Britain’s biggest banks axed or scaled back investment services following a clean-up of the financial industry that banned cosy backdoor commission deals four years ago.
But now most banks are bringing back or expanding investment options for customers under the simpler, more transparent regime that has operated following the overhaul.
Under the old system, financial advisers sold people investments that were often poor value and took substantial fees from providers for doing so.
What’s on offer? High Street banks have set up online arms that sell off-the-shelf funds, and sometimes offer share broking services too
And the advice services run by some of the High Street banks were responsible for some of the most shocking and ruthless sales of unsuitable and underperforming investments.
Nowadays, ordinary savers with modest pots of money tend to use DIY websites that are relatively cheap, but you have to either buy ready-made portfolios or be prepared to research, trade and monitor your own investments.
Meanwhile, properly independent financial advisers tend to give personal help to richer clients, whom they charge upfront fees and an ongoing percentage of their investments.
As the dust has settled on the shake-up that ushered in the new world of investing and financial advice, known as the retail distribution review or RDR, the High Street banks have joined back in.
Many have set up online arms that sell off-the-shelf funds, and sometimes also share dealing services, while offering wealthier customers the option of a fuller advice service.
However, the latter tend to give what is categorised by regulators as ‘restricted’ – not ‘independent’ – advice. This means they will stick to recommending in-house or partner investment products, with the prior knowledge and agreement of clients.
The banks have the ability to provide a valuable service to large numbers of customers, who are either looking for or open to buying straightforward and reasonably-priced investment products, while they go about fulfilling their other saving and banking needs.
We round up what the big players, including Nationwide Building Society, are offering and what it costs below.
Barclays: New online fund service rolled out
What services are available? Barclays launched a DIY investing platform called Barclays Direct Investing at the end of last year. It’s since been rebranded as Smart Investor.
The bank’s share dealing arm, Barclays Stockbrokers – the second-largest broker in the UK behind Hargreaves Lansdown – and its online banking arm are being merged into the new service.
Barclays offers a list of top funds, to help investors who are less confident in making their own decisions, similarly to many investing platforms which publish their own ranges of recommended or best buy funds.
All of Barclays’ online banking customers can already access the platform, while Barclays Stockbrokers’ customers are being migrated over during the course of this year. Non-Barclays customers will get access later this year but there is no date yet.
Barclays’ online bank customers can invest through an Isa, but not into a Self-Invested Personal Pension (Sipp) at this stage.
Financial advice is available to Barclays Wealth clients with a minimum of £500,000 of investable assets.
What products are on offer? On Smart Investor, shares, investment funds, investment trusts and exchange-traded funds (ETFs), with Sipps yet to be added.
Barclays Wealth clients taking financial advice get access to a ‘restricted’ panel of products, rather than the fuller range that would be available via an independent financial adviser.
What are the charges? The new service cut its fund charges from 0.35 per cent previously to 0.20 per cent on investment portfolios worth up to £500,000 – making its fees cheaper than those levied by Hargreaves.
However, there are a number of charges over and above the headline 0.2 per cent fee. A minimum monthly charge of £4, or £48 per year, will apply and it will cost £3 to buy or sell funds and £6 to buy or sell shares, investment trusts and ETFs. Phone dealing costs £25.
Non-fund investments carry a 0.1 per cent annual holding charge.
While the minimum charge is £48 per year, fees are now capped at a maximum of £1,500 a year, slightly lower than the £1,749 maximum charge before.
Clients taking financial advice get an initial consultation, and fees are only charged if they follow the advice offered.
Should you invest with your bank?
Considering the sway that our bank has over us when we take out financial products, it is inevitable that many people will consider taking advantage of these investing services.
There is no definite reason not to, but neither is there a compelling argument for doing so.
All of the services here are decent and some are better than others, however, it is well worth considering the rival DIY investing platforms out there before you take the plunge.
These specialists, including Hargreaves Lansdown, Fidelity, AJ Bell YouInvest and Interactive Investor, put a huge amount of effort into providing the best possible investment services – and this is what you need to benchmark your bank’s effort against.
If you’re looking for financial advice, you should consider whether an independent financial adviser would be better.
Read our long-running round-up of the best DIY investing platforms to find out more, including a table of charges, what each is good for and a comparison tool.
Lloyds: DIY stock trading and ready-made funds on offer
What services are available? Lloyds offers a DIY, execution-only share-dealing service, which allows customers to invest in individual shares.
