The Turbulent Journey of Hargreaves Lansdown: A Look into Britain’s DIY-Investing Giant
Hargreaves Lansdown (HL), a British investment giant, was founded in 1981 by Peter Hargreaves and Stuart Lansdown. Initially focusing on providing unit trusts to individual investors, the company soon expanded its offerings to include a wide range of investment services. Fast forward to the late 1990s, when HL introduced the Personal Investment Plan (PIP), a low-cost investment platform that allowed individuals to manage their own investments. This offering, later named Vantage, was a game-changer for the company, bringing significant growth.
Revolutionizing DIY Investing
HL’s innovative platform revolutionized the DIY investing market in the UK. As more investors sought to manage their investments directly, HL continued to adapt and expand its offerings. In 2014, the company launched its JISA (Junior Individual Savings Account) platform for children, further solidifying their position in the market. However, with great success comes challenges.
The Stock Spat
In 2018, HL found itself in the middle of a major controversy when it decided to remove Woodford Investment Management’s flagship fund from its Wealth 50 list. The move resulted in a public spat between HL and Woodford, with the latter accusing HL of “market manipulation” and damaging investor confidence. Despite this turbulence, HL’s reputation remained relatively unscathed.
Recent Developments
More recently, HL announced plans to launch a digital investment platform, which is set to compete with newer entrants in the market like Nutmeg and Wealthsimple. The new platform, named HL Super Invest, will leverage technology to offer lower costs and personalized investment advice.
Looking Ahead
With a strong market position, innovative offerings, and a commitment to customer service, Hargreaves Lansdown continues to shape the future of DIY investing in Britain. As the company moves forward, it will face new challenges and opportunities, but its resilience and adaptability are testaments to its enduring success.
I. Introduction
Brief explanation of Hargreaves Lansdown (HL)
Hargreaves Lansdown plc, commonly known as HL, is a leading DIY-investing platform in the UK. It offers a wide range of services for private investors, enabling them to manage their own investments in an efficient and cost-effective manner. With over 1.2 million active customers as of December 2021, HL has become a formidable force in the UK financial services sector.
Overview of the company’s history and its role in democratizing investing for the average Briton
Founded in 1981 by Peter Hargreaves and Steven Lansdown, Hargreaves Lansdown started as a small financial advice firm. Over the years, it transformed into a full-service investment platform that empowers individual investors to take control of their financial future. In 1998, HL revolutionized the UK investing landscape by launching its innovative Personal Investment Account (PIA), which allowed customers to buy and sell shares, investment trusts, and funds online. This groundbreaking move democratized investing, making it accessible to the average Briton at a lower cost compared to traditional investment channels. Since then, HL has expanded its offering with services like the
SIPP (Self-Invested Personal Pension)
,
ISA (Individual Savings Account)
, and the
JISA (Junior Individual Savings Account)
. These innovative offerings have solidified Hargreaves Lansdown’s reputation as a trailblazer in the world of DIY investing, enabling thousands of customers to build wealth and secure their financial future.
Hargreaves Lansdown: Early Successes
Hargreaves Lansdown (link), the UK’s leading online investment platform, owes its success to its innovative approach during the late 1990s and early 2000s.
Innovative Approach to Online Investing
During this period, HL revolutionized the way individuals could invest in the stock market. Its user-friendly website and affordable fees made investing accessible to a broader audience. The platform allowed users to buy and sell shares instantly online, providing unparalleled convenience and flexibility. HL’s innovative approach disrupted traditional investment firms and set the stage for a new era in personal investing.
Key Milestones: Launch of Personal Investment Account (PIA) and Business Growth
A significant milestone in HL’s history was the launch of the Personal Investment Account (PIA)
(now known as the Stock and Shares ISA), which allowed individuals to invest up to £3,000 per year tax-free. In the 1999–2000 tax year, HL attracted over 55,000 new customers and managed £674 million in assets. This rapid growth continued throughout the early 2000s, with HL managing over £3 billion in assets by 2003 and boasting over 175,000 customers.
