Barclays Smart Investor Review: Not A Smart Choice.

Barclays Smart Investor
Review

Category Ranking

2.9

FAIR

LAGGER
FAIR
GOOD
EXCELLENT
<2.5
2.5-3.5
3.5-4.5
4.5-5.5

CATEGORY: BANK

AVAILABILITY: UK ONLY

BROKER SCORE

3.4

/5

Category Ranking

2.9 FAIR

LAGGER
FAIR
GOOD
EXCELLENT
<2.5
2.5-3.5
3.5-4.5
4.5-5.5

CATEGORY: BANK

🌎 UK ONLY

BROKER SCORE

3.4

/5

Our take: Barclays Smart Investor is a relatively old school platform convenient for regular high net worth investors. However, for all other investors, it is overpriced. The only real justification to choosing it is the standing of the Barclays Group in the UK. However, there are competing Banks with similar standing offering better pricing. For example, Lloyds or Halifax offer lower custody fees. 

Our assessment: Barclays Smart Investor scores 3.4 on an absolute basis, given the support of the systemically important bank. However, once we reduce the weight of the Bank support and assess it only against Banking category peers, the score drops to 2.9 due to  excessive fees. 

Is it suitable for you?

  • Passive Investors: The financial stability of the company, along with the ease of establishing automated and free investments via monthly standing orders, as well as the good choice of products, could be attractive for buy-and-hold investors in plain vanilla ETFs. But, you need to have a high balance to make it work. 
  • Semi-Active Investors: The selection of stock exchanges and foreign products is satisfactory, but the fees for investing in international stock exchanges and currencies are very high. The lack of junior accounts can also be annoying for some.
  • Advanced Investors: Barclays Smart Investor is not a sophisticated platform. However, it does give access to the bond markets. Additionally, active investors may find the platform outdated.

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Pros & Cons and suitability

Pros & Cons

Suitability

SOMEWHAT Suitable

unsuitable except high balance accounts engaged in regular investing

SOMEWHAT Suitable

Unacceptable custody fees and lack of family accounts

SOMEWHAT Suitable

Lack of Advanced Features

Availability

Barclays Smart Investor is only Available in the UK

Broker Snapshot

Barclays Smart Investor Is Part Of A Traditional Banking Group

Barclays Smart Investor is the UK investment platform of the Barclays group. The group is a major and historically significant financial institution in the UK, listed on two stock exchanges and rated by three rating agencies. As of December 2023, Barclays Group had a $38 billion market cap. Barclays competes with Lloyds Banking Group to be the second-largest bank in the UK in terms of revenues. Barclays Smart Investor belongs to a bank that has been in the industry for centuries and has a transparent fee structure, although it is not competitive towards Tier 1 brokers like Hargreaves Lansdown and brokers from similarly large, established banking groups like Lloyds Group. Additionally, since brokerage is non-core to Barclays business, the platform is less modern and advanced compared to (pure-play) Tier 1 brokers.

Long standing Bank, Listed and Externally Rated

Barclays has an IG rating from S&P, Moody’s, and Fitch, and is a leading and highly profitable financial institution in the UK. It is listed on the LSE and Nasdaq Stock Exchanges and in terms of market cap, ranks behind HSBC and Lloyds. Like all brokers, it offers client protection up to £85,000 under the Financial Services Compensation Scheme and is regulated by the FCA.

Company Info

CharacteristicBarclays Smart Investor
Inception Date🛈 1690 (Parent)
Headquarters🛈 London
Key Owner🛈 Barclays Group
Bank Affiliated✅ Yes
Listed on Stock Exchange✅ LSE / Nasdaq: $38 bn (BARC / BCS)
Parent Rating✅ S&P: BBB,
Moody Baa1, Fitch A
Operating Profit✅ $5.3 bn (2023)

Regulation

FeatureBarclays Smart Investor
EU Entity🛈 None
UK Entity🛈 Barclays Investment Solutions Limited (BISL)
Key Regulators✅ UK
EU Regulator N/A
UK Regulator✅ UK (FCA)
EU GuaranteeN/A
UK Guarantee🛈 Max. £85k

high eTF availability but high custody and FX fees

Barclays Smart Investor offers extensive ETF and international stock exchange access. The trading fee structure is appealing if you use the regular investing service but the custody fees are high especially for smaller accounts. Accounts earn interest on cash but the rate is not competitive. Relatively high foreign exchange rates make investing through international funds pricy.