It also runs an online e-investment service which offers a choice of three managed funds, each with a different level of risk and potential return – lower, medium or higher. These can be used inside or outside an Isa.
Neither service involves giving customers financial advice. However, those with more than £100,000 in annual income, savings, investments or personal pensions can receive financial advice over the phone or via video link. Customers with more than £250,000 can choose to get face-to-face advice from a private banking and advice manager.
Lloyds provides the services but Halifax and Bank Of Scotland customers can use them too.
What products are on offer? Shares and investment funds. A wider range of investments are available for those taking financial advice.
What are the charges?
Share dealing prices differ depending on whether you bank with Lloyds, or with Halifax and Bank of Scotland.
At Lloyds, account fees are £20 per half year or £40 per year for either a sharedealing account or an Isa. However, if you have both, the fee will be waived for the sharedealing account so you still only pay £40 per year.
Online share trading costs from £11 per deal, or £8 if you trade eight or more times a quarter. Telephone trades cost £35 per deal.
At Halifax and Bank of Scotland, the account fee for a stocks and shares Isa is £12.50 a year, and there is no fee to hold a sharedealing account. Online trades cost £12.50 each and telephone trades £25 each.
For the e-investment service, there is an annual fund manager fee of 0.45 per cent of the value of your investment, which is taken off automatically. There is also an annual admin fee of 0.24 per cent of your investment, payable by debit card
It’s worth noting that Lloyds and Halifax also own another DIY investing brand, iWeb. This is considerably cheaper that the bank branded offerings, it has a one-off account opening fee of £25 and charges £5 per trade for funds and shares, with no annual admin fees.
If you use Lloyds’ financial advice services, there are no charges for an initial meeting. After that any fees for advice or products will be agreed in advance.
NatWest/RBS: Funds targeting five risk levels on sale
What services are available? A NatWest Invest website was launched in February. It’s only open to customers of NatWest – there are no investment services available to people who bank with RBS at the moment.
The NatWest site allows people to choose their own funds and invest with a minimum of £500. The funds are spread across five varying risk levels, ranging from those aimed at people who want to take a small risk to those who believe they can weather large fluctuations in value.
The five categories are conservative, cautious, balanced, assertive and adventurous. Customers can invest in more than one fund at a time.
They can also link their investment to a financial goal and track their investment performance online. The funds can be put in an Isa, and customers can use up their allowance for the current tax year and transfer in funds from an existing Isa.
A new robo-advice service is set to follow later this year. This automated service will involve customers responding to questions based on their income, spending and openness to risk, then being guided towards suitable investments
Face-to-face financial advice is available to wealthier customers. You need to be able to invest a minimum of £250,000 or more from money deposited at the bank, and to hold a minimum of £360,000 of capital overall either inside or outside the bank.
What products are on offer? Five investment funds via the Natwest Invest website.
For those able to afford advice, recommendations will be restricted to a panel of investment products rather than the whole market – so less than is typically available through an independent financial adviser.
What are the charges? Customers using NatWest Invest will be charged a maximum of 0.95 per cent of their investment pot per year. There are links on the site to information about the face-to-face advice service, but fees are not stated upfront.
Nationwide: Fund service run by Aegon, stocks dropped
What services are available? Nationwide offers an online investor portfolio service, which sells funds on a DIY basis.
Until recently the fund service was operated by Legal and General, but the latter sold it to financial firm Aegon which is now responsible for its administration. A previous share dealing service offered via Stocktrade has been dropped.
Six L&G funds are available: mixed investment with 0-20 per cent in shares; mixed investment with 0-35 per cent in shares; mixed investment with 20-60 per cent in shares; mixed investment with 40-85 per cent in shares; a tracker trust; and a global equity index fund.
Nationwide also gives advice on investments on a one-off or ongoing basis via financial planning managers.
It says this is usually best suited to building society members with either £50,000 or more available to invest, or earnings of at least £50,000 a year. However, it will help members with smaller sums where appropriate.
What products are on offer? Investment funds.
What are the charges? Total costs for the six funds available online range from 0.77 per cent to 1.08 per cent.
For the financial advice service, there is a 3.5 per cent initial charge plus a 0.75 per cent a year charge for ongoing help.
Then, in terms of product fees, for using model portfolio funds you pay charges of 0.06-1.15 per cent a year for the funds and 0.39 per cent a year for admin. For using the rest of the fund range, you pay 0.06 per cent-0.43 for the funds and 0.31 per cent for admin.
