HSBC has a capacity problem when it comes to offering financial advice to those with smaller amounts to invest, its head of wealth has said.
James Hewitson told FTAdviser the bank has expanded its direct to consumer offering to encourage young people to invest but that its efforts to expand its advised service in that segment were hampered by a lack of people.
HSBC has implemented simplified buying journeys for its clients, meaning within a few clicks customers are able to move money into funds through a set of pre-selected portfolios.
For those with assets above £50,000, HSBC has a virtual advisory service and then full holistic advice for those beyond this.
But in between the bank is keen to offer an advisory service to customers with smaller wealth amounts but does not have the capacity to do so, he said.
Hewitson said: “We can see a real route to doing [virtual advice] at a much broader spread of customers.
“At the moment we just haven't got the capacity to run it down smaller. It's not a cost problem, it's a capacity problem. We haven't got enough people to do it further down the spectrum."
He added: “Our absolute intention is to move in that direction, because people do want advice, and if we can do it simply and straightforwardly and you don't have to leave your home and our advisers can see you in an hour and be done and dusted, then frankly the minimum premium stops being an issue altogether.”
HSBC currently offers a robo-advice service, My Investment, which costs 0.5 per cent initially, followed by a fund charge of 0.3 to 0.4 per cent and platform fee of about 25 basis points.
Face to face advice is 2.75 per cent of invested assets but Hewitson explained that clients can have the report and walk away without having executed the advice, and at that point will pay a fixed fee for that service.
“We'll provide you with financial advice [via] video from as little as £50,000 and we will have that conversation with you,” he said.
“Actually often the case size is getting slightly smaller than that because we don't want any people without a safety buffer so we'll only invest what's right for them.”
But he said the bank was not looking to offer human advice for small amounts such as regular £50 top ups.
"I'm not sure that that's ever going to be a viable mode, not if there's a person involved," he said. "We will provide regulated advice, but there's just no people involved."
Simple buying journeys
HSBC in the UK has about 14.5m customers, Hewitson said, adding the bank has seen some worrying trends in the younger cohort.
“We're seeing almost slightly worrying trends with about a third of 18 to 35 year olds throwing money into unusual investments because they don't know better," he said. "And actually, whilst they might deliver them short term gains, they don't know how they're doing long term.”
As a result, Hewitson said, HSBC has recognised a real need to help all of its customers on that journey.
“Particularly with things like current inflation rates and the current interest rates, those customers need to do more and actually try and make their money work harder for them."
He said HSBC had an ambition of growing its engaged young customer base from around 300,000 today to about a million by 2025 through making it part of their banking experience.
“We're building out new journeys for that customer group to access and engage with us and in particular, the opportunity to build on what we call simplified buying journeys in our space which fundamentally means straightforward five clicks from within your banking ecosystems - not separate apps, from within your banking app, five clicks and you are able to move money into funds and buy funds through a set of pre selected portfolios.”
He said this was something the bank designed as a way to engage customers with wealth at reasonably small amounts.
“Our smallest single premium is £100 and smallest regular premium is £50, we're not talking big chunks of money here and that's a real driver for us to [do it] and so those simple journeys we've created have been really, really important.”
sonia.rach@ft.com
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