As job adverts start to appear, will the financial planning joint venture work?
In the eyes of the mass-affluent in the UK, you would be hard-pushed to find two brands that resonate more than Lloyds and Schroders.
Through brands like Scottish Widows and a huge personal banking arm, Lloyds in particular has real pull with average families looking to boost their saving and investing habits.
Combining the two forces into a financial planning joint venture is no easy task, but that is exactly what the brands announced they would be doing in October under the Schroders Personal Wealth brand. Details are starting to emerge over how the new players intend to go about their business. For a start, some 20 job adverts have appeared on the Lloyds website for “private banking and advice managers”, and similar adviser roles.
They are advertised as offering “holistic financial advice to review and meet [clients’] immediate and ongoing financial needs”, and offer a salary of around £60,000 – though because they are employed roles, they note bonuses and additional earning potential exist on top of this.
Client acquisition may prove much easier as part of Lloyds. But while the job adverts note advisers will have a pool of potential clients to draw on, they should be building their own client banks as well.
The adverts read: “You’ll be establishing links with introducers, both internal and external… Your role is about growing your portfolio.”
Under the bonnet
So far, so predictable. Speaking to others around the business, there are plenty of other details that tread ground one might have expected a Lloyds/Schroders financial planning venture to cover. Banks have been burned by poor advice in the past, so it may not be a surprise to learn that, as it stands, it will not cover defined benefit transfer business, while “holistic” advice will include less controversial areas such as protection.
Money Marketing understands the business will charge on an assets-under-management basis, and that those charges will be tiered based on asset size. Those levels have been decided, we have been informed, but have not been made public yet.
Whatever they are, the message is that the firm is not planning on price disruption.
Existing Lloyds advisers, who are being moved into the joint venture over the next few weeks before a larger external launch nearer the autumn, will keep their pricing and remuneration structures.
There are some new features, however. Even existing advisers will be transitioned on to the new platform and back-office technology, for example.
The business has a plan all the way to 2021, which could see further technology improvements, but it is unlikely to involve a new robo proposition.
Crossing the lines
Many commentators have predicted a significant amount of cross-selling will take place across the value chain, particularly after the joint venture revealed its advisers would be using the Fusion Wealth platform that Schroders has a majority stake in through its owner, Benchmark Capital. Will this be roped in across the piece? The answer is yes and no. Those close to the business say it is keen to refer more complex and higher-value clients to Schroders-owned discretionary fund manager Cazenove Capital. Schroders funds will be sold by Lloyds/Schroders financial planners, but this will be “the best of Schroders, not all Schroders”, according to one source.
Robo-adviser Nutmeg, another significant investment Schroders has, is likely to remain just that: a financial investment not really seen as a significant point of referral in the new financial planning venture.
Elsewhere, the firm is still working on commercial deals with other asset managers to see how it can drive down the price of the external funds it uses. Individual suitability assessments will be conducted on all clients transitioning with Lloyds advisers, or any joining the new joint venture from outside as their advisers sign up.
This could see them moved into lower-cost versions of similar investments, or they might be told they need to hold more Schroders funds.
Bang for the buck
So are we any closer to knowing if the joint venture is going to work? Again, the picture is mixed. Around 300 Lloyds advisers are coming over to the new business, and 700 has been suggested as a goal for the number of advisers the venture eventually wants.
The firm appears to be looking at all potential acquisition paths available. It will boast a fairly sizeable marketing budget, in addition to Lloyds’ already-extensive customer footprint.
If it can solve the final problem of getting enough quality planners through the door, it might just stand a chance of success.