Features

FeatureBarclays Smart Investor
Key Base Currencies🛈 GBP
ETF Availability✅ High
Multicurrency❌ Not Available
Cash Interest✅ Low
Margin Loans❌ Not Available
Exchanges✅ LSE, Nasdaq, Major European
Security transfer✅ Yes
External PFOF Reliance✅ None

Fee Structure

FeatureBarclays Smart Investor
Custody Fees⚠️ High
Inactivity Fees✅ None
ETFs Dealing Fees✅ None (for regular investing)
FX Fees⚠️ High
Deposit Fees✅ None (a part SIPP)
Withdrawal Fees✅ None
Security Lending🛈 Not Available

I. Company

Barclays Smart Investor is part of a well-established, listed, and IG-rated banking group. The Barclays Group is a systemically important institution (O-SIIs) in the UK. Despite its solid financial standing, it has been involved in some scandals in the past few years, but those did not affect the brokerage business clients.

Business Profile

Barclays Smart Investor operates exclusively in the UK. While the platform is open to anyone, it is faster to start investing for its bank customers. The company is relatively transparent about its revenue sources, primarily earning through custody fees (higher for smaller accounts) and transaction fees (if you do not use the regular investing service). FX fees are also high, making it another form of income for the company. Information related to assets under administration and the number of customers is not separated from those of the group; therefore, they are not publicly available even though the Company website report to have more than 300,000 customers using theirs services. 

Over the past two years, Barclays Group has shown a mixed financial performance. In 2022, the group reported a revenue of approximately $30.9 billion, a slight increase from the previous year’s $30.2 billion. For 2023, Barclays continued to grow its revenue modestly to $31.6 billion. However, net income for 2022 was $6.2 billion, representing a significant decrease from $8.8 billion in 2021. This decline in net income, about 29%, was a contrast to the sharp increase of 347.4% observed from 2020 to 2021. 

Ownership and Transparency

Barclays PLC has a history dating back to 1690, making it one of the oldest banks in the world. It acquired the names Barclays in 1896 after 12 banks united as a joint-stock bank the group has evolved significantly over the centuries, expanding its services beyond traditional banking to include wealth management, or investment banking. It operates on a global scale with significant presence in both retail and investment banking sectors.

As of May 2024, Barclays’ market capitalization stands at approximately $38 billion. It is also part of FTSE 100. Barclays Smart Investor is part of the wealth and investment management division and caters to individual investors by providing various investment account options, including ISAs and SIPPs. 

Safety Considerations

The credit rating is in the high BBB or A category, which implies a very low estimated probability of default, as measured by historical 10-year peer cohort probability of default. Based on historical data, a couple of 100 similarly rated financial companies went out of business over a 10-year period. Barclays is a systemically important institution (O-SII) in the UK and this increases the probability of a government intervention in case of a crisis similar to its competitors Lloyds and HBOS during the 2009 financial crisis. In October 2008 the UK Government announced the injection of liquidity in Barclays, although the Company refused the offer and preferred instead to raise £6.5 billion of new capital to remain independent. 

Regulation & Investor Compensation Schemes

The Financial Services Compensation Scheme protects up to £85,000 per institution in event of firm failure.  Importantly this is per customer per institution. 

Share & Cash Custodians

Barclays Smart Investor holds your uninvested cash in a pool of 13 big bank institution that are periodically revised. The list is available on their website and includes Bank of Scotland, HSBC and Barclays Bank itself. Shares are instead hold by Barclays itself. Personal CREST accounts are not supported.

Reputation

Where Barclays group has in general a solid reputation, it has been involved in several controversies. In March 2009, Barclays faced accusations of breaching international anti-money laundering laws when it was reported that the Paris branch had maintained an account for Teodorin Obiang, son of Equatorial Guinea’s President, even after allegations surfaced about his illicit use of oil revenues for personal luxuries. Additionally, Barclays was criticized for aggressive tax avoidance strategies revealed through leaked documents in 2009, showing plans involving over £11 billion to generate tax benefits through complex offshore structures. The bank was later mandated by the Treasury in 2012 to pay £500 million for attempting to avoid tax through designed financial schemes. Barclays was also involved a notable rate-fixing scandal where the bank was fined for manipulating the Libor and Euribor rates, affecting financial instruments worldwide.

II. Fee structure

Barclays Smart Investor offers a fee structure favorable for investors who use the regular investing service and have larger invested amounts since the charge is significantly less above £200K. For all other investors, the fees are unacceptable, particularly the custody charge. FX rates are also relatively high compared to the market.

Platform fees

Barclays Smart Investor’s fee structure is designed as follows:

  • 0.25% on investments up to £200,000 
  • 0.05% on investments above £200,000

In addition, all SIPP accounts pay an AJ Bell Administration fee of £31.25 + VAT per quarter or part thereof (£125 + VAT p.a). This fee will be collected by Barclays and paid to AJ Bell. No part of this fee is kept by Barclays.