HSBC: Buy ready-made portfolios or build your own
What services are available? HSBC offers stocks and shares Isas, investment funds and a share dealing service on its website.
If you are buying an Isa, you can opt for a ready-made ‘world selection’ portfolio with a minimum of a £1,000 lump sum or £50 a month. Four are available depending on your risk appetite – income, cautious, balanced and dynamic.
If you want to build your own fund portfolio for an Isa, the minimum investment is £100. If you want your own Isa share portfolio, there is no minimum investment.
For funds held outside an Isa, HSBC offers either a selected range which is only open to existing customers, or an extensive list via its global investment centre. There is no minimum investment for the former option, and it’s £100 to use the latter service.
HSBC’s sharedealing service comes with a choice of accounts – InvestDirect and InvestDirect Plus. InvestDirect lets you trade in UK shares, UK Government bonds and most UK-listed exchange-traded funds (ETFs).
InvestDirect Plus has additional benefits, such as letting you trade US share, borrow against your portfolio and take advantage of a frequent trader tariff.
HSBC also offers advice to richer customers. You need to be 18, have an HSBC or First Direct current account or savings account, and £50,000 or more in savings and investments. A selected range of products are available, so it’s a more limited service than you would get via an independent financial adviser.
What products are on offer? Investment funds and shares.
What are the charges? Fees on the ready-made Isa portfolios are 1.27 per cent a year for the income option or 1.06 per cent a year for the rest.
Building your own Isa fund portfolio costs 0.39 per cent plus fund charges. For funds held outside an Isa, the charges are 0.25 per cent plus fund fees per year on the selected range or 0.39 per cent plus fund fees per year on the global range.
The sharedealing accounts cost £10.50 a quarter. You can buy and sell shares online for a flat fee from £10.50 per share deal (including trades inside an Isa) for those made online and from £29.95 for trades made over the telephone.
If you have an InvestDirect Plus account, you will qualify for a frequent trader tariff of £7.95 per share deal after your ninth trade in a calendar quarter. It only applies to deals in UK shares, government bonds and ETFs.
There no charge to transfer shares to your account, but it costs £15 per stock to transfer out. There are no inactivity or management fees.
If you opt for financial advice, charges are discussed during an initial consultation, which the bank says is a no-obligation meeting.
Santander: DIY investing and financial advice
What services are available? Santander has scooped up lots of extra customers with its popular 123 account and offers them both a DIY investing platform-style route, along with a financial planning service.
Santander Investment Hub is the DIY investing option and allows people to buy and sell funds with no dealing fee, but they must pay a 0.35 per cent annual admin charge to hold investments. Fund charges also apply.
It offers a full range of funds to choose from, Santander managed funds, and for those looking for a ready-made portfolio, it also has multi-index funds, which blend low-cost funds to deliver a risk-rated investment option. Unfortunately, to evaluate the list of what is available, you need to register for the service first.
You can invest in an Isa but not a Sipp through the investment hub.
Santander’s Financial Planning service charges 2.5 per cent of the sum invested and is designed for those with more than £50,000 to invest, or £25,000 to invest combined with at least the same amount in other existing Santander investments to get up to a £50,000 level.
Advice comes from its financial planning managers, who will assess customers’ needs and make a recommendation. If customers go through with this, they will have the investments arranged for them under Santander Isa Managers, a wholly owned subsidiary.
Products that will be recommended are restricted to Santander’s structured deposits, also known as index-linked savings bonds, its structured investments, also called fixed term investments, and Santander Asset Management’s fund ranges.
What products are on offer? The investment hub offers a full range of funds and multi-index options too, the financial planning service is restricted to Santander products and funds.
What are the charges? The Investment Hub DIY investing service charges 0.35 per cent on holdings annually, but comes with no charge to buy or sell funds.
For the Financial Planning service, an advisory service fee is charged, which is collected as a single one-off payment, but is not charged if you choose not to invest.
Santander says: ‘The amount used to calculate the advisory service fee is the total of the lump sum being invested plus any amount invested on a monthly basis multiplied by 36. The fee will be rounded up or down to the nearest whole pound.’
The fee is set as 2.5 per cent of the amount invested up to £150,000, on larger amounts above this no further fee is charged, meaning the maximum is £3,750. The minimum fee is £250.
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