Speaking after the bank revealed plans to attract £50 billion of financial planning and retirement assets by 2020, Antonio Horta-Osorio (pictured) said pension freedoms presented an opportunity for Lloyds to reinvent its advice arm.
'We have a very different culture and approach in terms of what you were used to 10 years ago,' he said.
Lloyds exited mass market financial advice in 2012 following a number of mis-selling fines that culminated with the bank setting aside £225 million in 2014 to cover ‘legacy sales of investment and protection products’.
The company has now announced it will plough £3 billion of investments into a new strategy which will grow the group’s financial planning offerings.
This landmark announcement will see the bank aim to bring in 1 million new pension customers.
Horta-Osorio said this new financial advice push will not see history repeat itself.
‘I would remind you we were the first to proactively address the PPI issue,’ Horta-Osorio said. ‘What we are going to do is very different. Now that we live in a digital world and we have an exponentially higher interaction with our customers through our multi-channel distribution approach, we also have much greater insights into what our customers want given the digitisation. What we want to provide them is what they want.’
Horta-Osorio added this decision to push into financial advice was driven by pension freedoms.
‘Our market share is much smaller in insurance and financial planning and retirement. On the other hand the pensions market is now a free market and therefore it is booming in terms of people taking money out and putting it in the best alternatives.
‘So we are seeing a huge opportunity as the only bank integrated with insurance and we think we are the only one that can provide a holistic view of our customers in terms of financial planning and retirement either through our banking products like ISAs or insurance products. ’
What this advice push will look like?
During the presentation to journalists Lloyds emphasised it would be using a ‘multi-channel approach’. There will be at least three tiers to this advice channel.
Firstly Lloyds is placing a big investment in digital investment and Lloyds was one of the 24 firms accepted into the Financial Conduct Authority’s (FCA) regulatory sandbox in 2016 for firms to develop fintech ventures including robo-advice propositions.
Lloyds has not yet openly expressed its commitment to launch a robo-advice service but it is talking up a big push into digital expansion and financial advice.
Secondly there is the intermediary channel. This will see products from Scottish Widows, which is owned by Lloyds, sold through IFAs. Chief executive of Scottish Widows, Antonio Lorenzo, said this would be the predominate route to reach the 1 million pension customer target.
Scottish Widows made a big corporate pension expansion last year with the acquisition of Zurich’s £19 billion workplace pension book.
Then there is the face-to-face advice offering through Lloyds branches. Lloyds currently offers retirement advice to customers with over £100,000 of savings and investment.
When asked about plans to expand the in-branch offering, Lorenzo indicated the bank would be increasing this reach.
‘With the branch network plans, we will see what the customers want with touch bases and contact with us. We will address these needs as we go. For that reason we can see in the future much more customer needs addressed in the branches.’
Lorenzo would not put a figure on how many new Lloyds financial advisers would be brought in.