Lloyds and Schroders to launch wealth management JV

Lloyds Banking Group and Schroders have announced plans to launch a financial planning business aimed at affluent customers.

The companies said on Tuesday that they are entering into a strategic partnership that will combine Schroders' investment and wealth management expertise and technology capabilities with Lloyds' significant client base, multi-channel distribution and digital capabilities.

Lloyds will own 50.1% of the joint venture, while Schroders will own the rest.

"The JV will address the growing gap in the advice market through a personalised, advice-led proposition, backed by world-class investment expertise and best in class technology," they said in a statement.

As part of the JV, Schroders will be appointed as the active investment manager of around £80bn of the Scottish Widows and Lloyds insurance and wealth related assets.

Lloyds chief executive Antonio Horta-Osorio said: "I am delighted to be announcing this exciting partnership with Schroders and the creation of a new market leading wealth management proposition. This provides a strong platform for growth and is a further step in the delivery of our strategic objectives."

Schroders CEO Peter Harrison said wealth management is a strategic priority for Schroders.

"In combining our award-winning technology and world-class investment expertise with Lloyds' significant client base and digital capabilities, we are creating a strategic partnership which is exclusively focused on the evolving needs of UK savers and investors. I am also delighted that we have been entrusted to manage £80bn of assets for Lloyds' and Scottish Widows' clients."

James Rainbow, co-head of UK intermediary at Schroders, will be chief executive of the joint venture, while Antonio Lorenzo, chief executive of Scottish Widows and group director of insurance & wealth, will be chairman.

Responding to press speculation, Schroders confirmed earlier this month that it was in talks with Lloyds with a view to working closely in parts of the wealth sector.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Lloyds and Schroders may be tying the knot but there’s still a somewhat acrimonious divorce going on between the high street bank and Standard Life Aberdeen. This creates some uncertainty about when £67 billion of assets may be transferred to Schroders, which could be as late as 2022.

"Part of Lloyds’ new strategy is to expand into the financial planning and retirement market, and the bank is targeting 1 million new pension customers by 2020. The government’s auto-enrolment programme is now firmly in the rear view mirror, which means Lloyds will have to pinch many of these new customers off someone else, so it needs to sharpen up its toolkit. To that end it makes sense to team up with Schroders who have a wide range of investment capabilities and experience of managing pension assets.

"Targeting growth in financial planning and wealth management offers Lloyds some diversification away from its traditional banking activities. However it doesn’t look like hell or high water is going to shift the Lloyds share price meaningfully in the right direction until there’s some clarity on Brexit."