s second-largest stockbroker on trading volumes, with much of its client base reportedly coming out of the government privatisations of the 1980s and 1990s.
But fund investing became a central part of the proposition when it partnered with FundsNetwork in 2012. The next phase will see Barclays building its own platform technology with FNZ. Launching next year, this will be especially interesting if it successfully brings together not only shares and funds, but also financial guidance and banking with access to Barclays’ millions of retail banking customers.
In future, Barclays will present a single brand for execution-only services with a primary focus on buy and hold investors. Savings including cash Isas, mortgages and investments will all be accessed from a single portal with one login. Active traders will be serviced through a separate trader’s hub to prevent the inexperienced from stumbling upon unsuitable investments, and this will also help Barclays to segregate its marketing.
The banks have been timid in their approach to the execution-only opportunity thrown up by the RDR and often see it as a ‘mis-buying’ accident waiting to happen. Fear of conduct risk tends to stifle innovation, and what Neil Woodford has described recently as “fine inflation” for retail banks exacerbates that further.
The Budget provides more incentive for banks to target self-directed investors with the creation of the Nisa, which enables consumers to merge their saving and investing into a single place. With competitors like Hargreaves Lansdown bemoaning a difficult environment in which to compete on interest rates, this is an area in which Barclays has a head start.
Online banking is one of a few core websites that most people access regularly. This gives Barclays a context to engage with consumers who are thinking of investing. While banking brands may be dented these days, they are trusted custodians compared to smaller brands and this is critical for anyone choosing where to keep their nest egg.
Barclays Stockbrokers provides an efficient, modern service for share traders but has little empathy with the inhabitants of middle England, who are potentially the bigger opportunity. Many of those who would benefit from sensible long-term investing choose their bank as the place to do it. It is the natural home for orphaned advised clients and first-time investors. Given that banks have such good access to that segment, and the scale to compete on technology and marketing, they have the potential to make waves in the D2C market. However, low margins and the regulatory risk of serving self-directed investors might test its enthusiasm.
Jeremy Fawcett is head of direct at The Platforum
Darren Lloyd Thomas
Thomas and Thomas Financial Services
I am not a huge fan of FNZ and I think it has some shortcomings. Some of the advised platforms that use its technology have some odd quirks, so I hope Barclays works closely with the technology firm to make sure it gets it right. Growing D2C is risky – markets have been improving over the past couple of years, but in a falling market there is always a risk that those clients feel they have invested poorly.