Trading Commisions

Barclays Smart Investor trading fees are as following:

  • Trading: £6 per trade.
  • Mutual Funds: No charge. 
  • Regular Trading: No charge. 
  • Foreign Trading: there’s a brokerage fee for all trades on international exchanges, charged by the underlying market at 0.03%
  • Dividend Reinvestments: No charge.
  • SIPP Drawdown Charges:
    • Flexi-access or Capped drawdown: £100 per annum.
    • Set up Flexi drawdown: £75.
    • An additional £75 fee will be charged to move from a capped to a flexi drawdown. 

Overall Fee Simulation vs Competitors

Most of our readers have simple Index portfolios. Using our Broker Total cost calculator, you can estimate the total cost of holding ETFs throughout the investment period. For our simulated scenarios:

  • General Accounts – Barclays Smart Investor is not competitive.
  • ISAs – Barclays Smart Investor is not competitive.
  • SIPPs – Barclays Smart Investor is not competitive.
We compared it against Halifax (another established bank) and Hargreaves Lansdown as a representative of Tier 1 Brokers with a good ETF offer.

Fee Simulation For General Accounts

In the below simulation, a 20-year accumulation period broker bill for Barclays Smart Investor comes out at £5,860 and by far the most expensive option. The cost is £0 for Hargreaves Lansdown as the broker does not charge any custody fees for ETFs and £720 for Halifax Share Dealing that charges a fixed yearly amount. For all three brokers the calculator assumes the use of regular trading service that is free. Note that ISAs and General accounts have the same cost for both Halifax Share Dealing and Barclays Smart Investor. 

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountGeneral
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Fee Simulation For ISAs

In the below simulation, a 20-year accumulation period broker bill for an ISA account comes out at £5,860 for Barclays Smart Investor, £900 for Hargreaves Lansdown, due to yearly custody fees capped at £45, and £720 for Halifax Share Dealing that as well cap the fees at £36. As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountISA
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Fee Simulation For SIPPs

In the below simulation, a 20-year accumulation period broker bill for a SIPP account comes out at £8,835 for Barclays Smart Investor, more than double that for its competitors. Halifax Share Dealing charges £3,600 and Hargreaves Lansdown £4,000 . As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountSIPP
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Currency Exchange fees

Barclays Smart Investor’s currency exchange fees are relatively high and priced as follow:

  • First £5,000 –> 1%
  • Next £5,000 –> 0.75%
  • Next 15,000 –> 0.5%
  • Next £225,000 –> 0.25%
  • Value over £250,000 –> 0.1%

Other fees

Deposits and withdrawal are free of charge. 

For SIPP, £75 per transfer in (maximum charge of £375 per account). No exit fee. 

III. Platform & Features

Like other traditional banks, Barclays Smart Investor has a straightforward – but old-school – interface, ideal for beginners. It offers access to various international stock exchanges and a diverse range of products. However, the platform may feel outdated and could be restrictive for advanced investors. Barclays pays interest on cash held in your accounts, however the rate is not competitive. It offers a Mobile App, however if you do not have a Barclays account, you have to trade via the Web platform. 

Account Opening Process

Opening an account with Barclays Smart Investor is straightforward if you have already a bank account with Barclays. Otherwise it will take longer since you will have to wait to receive your credentials by post. 

account Features

Barclays Smart Investor offers several features for Long-Term Investors:

  • Foreign Stock Exchange: access to 10 foreign stock exchanges including NYSE, NASDAQ, Xetra and Euronext (Milan, Amsterdam, Paris, Brussels).
  • Standing Orders: those are particularly advantageous because they do not incur in trading fees. 
  • Free Share Transfer, a standard in the industry.
  • Mobile App: if you do not have a Barclays bank account, you will have to first to wait for your credentials via post. In addition, without a bank account, you can see your investment but you have to operate via the web platform. 

Internalisation and PFOF

PFOF is not allowed in the UK therefore Barclays Smart Investor does not engage in this practice. 

Cash Interest

Barclays Smart Investor pay cash interest on cash hold in th Investment Saver account as follow:

  • 1.65% AER/gross up £10K;
  • 1.15% AER/gross for additional balances above £10K.

Advanced Features

Barclays Smart Investor prioritizes simplicity and user-friendliness, with a focus on traditional investment products. As such, it does not offer advanced trading features like Futures, Options, Derivatives, and Margin Loans, catering more to investors looking for straightforward investment options. Below a summary of the available investment types:

Features

Investment TypeAvailability
ETFs
Stocks
Bonds
Funds
Options
Derivative
Futures
CFDs
Forex
Crypto
Commodities

IV. Taxes

Tax Wrappers

Barclays Smart Investor offers the most common tax-advantaged accounts available in the UK. This includes:

  • ISA
  • SIPP 

Tax Reporting

Barclays Smart Investor provides tax reports, however the reporting functionality to the tax authority is not automated and is responsibility of the individual investor. 

Thank you for reading.
Good Luck and Keep’em* Rolling!

(* Wheels & Dividends)

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