Lloyds Banking Group and Schroders will launch a financial planning business, which they hope will be in the top three in the UK within five years.
The business will launch by the middle of 2019 and Lloyds will transfer some £13bn of assets and its associated advisers from its existing wealth management business to the joint venture.
In an announcement to the London Stock Exchange ahead of Lloyds' results, the company said it will partner with Schroders to create a joint venture in financial planning which it said it is creating to address the advice gap among "affluent" customers.
The business will be structured as a joint venture, with Lloyds owning 50.1 per cent and Schroders the remainder. Lloyds had previously signalled its intention to offer financial advice in branches.
The agreement is part of a wider deal between the companies, with Schroders taking over as manager of £80bn of Scottish Widows assets that had previously been managed by Aberdeen Asset Management.
James Rainbow, currently co-head of UK intermediary at Schroders, will be chief executive of the new financial planning business while Antonio Lorenzo, head of Lloyds insurance business, will be its chairman.
Mr Lorenzo said: "The unique combination of two of the UK's strongest financial services businesses will enable us to create a market-leading proposition which will benefit customers.
"The aim is to become a top three UK financial planning business within five years, given the significant growth opportunities in the financial planning and retirement market combined with the new company's ambitious medium term growth strategy."
Lloyds has previously offered financial advice, but stopped offering advice to clients with less than £100,000 to invest in 2012.
Schroders has been exposed to the UK financial advice market for some time through its investment in Benchmark Capital, in which the former has a 77 per cent shareholding. The Fusion Wealth platform, which is owned by Benchmark, will provide its technology to the new venture.
In addition to the financial planning joint venture, Lloyds will receive up to a 19.9 per cent investment in the holding company of Schroders' UK wealth management business which will provide its high net worth customers with access to Cazenove Capital's wealth management services.
Lloyds will offer the investment management services of Cazenove Capital to charities and family offices, with which it has strong relationships through its commercial banking business and it will also transfer some £400m of existing private client assets under management to the Schroders UK wealth management business.
Lloyds and Schroders have also agreed to work together and potentially develop other "strategic opportunities", including investment propositions and advice for Lloyds' retail customers for which Schroders would provide active asset management services.
Peter Harrison, chief executive of Schroders, said: "Wealth management is a strategic priority for Schroders. In combining our award-winning technology and world-class investment expertise with Lloyds' significant client base and digital capabilities, we are creating a strategic partnership which is exclusively focused on the evolving needs of UK savers and investors.