Barclays has launched an online investing service in a bid to plug the so-called advice gap with a ‘personalised investment plan’.
Initially only available to Barclays current account customers with at least £5,000 to invest, but soon to be rolled out further, Plan & Invest is designed for those without the know-how, time or confidence to get started in investing.
It builds a tailored investment plan tailored to the user’s goals, which is then monitored by the same active managers behind the bank’s wealth management service.
Plan & Invest is designed for those without the know-how, time or confidence to start investing
It is the latest launch within a plethora of so-called ‘robo-advice’ platforms that have come into market in recent years, offering cheaper, supposedly easier solutions for the novice investor.
However, Barclays says the Plan & Invest service is different in that the service is tailored to the user’s goals and needs and offers personalised support that traditional robo-advisers have yet to tap into.
A spokesperson said: ‘Whilst there are numerous wealth management firms who offer tailored, face-to-face advice and a handful of good robo-advice providers, there’s very little support in between.
‘This is what we were hearing from our customers – they wanted us to meet them halfway and create an advice service that gave them the personalisation associated with wealth management but with the digital convenience and affordability of robo-advice.’
This is Money was granted an exclusive tour of the seven step Plan & Invest scheme. Here’s what we found.
What is Plan & Invest?
The new service is a joint venture between Barclays and Scalable Capital, and gives customers access to the bank’s pick of both active and passive funds through a managed portfolio.
Investments will be chosen and managed by Barclays’ dedicated team of investment experts, previously only accessible to clients with considerable sums to invest.
It has been launched in an attempt to fill the gap between the expensive face-to-face catered advice offered by wealth management firms and the cheaper, simpler digital solutions provided by robo-advisers, such as Nutmeg and Wealthify, which generally invest in passive products based on the users ‘lifestyle’.
Plan & Invest is different to Barclays’ Smart Investor service which is a DIY platform closer to the likes of Hargreaves Lansdown or AJ Bell where users can pick and choose where they invest.
Robo-advisers offer investment solutions at a fraction of the cost of traditional finance advice given by flesh and blood humans
Who is it for?
The service is available to Barclays’ current account customers with at least £5,000 available to invest. It is accessible via online banking and will later this summer also be available through the Barclays app.
It is mainly targeting those who have some money to invest but don’t know where to begin or lack the time, confidence or both.
A recent YouGov poll found over half of British savers (56 per cent) feel they don’t currently have access to the expert support they would need to start investing. Meanwhile 71 per cent believe they do not have the skills or expertise to invest on their own.
Dirk Klee, chief executive of wealth management and investments at Barclays, said: ‘Over the last few months, we’ve seen a rise in the number of people wanting to invest for the first time and it feels more important than ever that we give people the right tools and advice to plan for their financial future.’
Currently, even Barclays Smart Investor customers cannot open a Plan & Invest account if they do not have a Barclays current account.
How does it work?
Plan & Invest involves seven relatively straightforward steps to get started. The first is setting an objective in mind for your investment.
Options available include retirement, buying a home, education, saving for family or something else.
The second step is to check your affordability, by asking you to input assets, debts, liabilities, income and expenditure. If the programme thinks you have too much debt it will not take you forward as a candidate.
Otherwise, it gives you figures for the most you can afford to invest, regular payments as well as a recommended emergency cash reserve.
Barclays’ new Plan & Invest service involves seven relatively straightforward steps
These amounts can be changed manually if they don’t suit you, before going to the next step – testing your investment knowledge.
Somewhat confusingly, this involves only three questions – whether you’ve invested before, whether investments have been part of your job, or if you’ve got any relevant qualifications. Which is a rather blunt test of investing knowledge.
The fourth step is assessing your attitude to risk, where you asked to rate 12 statements based on how much you agree with them.
For example, ‘compared to other people, I am prepared to take higher financial risks’.
The fifth stage of creating your plan will show you what your potential portfolio will look like. This includes a breakdown of cash and short maturity bonds, bonds and equities, which are also split into subcategories such as geographies.
The penultimate step involves declaring whether or not you have an existing Isa and if you’d like to transfer it to the Plan & Invest service. If you select this option and go ahead with the service, Barclays will initiate any transfers requested.
Finally, you are presented with an infographic showing how likely (or unlikely) you are to reach your goal in the chosen time frame.
For the final stage of the Plan & Invest process, you are presented with an infographic showing how likely (or unlikely) you are to reach your goal in the chosen time frame
This also includes a projected value of your investment if markets perform poorly during that time. If you don’t like the results, you can always go back and make alterations.
Throughout the entire process you can save and come back later and also ask for online support via the live chat box.
