James Coney 

Lloyds closes the advice gap in sales push

James Coney

James Coney

Lloyds, as part of its tie-up with Schroders, is looking to hire 700 financial advisers and nearly double its assets under management from £13bn to £25bn.

With that move it looks as though we are going full circle with banks re-entering the advice market.

I cannot tell you how much I hate banks doing financial planning. They have always been so bad at it.

They approach it from totally the wrong angle: they are about how much they can sell, not what the customer really needs.

What worries me the most is that Lloyds seems to expect much of this growth to be organic, coming from its existing customer base.

Gulp. That means targeting current account customers.

We do not know precise details of what Lloyds is planning yet, but I would be surprised if it was whole-of-market advice, which means it will be offering a very limited product range, which in turn effectively means the return of the tied adviser.

We have definitely been down that road before.

They will have to be enormously careful about sales incentives. Any type of bonus built in to the bank model quickly skews their sales of one product or another.

(Fortunately Lloyds has a very active and vocal in-house union, so we get to hear about any pressures the front line staff are placed under pretty quickly).

I would also be interested to know how exactly Lloyds is planning on tracking down these customers.

In the old days, counter staff would usher customers into a back room where a client manager would do the dirty work.

But branches are closing, and customers are venturing into them less and less, so this human interaction is going to be hard to strike.

On top of this there is also the cross-selling risk. It may not be just investments they try to flog you, but a whole load of pretty awful life products too.

I can understand why Lloyds has weighed in. The post-retail distribution review world is not nearly so daunting as it thought – not if you are a multi-billion pound multinational.

So getting rid of all those branch advice staff now looks hasty.

If Lloyds were planning to offer a whole-of-market independent advice service, which catered for the mid-market, then I may be enthusiastic.

We do, of course, still have a chronic advice gap in the UK.

There is a possibility that the birth of new technologies since RDR and artificial intelligence, done to scale, could make this possible on a low-cost basis.

But where is Lloyds going to get these 700 new advisers? Having to train up so many, so quickly, will surely reduce the quality of staff.

They will be more like sales consultants with a fancy title.