Competitive Advantage in a Rapidly Expanding Market
Hargreaves Lansdown’s competitive advantage during this period can be attributed to several factors. First, its low-cost business model
(which remains a cornerstone of the company’s success today) allowed it to undercut traditional investment firms’ high fees and attract a large customer base. Furthermore, HL’s focus on customer service
(including a dedicated help desk and educational resources) distinguished it from competitors. Lastly, the company’s ability to capitalize on emerging trends, such as the increasing popularity of contact investing and tax-efficient ISAs, played a significant role in its growth.
I Challenges Faced by Hargreaves Lansdown
Hargreaves Lansdown (HL), the UK’s leading online investment platform, has faced numerous challenges over the past decade. One of the most significant regulatory hurdles was the increased scrutiny of Do-It-Yourself (DIY) investing platforms by the Financial Services Authority (FSA).
Regulatory Landscape and Its Impact on HL
The Retail Distribution Review (RDR): The introduction of the RDR in 2013 fundamentally changed the way financial advisers are paid, and thus impacted HL’s business model. The RDR aimed to ensure that retail investment advice was focused on the customer’s best interests and charged transparently. For HL, this meant adjusting their fees and services to comply with new regulations, while maintaining competitive pricing.
HL’s Response: Diversification into Financial Advice and Wealth Management Services
Acquisition of WiseNet Financial Planning (2014): In response to the changing regulatory landscape, HL made strategic acquisitions to expand their service offerings. One notable example was the acquisition of WiseNet Financial Planning in 2014 for £12 million. This move allowed HL to provide financial planning and advice services directly to clients, strengthening their position in the market and improving their revenue streams.
Impact of Brexit on HL
Regulatory Uncertainty: The uncertainty surrounding the UK’s departure from the European Union (Brexit) also posed challenges for HL. With potential changes to financial regulations and market access, HL needed to navigate this turbulent period carefully. They assured their clients that they would maintain their existing service offerings despite the regulatory changes.
Implications for HL’s Business and Future Growth Prospects
Post-Brexit: Post-Brexit, HL’s client base may shift as UK and European investors respond to the new regulatory environment. The potential impact on HL’s business depends on factors such as market volatility, client sentiment, and their ability to adapt to the new regulatory landscape. With a strong brand, diverse service offerings, and a robust digital platform, HL is well-positioned to navigate these challenges and continue its growth trajectory.
Current State and Future Prospects of Hargreaves Lansdown
Hargreaves Lansdown (HL), the UK’s leading online investment platform, has continued to impress the market with its robust financial performance. Revenue growth has been a standout feature, with the company reporting a 14% increase in revenue to £382.7m for the year ending April 202
Market share
also remains strong, with HL holding a 23% share of the UK’s retail investment market. Furthermore, customer base expansion has been a key driver of growth, with new business up 15% in the same period, reflecting the company’s ability to attract and retain customers.
Ongoing initiatives include a strategic partnership with Nutmeg, the automated investment service, to offer clients an enhanced digital investment proposition. Additionally, the acquisition of Ascot Lloyd, a wealth management firm, has expanded HL’s offering in areas such as pension transfers and inheritance tax planning. These moves demonstrate HL’s commitment to
expanding its offerings
and meeting the evolving needs of its clients.
Potential growth opportunities
Expansion into international markets
is an area of significant potential, with HL having announced plans to enter the Irish market in 2019. DIY investing among younger generations, who are increasingly turning away from traditional advisers and towards digital platforms, is another area of growth. This trend is expected to continue as more people look for cost-effective ways to manage their finances.
In conclusion
HL’s strong financial performance, ongoing initiatives, and potential growth opportunities position it as a leading player in the UK financial services sector. With its ability to adapt to changing market conditions, HL is well placed to capitalise on emerging trends and continue delivering value to its clients.
Sources and Additional Information
List of Relevant Articles, Reports, and Data Sources Used for Researching this Article:
Recommendations for Further Reading on Hargreaves Lansdown and the DIY Investing Sector:
Contact Information for Hargreaves Lansdown’s Media Relations Team for Additional Comment or Interviews, if Applicable:
Tel: 0117 934 6628