Advisers are split on whether Lloyds Banking Group’s renewed focus on bancassurance will be a threat to IFAs.
Last week, the bank announced it is cutting 15,000 jobs as part of its strategic review and revealed it will position Widows to profit from the mass market advice gap following the retail distribution review.
Some advisers say the banking model will offer no competition for IFAs as highnet-worth clients will always prefer an IFA service over a banking model.
But others believe the scale, brand and pricing models offered by Widows could step on IFAs’ toes.
Brunning Newman Houghton director David Brunning says: “Lloyds and Scottish Widows both have extremely strong brands in this sector. It is a major threat to IFAs but Widows has to play in the same remuneration playing field as IFAs and it will have to demonstrate why people should pay for its advice over an independent adviser.
“Any IFA who does not acknowledge it as a threat is making a mistake but most IFAs are resilient enough to deal with such threats because of the face-to-face service they offer.”
Highclere Financial Services partner Alan Lakey says the Widows salesforce will have to hit demanding sales targets. He says: “The salesforce will get lots of money at the end of the year for hitting sales targets as a replacement for commission. It is a shame as Scottish Widows is no longer the company it used to be.”
But Churchouse Financial Planning director Keith Churchouse says the move reflects a wider acceptance from the banks that they will have to aim their advice services at the lower end of the market rather than targeting high-net-worth clients.
He says: “Banks are running scared of the RDR and these changes are an admission that high-net-worth clients are going to be dealt with by IFAs as banks move to the lower-end clients.”
Consilium Financial Planning managing director Kevin Morgan says: “There is huge pressure on Lloyds to return to profitability, to see its share price increase so the Government can show it has been a success and look to recoup the huge sums spent on it for the benefit of the Exchequer coffers.
“There is room for both Widows and IFAs to succeed in this area and IFAs could benefit if Lloyds increases consumers’ awareness of financial advice as part of the restructure.”
A Lloyds spokesman says: “Of the 30 million Lloyds customers, we estimate more than 17 million are potential bancassurance customers. Our current penetration of this customer group is 2.1 million people and we are seeking to grow this by a further million by 2014.
“We will have more advisers in our branches to help customers with their protection, savings and investment needs and are developing new and simpler ways to help our customers.”