Barclays have also defined seven steps in the Plan & Invest’s ‘customer journey’.
|1||Customer answers a series of questions online – covering their goals, finances, Isa allowances and how they respond to risk|
|2||This information is used to work out if investing is right for the customer and how much they can afford to contribute towards their goal, both initially and on an ongoing basis|
|3||A personalised investment plan is created, combining a mix of investments chosen by the same team that looks after Barclays’ wealthiest clients|
|4||The customer can see how their money will be invested and how it will change over time/as they get closer to their goal. It will also show them how achievable their goal is and make sure that, where possible, they’re investing in a tax-efficient way|
|5||If the customer proceeds with the plan, their investments will be actively managed, involving performance tracking and trading as would be done by a fund manager|
|6||The customer will be kept updated, and given dedicated support online or over the phone with the option to make any changes as and when is necessary.|
|7||An annual review of the plan will be given to make sure it is still right for the customer’s needs and changes may be made|
How much does it cost?
The personalised investment plan is free to set up. Customers will only be charged once the accounts are live and money has been invested.
Once a portfolio is set up, ongoing charges will range from 1.39 per cent to 1.59 per cent per year, which is charged based on the value of investments and split into two service costs and product costs.
The service cost is fixed at 0.95 per cent (+ VAT) and covers planning, investing and safekeeping costs.
The product costs cover ongoing fund management fees and transaction fees and will range between 0.25 and 0.45 per cent, depending on which funds are chosen for a customer’s personalised investment plan.
|Service cost||0.95 + VAT = 1.14 per cent|
|Product cost||0.25-0.45 per cent|
|Total annual cost||1.39-1.59 per cent (inc. VAT)|
Based on the table above, someone with a goal of reaching £100,00 in 15 years time, with a one-off cash payment of £10,000 and regular monthly payments of £300 can expect to pay the following fees.
In their first year, the 1.14 per cent service cost would be £419.34 while the 0.40% product cost would be £148.42, making a total of £567.76.
The average annual total cost over the fifteen years would be around £1,043.95.
Is it limited to only Barclays funds?
The Plan & Invest portfolios have a mix of active and passive funds and are not limited to Barclays products.
Some examples of the passive funds that may be in a customer’s portfolio are iShares Japan Equity Index fund and iShares Europe ex-UK Index fund.
Portfolios may also include actively managed funds such as GlobalAccess Europe (ex-UK) Alpha fund (which comprises managers from Allianz Global Investors, Invesco Perpetual and Blackrock) and the GlobalAccess US Equity fund (which has managers from Ceredex Value Advisors, T. Rowe Price and Alliance Bernstein).
Within a typical Plan & Invest portfolio, there will be around 15 different fund management companies featured.
How does it differ from rival offerings?
Unlike many robo-advice providers, such as Nutmeg and MoneyFarm, Barclays will adapt the investment plan to any changes in the market or the customer’s circumstances and check in with them at least once a year.
This is to make sure the investments are still right for the customer’s needs and that they’re making the most of their tax allowances.
If anything needs to change, for example if they would benefit from moving their investments into an Isa account, Barclays will take care of it.
Similarly, if a customer was to get a job promotion, they can input this update and the portfolio will be altered accordingly. This can be done at any time, and not just during the annual review.
The portfolio is also tailored to the customer rather than choosing from a small number of risk-rated portfolios.
While every customer will be given one of five risk ratings, the investments chosen will also depend on their goal, how much money they’re putting in each month and what they want to achieve, and by when.
Over time as a customer starts to near their goal, and as they complete a detailed check-up at least once a year, the portfolio is adjusted. Barclays says any given portfolio could follow one of over 10,000 different investment paths.
Klee said: ‘The need for more people to be able to access investment advice and have the right tools to manage their finances online and plan for the future has never been clearer.
‘We see a huge opportunity to combine the best of our human and digital investment expertise to benefit all of our customers.
‘Looking ahead to the future, I want to go further and create a digital platform where people can manage all of their finances in one place, with the option to pay for both digital and direct access to our other investment and financial planning experts.’
With your Plan & Invest account, you can see a breakdown of where your money is invested as well as real-time trades such as new sales and purchases and where they are coming from
This is Money verdict
The simplicity of using the Plan & Invest service is definitely a plus and it’s good to know your money is the hands of the experts behind Barclays’ wealth management service.
However some of the steps seem a little too simple – for example its sections on assessing your investment knowledge and attitude to risk – and it’s difficult to see how your plan is personalised based on such a limited amount of interrogation.
It is also one of the more expensive options available when MoneyFarm’s charges, for example, start at 0.70 per cent for a minimum investment of £500, plus 0.39 per cent for investment and market spread costs. The costs goes down to as little as 0.40 per cent for sums above £500,001.
As of yet there is also no way of saying whether you’d like to invest in responsible funds – an area of the market that has risen in popularity in recent years, especially among millennials, who are probably part of the bank’s main target audience for this service.
Nonetheless, it’s good to see where your money is invested in real time as new sales and purchases are made and the asset class breakdown provides a means of understanding what is deemed risky and what’s not – which may encourage novice investors to do some more research.
While Barclays has certainly delivered something different, it’s hard to say just yet whether the cost – at more than double the average charge for the likes of a Nutmeg, MoneyFarm or Wealthify account – is worth it.
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