View more on these topics

Advisers weigh up the threat from Widows

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.”


News and expert analysis straight to your inbox

Sign up


There are 15 comments at the moment, we would love to hear your opinion too.

  1. So Lloyds are “developing new and simpler ways to help our customers.”. My advice to Lloyds Bank customers is to get out now before they do!

    Only a bank could use the word ‘help’ as a euphemism for ‘fleece’

  2. David Patrickson 8th July 2011 at 9:41 am

    “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.”

    I believe this sums up the stance the banks will take. The key word in this statement is “simpler”. It will be very interesting to see the outcome of the consultation paper on “Simplified Advice”.

    Being a cynic I feel the FSA will open the door for the banks to flog products under the guise of “Simplified Advice”. I also feel the adviser charging and professionalism requirements will not apply to “Simplified Advice”.

    The likes of Lloyds & Barclays are not simply going to walk away from the mass market, they will be given a route to continue without the restrictions imposed on IFA’s under the RDR.

    After all, the government are keen to see the banks return to profitability, in order to get “our” money back.

  3. If the banks can see that RDR means that the mass market cant be serviced by fee charging IFA’s why cant the FSA?

  4. Pensions Angel 8th July 2011 at 10:11 am

    Any IFA /Intermediary who thinks any bank will only concentrate on the ‘poorer’ end of their client bank is wildly optimistic.

    The announcement last week was that Lloyds will use Scottish Widows brand to target the ‘mass affluent’ – for those under the impression that this means ‘low end’, here’s Wikipedia’s definition:

    Mass affluent and emerging affluent are marketing terms used to refer to the high end of the mass market. It is most commonly used by the financial services industry to refer to individuals with US$100,000 to US$1,000,000 of liquid financial assets,[1] although the exact definition varies. It is also used by marketers of consumer products to refer to consumers with an annual household income of about US$75,000 and up. Mass affluent consumers are an important target market for sellers of affordable luxuries.

    Perhaps the contributors to this article would like to reconsider their quotes?

    Make no mistake, with 30m clients in the bank and an increasing number of EBC’s placing ‘orphan’ clients into the hands of the GPP/GSIPP solution of the Widows, this group, as well as the likes of HSBC, will take a huge slice of the IFA/Intermediary market.

    Growth in the IFA sector will be through specialism, networking and nurturing. Personal relationships and going the extra mile will be the banks achilles heel, just as it always is.

    Competing in the mass market without a truly differentiated approach is likely to end unhappily ever after for the average IFA/Intermediary IMHO.

  5. Green Eyed Monster 8th July 2011 at 10:41 am

    And dont forget the ‘Reciprocation tool’ that can be found in many bank branches. The one that is taken out when a customer want a business loan.

  6. Green Eyed Monster 8th July 2011 at 10:44 am

    Isn’t it ironic that the government should allow Lloyds bank to continue to use Dick Turpin’s horse in their logo?

  7. This is just the next Banking misselling scandel waiting to happen !

  8. As someone very much on the sidelines due to age and having no need of the products being discussed I follow the various points with just interest.

    Looking back over the last few years, the Banks have certainly been guilty of misselling their products, but whilst they have fought their corner they have eventually paid compensation to their “victims”, although it does seem to me that many were not mislead as they would have us believe.

    On the other hand, one continually reads of independent IFA’s/Brokers who were also guilty of the same misselling (and there were many, being independent does not mean IFA’s are angels!) not being able or being unwilling to compensate, and when the crunch comes they take the Receivership/Bankruptsy route to protect themselves and leave their clients high and dry.

    For big transactions/advice I would utilise such companies that if things did not work out could afford, and still be in business to put things right!

  9. Lloyds branches will end up being nothing more than a conduit to flog millions of pounds worth of complicated, expensive and inappropriate structured products to little old grannies who are getting nothing on their deposit accounts.

    Scottish Widows consultants will no doubt have been told that they will central to developing a “Private Bank”

    Just wait and see instead of calling IFAs to talk about pensions they will be calling them to talk about Lloyds latest structured product.

  10. Matthew Stanton 8th July 2011 at 2:44 pm

    This is why I have stopped using Scottish Widows with immediate effect.
    My business relies on my clients coming to see me for advice and guidance. Knowing that a large bank will directly compete with me for my clients in a Post RDR fee based world means I have to be competitive, knowledgeable and understand my clients. Fortunately I am not worried by this and will see it as added impetus to do a even better job.

    Banks have a bad enough reputation at the moment and I intend to capitalise on this.

  11. I think its great. We need the Banks to train new advisors.
    Also there will be more clients to take the big step of investing via there Bank, and then think…”surely there MUST be something better than this”…….enter IFA!!!

  12. I doubt that Lloyds can even count. 30 million customers? More likely 30 million accounts. As far as I know no bank has cross sold more than one in seven prime account holders. I can only assume that the boss has been advised that, right now, he won’t get a good price for the Scottish Windows, so he might as well pretend to soldier on with a business idea that has failed and failed and failed and failed again.

  13. Jonathan Hunt 9th July 2011 at 3:24 pm

    They in effective now and they will remain in effective after RDR. Let help the mass Market to accumulate wealth before the professionals set in to manage it. IFA’s know which part they are good at. Role on RDR.

  14. This really is a storm in a teacup. I wonder why IFAs would use SWF at all. Do they have a killer proposition? Do they have anything that you can’t get elsewhere? (Apart from inflated rates of commission). To date I would answer no to both. That being the case why on earth would any IFA use them?

    We need to differentiate our proposition and therefore recommending something that can be accessed through any high street bucket shop (bank branch) is hardly an effective marketing ploy.

    I really wonder how they justify their blurb that they have been voted best pension provider by IFAs? Which year was this 1872? How many IFAs voted? What was the breakdown between so called bank IFAs (if there ever was such a thing) network members and true directly regulated IFAs?
    I suspect the figures would be very revealing.

    As ever we have a large entity (be it a bank or a life office) trying to hunt with the hounds and run with the hare. Mendacity as usual.

  15. Firstly, I think many IFAs haven’t seen bancassurance from a close angle, and due to that fact, they haven’t got a clue what they’re talking about when it comes to banks. I wish they had the same close supervision or scrutiny when it comes to advice.

    Second thing: RDR is necessary, it will drive 30ish % of the adviser market out of the field. We’ll be better off without them anyway, one who does not have the mental capacity to pass these exams should not be advising on money.

    Third thing: banks DO need RDR to get their act together, or to get out of the advice market. Either ways, customers will better off.

    Because the current 1 financial adviser per bank branch won’t be sustainable post RDR, I’m expecting the online, unadvised sales channels to evolve rapidly – Lloyds announced a new online advice tool already. It will still be bancassurance, quick, but unadvised. The success of price comparing websites just shows that it is a viable business modell.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm