Lloyds Banking Group plans to counter Hargreaves Lansdowne with a £100 billion personal pension and investment arm.
The bank’s wealth and insurance boss Antonio Lorenzo revealed that billions of pounds flow from Lloyds to companies such as Hargreaves Lansdowne, the UK’s largest fund supermarket that manages £135.5 billion in assets.
He said Lloyds wants to create its own version of the Hargreaves platform, which allows investors to buy funds and shares within ISAS or self-invested individual pensions. (sips).
Lorenzo told The Mail on Sunday: ‘We have only about 3 percent of the direct-to-consumer pension and investment market.
Challenge: Bank money and insurance boss Antonio Lorenzo reveals billions of pounds flow from Lloyds to companies like Hargreaves Lansdowne
‘Each year, more than £10 billion is transferred from Lloyds to individual pension providers. Our ambition is to grow more than 10 per cent in three to five years.
The lender bought online retirement website Embark Group in a deal that is set to close as soon as next month.
Lorenzo said: ‘Hargreaves is Lansdowne’ [more than] £100 billion in assets. In Embark, we will have an area of 60 billion pounds. Our ambition is to be north of £100 billion in the near future.’
The Bank holds a significant position in workplace pensions through its Scottish Widow brand. It also shut down employee pension provider Zurich in 2017.
And it joined with fund giant Schröders in 2018 to provide advisory services to ‘Jan Sampanna’ – middle-class clients who have more than £100,000 to invest. It also took a 19.9 percent stake in wealth manager Kazenov.
But until now, Lloyds had only a small presence in the individual pension market and no offering in the execution-only fund space, where clients invest without using a financial advisor as a low-cost option.
Lorenzo plans to use Embark’s technology to launch a ‘robo-advisor’ that will guide clients on how to select funds and other products.
He also plans to mass sell self-invested individual pensions using Embark’s technology.
It aims to make the product available to customers through banking apps, so that they can easily transfer money from their current account or savings to retirement products.
Lloyd’s has approximately 17.7 million customers using the app. Lloyds’ final areas of growth include SIPS and retail investments. It already dominates retail banking and any further growth could lead to competition-watching action.
The bank holds 26 per cent of credit cards, 23 per cent of current accounts and 19 per cent of mortgages.
Hargreaves Lansdowne has long led the execution-only pension and investment market – although the promotion of fund manager Neil Woodford, whose funds collapsed and was forced to close, has reduced the amount of new money flowing last year. Impressed.
Lloyds also faces new competitors. JPMorgan recently snatched up online wealth manager Nutmeg and has bold ambitions for its new digital bank Chase in the UK, which will include sales of wealth management and retirement products.
Paul McGinnis, an analyst at Shore Capital, said: ‘With Embark, they are going after self-service clients like Hargreaves Lansdowne.
‘Are they a bit ambitious? I think they will find it difficult. Hargreaves Lansdowne is a formidable competitor with 40 percent market share. The space is very competitive.