Hybrid models are coming of age

It has been almost a year since Barclays launched a new integrated online direct investing platform.

Hybrid models are coming of age

It has been almost a year since Barclays launched a new integrated online direct investing platform combining its online banking and investment services.

The platform has one fee and one transaction charge, and would be free from common charges including exit fees, reinvesting dividends and probate valuations. It has no minimum investment amount.

In the UK, these offerings by a bank bringing together a suite of services to allow its customers to see their investments, savings and current accounts through a single log-in, as well as address the savings and investing “knowledge gap”.

However, there is also the “advice gap” that clients are worried about. High cost of advice has been blamed for this and there has been a push in recent months to offer cheaper and simpler services to the mass-affluent and even affluent customers.

Some banks have reacted accordingly. For instance, Swiss private banking giant, UBS launched SmartWealth in the UK earlier in 2017 via which people with investable assets of GBP15,000 can become customers. Even though usage fees are high, this is a drastic departure from their $1m in investable assets entry point so far.

In early April, Coutts launched Coutts Invest, an online investment platform, that allows access to a suite of five passive risk-rated portfolios. The service enables clients to invest with an initial lump sum, starting as low as £500.

Coutts’ CEO Peter Flavel said to Private Banker International in a recent interview: “It’s an offering that is suited to execution only, and simplified advice and for things like ISAs that people can self-execute without having to go through a full plan.”

Charles Schwab in the US has its new hybrid offering, Schwab Intelligent Advisory, combining advice from financial advisers with online advice to target mass affluent investors. The service requires minimum investment of $25,000, and offers clients a customised financial plan and ongoing live advice from certified financial planners, as well as an automated portfolio at a low cost.

These platforms are steps in the right direction for the wealth management community. With competition between banks getting tougher and profit margins being squeezed, private banks need to evolve according to market and client demands to gain more wallet share. There is, certainly, an underserved segment that is not keen to over pay but needs investment management services.