Lloyds Banking Group plans to tackle Hargreaves Lansdown with a £ 100 billion personal investment and retirement arm.
The bank’s director of wealth management and insurance, Antonio Lorenzo, revealed billions of pounds were flowing out of Lloyds to companies such as Hargreaves Lansdown, which is the UK’s largest fund supermarket managing £ 135.5 billion in assets.
He said Lloyds wanted to create their own version of the Hargreaves platform, which allows investors to buy funds and stocks within Isas or self-invested personal pensions. (Sipps).
Challenge: Antonio Lorenzo, the bank’s director of wealth management and insurance, revealed billions of pounds were flowing out of Lloyds to companies such as Hargreaves Lansdown
Lorenzo told the Mail on Sunday: “We only have about 3% of the market for pensions and direct investment to consumers. Every year, over £ 10 billion is transferred from Lloyds to personal pension funds. Our ambition is that in three to five years we want to grow above 10 percent. ‘
The lender has bought the Embark Group online retirement website as part of a deal expected to close as early as next month. Lorenzo said: ‘Hargreaves Lansdown has [more than] £ 100 billion in assets. In Embark we will have around £ 60 billion. Our ambition is to be north of £ 100 billion in the short term.
The bank has a strong presence in occupational pensions through its Scottish Widows brand. It also bought out employee pension fund Zurich in 2017. And it partnered with fund giant Schroders in 2018 to offer advisory services to the “richest” – middle-class clients who typically have more than $ 25,000. £ 100,000 to invest. It also took a 19.9% stake in the asset manager Cazenove.
But so far, Lloyds has had little presence in the personal pensions market and no offerings in the execution-only fund space, where clients invest without resorting to a financial advisor as a lower-cost alternative. cost. Lorenzo plans to use Embark’s technology to launch a “robot-advisor” that will guide clients on how to select funds and other products.
It also plans to sell self-invested personal pensions on a large scale using Emark’s technology.
The aim is to deliver the products through customers’ banking applications, so that they can easily transfer money from their checking account or savings to retirement products. Lloyds has some 17.7 million customers using its app. Sipps and retail investments are among the last areas in which Lloyds can grow. It already dominates retail banking and any further growth could call for action by the competition watchdog. The bank has a 26 percent market share in credit cards, 23 percent in checking accounts and 19 percent in mortgages.
Hargreaves Lansdown has long dominated the pension and execution-only investment market – although his promotion of fund manager Neil Woodford, whose funds plunged and were forced to close, had an impact on the amount of fresh money that poured in last year.
Lloyds is also facing new rivals. JP Morgan recently brought in online wealth manager Nutmeg and has a bold ambition for their new UK digital bank Chase, which will involve the sale of wealth management and retirement products.
Paul McGinnis, analyst at Shore Capital, said: “With Embark, they are tackling self-service customers like Hargreaves Lansdown.
“Are they a little ambitious? I think they will find it difficult. Hargreaves Lansdown is a formidable competitor with a 40 percent market share. The space is quite competitive.