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Can Lloyds crack wealth management?

by Danielle Levy on Jul 08, 2011 at 00:01

Can Lloyds crack wealth management?

Lloyds Banking Group is seeking to become the UK’s primary wealth adviser and certainly has the potential given its broad distribution. However, analysts and spectators argue the company’s rationale behind the move and the quality of its investment approach could act as obstacles.

Following the bank’s strategic review, chief executive António Horta-Osório (pictured) has revealed plans to build an execution-only platform offering Scottish Widows and third-party products. This forms part of Lloyds’ broader plans to dominate advice to mass affluent and high net worth customers, triple the number of its ‘in proposition’ customers and increase income per customer by more than 50% by 2014.

The bank stated that bancassurance would form a ‘core part’ of the proposition and will invest in ‘specialised adviser models’ for protection and investments, self-service propositions with integrated planning tools delivered in branch, online and over the phone.

Can it work?

Given the substantial growth in the platform market and well documented plans of Lloyds’ competitors to grow their wealth management divisions and build platforms, is it too late in the day for Lloyds?

Michael Maslinski, founder of strategy and marketing firm Maslinski & Co, believes this is not the case, but stresses the importance of getting the proposition right.

‘Lloyds has got a good name. It is not too late in the day, but it will require substantial commitment in terms of building the business for the long term. Another question to ask is has the top brass at Lloyds got the stomach to make the investment and recognise that it could take time before it is a profitable one?’ Maslinski said.

Aside from not taking a view that is too short-term, he believes another potential barrier to success could be skimping on research and not fully understanding the target market.

‘One needs to find out more about what their target market is. Life assurance products are only appropriate at the lower end of the mass affluent market,’ Maslinski said.

Although potential clients may have become more sceptical about private banks post the credit crisis, he says the number of alternatives to large banks is still relatively limited and not necessarily well known in the mass affluent space, which weighs in Lloyds’ favour.

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4 comments so far. Why not have your say?

Uncle Albert

Jul 08, 2011 at 08:15

What's St James Place for ?

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Jul 08, 2011 at 09:03

Excellent Point Uncle A. If I was a HNWI of Lloyds I would be leaving right now. How ridiculous is it to tell all yr clients they will be paying 50% more in three years time in a period where fees are under pressure. They treat their clients like a switch, they can turn on and off. Shhhhh. they probably wont read all this stuff !!!Oh hang on yr clients are smarter than that !!!

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Kev S

Jul 08, 2011 at 09:55

One wonders whether Lloyds will take a similar approach to SJP in giving the illusion that they are independent when in fact they are not. The problem with banks and wealth management is that they still cannot get past this idea that when you get to HNW clients its not new business that matters, its providing a high quality on-going service and actually doing 'wealth management'.

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Nick Crabbe

Jul 08, 2011 at 17:41

I very much look forward to seeing the mess Lloyds make of this project. Many have tried before them and many have failed. Placing an underqualified commission driven poorly experienced spotty youth in front of clients has never worked and never will work. Their assumption that succesful financial planning and wealth management is all about numbers and boots on the ground is laughable. It merely demonstrates their complete lack of understanding of the knowledge, experience and interpersonal skills required to not only win a HNW client but more importantly to keep them. Where are they going to get all these brilliant new employees from. It's certainly not the IFA sector because by 2013 all those who "can" will "doing" and all those who "can't" will have gone. If They think they can simply employ old IFA's who know nothing but how to sell then they will be back to square one. A platform is no more than another quasi product and their assumption that if they build one and then get their sales force to sell it to their customers they will suddenly massively increase their revenue, merely shows that they still don't get it. It's not about product, as B.A. woud say, "pitty the fool".

Fantastic news for all genuine fee only Wealth Managers and qualified Financial Planners.

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