Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a506726
Can Lloyds crack wealth management?
by Danielle Levy on Jul 08, 2011 at 00:01
While Fowler Drew founder Stuart Fowler recognises the power and potential of Lloyds’ distribution, he remains sceptical of the bank’s plans, questioning the quality of the underlying products and the rationale behind the move.
‘If they are geared to financial objectives such as profits per customer, then they probably will screw up again,’ he said. ‘Is it all going to change because there is new management coming in? I don’t know. In this area it pays to be critical. If they stay in the mass market they almost certainly won’t get it right. If it is because of the retail distribution review (RDR) that they have decided to move up market then I am not sure if they have got the brand to work there.’
Richard Williams, managing director of wealth management consultancy MDRC, believes Lloyds has the potential to leverage off its distribution to expand its presence in wealth management, particularly given that the sector has a market penetration of just 35% to 36% in the UK.
‘The Lloyds Banking Group has tremendous distribution potential if it gets itself properly organised and structured,’ he said, adding the caveat: ‘This is a big “if” because all the major financial services companies are eyeing the UK wealth space because there is potential there.’
This means getting the proposition right will prove pivotal. ‘The cost of advice post-RDR means the self-directed option is the only way for many mass market providers,’ he said.
Meanwhile, attracting clients when they are young and largely self-directed could play into the hands of the client ‘life cycle’ relationship, leading to a potentially successful migration through their products and service types as clients become wealthier. This could prove profitable for the bank, he says.
Cormac Leech, an analyst at Canaccord Genuity, believes that under a capable management team, Lloyds should be able to increase revenues in its wealth and investment division from £1.4 billion to £2 billion by 2014, depending on how much investment there is in the new proposition.
News sponsored by:
Subscribe to Wealth Manager to get the inside track on your rivals' moves
Keep up to date with how your peers are allocating their clients' assets by subscribing to Wealth Manager magazine.
Today's top headlines
More about this:
Look up the shares
More from us
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.
On the road
on May 21, 2013 at 14:06