Lloyds venture faces challenges

Lloyds venture faces challenges

More details were released last month about the Lloyds/Schroders deal to create a new financial planning business, Schroders Personal Wealth.

The joint venture was originally announced at the end of last year, when it was revealed that the two companies were joining forces to create a new financial planning arm, aimed at mining the perceived need for more financial advice among the mass affluent.

In February, it was revealed that the new company  would be called Schroders Personal Wealth, and would be targeting clients with investable assets of £100,000.

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It was also revealed in a newspaper article, although not confirmed, that Lloyds would be recruiting 700 financial advisers to be the advisers.

Stuart Duncan, equity analyst at Peel Hunt, says: “To a large extent for the big banks, it makes sense. The challenge is to do so successfully. When it comes to recruiting a number of financial advisers, there are not as many as there used to be, and established businesses are struggling to recruit as well.

“There’s lots of different parts of the UK wealth market, and the typical focus will be on the mass affluent. The challenge will be to provide a service in a cost-effective fashion.”

George Higginson, former chief executive at Sesame Bankhall, set about launching an advice company, Intrinsic, and has been in the business of recruiting financial advisers. 

He says: “You need to have something to give as an incentive, such as shareholdings or packages to help them with the transition.

“It’s not easy to move advisers. With 1825 [set up by Standard Life], what they did was they bought out a lot of the businesses. I don’t get the sense that’s what they’re talking about here.

“Whenever the banks did it before it was employed financial advisers, and in the main they’re less productive. They’re getting a salary, and they don’t have the same incentive as people who are self-employed.”

Russell Facer, managing director at Threesixty, agrees that it will not be easy to recruit financial advisers. He says: “If there’s good advisers out there, they’ll be busy and not looking for work.

“Or are they going to have good academies where they can afford to invest in training and development? A lot of the current crop of advisers come from old product providers when they had salesforces.

Schroders Personal Wealth has not confirmed the figures, and a spokeswoman says that a lot has still to be established, although 300 financial advisers would be coming across from the Lloyds’ wealth management business, and the plan is to grow the business further.

The other question is the issue of whether a bank should be getting into financial advice at all, and whether it will put pressure on its financial advisers to sell products.