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Can Lloyds crack wealth management?
Markets
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.
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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 ?
report thisMiloman
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 !!!
report thisKev 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'.
report thisNick 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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