Lloyds Banking Group plans to hire more than 700 financial advisers, setting the stage for a potential acquisition spree and war for talent against rivals such as St James’s Place and Rathbones.
Lloyds and Schroders, the FTSE 100 fund manager, announced a tie-up of their wealth, investment and financial planning businesses last year, with a stated goal of becoming a “top three UK financial planning business” within five years.
According to internal documents seen by the Financial Times, it has set a goal of increasing its assets under management from about £13bn to £25bn, equivalent to annual growth of about 14 per cent.
One person familiar with the plans said much of the growth could come organically, particularly by attracting existing Lloyds bank customers who currently use wealth and investment services elsewhere. However, it will also be on the lookout for acquisitions, both of full businesses and individual advisers who can bring clients with them.
About 300 Lloyds advisers will join the joint venture at launch later this year, but the number is set to more than triple in the next five years. “We’re not afraid of having over 1,000”, the person added.
Lloyds declined to comment.
The efforts highlight the importance Lloyds has placed on its wealth and insurance business as it looks for new sources of growth.
As the UK’s largest retail bank its opportunities to gain further market share in core areas such as credit cards and mortgages are limited, so it has made strengthening the division — which also includes the Scottish Widows insurance business — a key part of its latest three-year plan.
Others, including Santander, Royal Bank of Scotland and Citi, are also looking at wealth management to boost their UK earnings.
Lloyds’ approach sets it on a collision course with the likes of St James’s Place, which Lloyds once held a large stake in, and which has similarly grown by attracting independent advisers to join its “partnership”.
Industry figures said the dwindling and ageing stock of qualified advisers — many of whom are reluctant to join banks — could complicate Lloyds’ plans.
“The challenge is you could be paying a lot up front for quality advisers”, one senior executive said. “There is very high competition for talent, it’s [already] at the high end of normal at the moment and that’s having an impact.”
An executive at another wealth manager said banks had “very high recognition” with customers and potential staff, but suggested it could be “a double-edged sword” given the reputational damage caused by previous scandals.
“We have a lot of people here that used to work for banks and it can be complicated”, the person added. “I think we’d be crazy to be complacent about this but I’m confident that any adviser who’s been here more than about three years and has established business would stay.”
Lloyds and Schroders have yet to finalise a brand for their joint business, but several people close to the discussions said it was likely to feature the Schroders name prominently rather than Lloyds to make it more appealing to staff and more affluent investors.
“We would have to massively overpay to attract people if it was just Lloyds”, one of the people said. Lloyds is also keen to let the venture’s management operate independently to reassure advisers wary of joining a large, bureaucratic bank.
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