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Can Lloyds crack wealth management?
by Danielle Levy on Jul 08, 2011 at 00:01
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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