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Did Peter Hargreaves have a Gerald Ratner moment?

Whilst promoting the virtues of Hargreaves Lansdown’s execution-only model last week, did co-founder Peter Hargreaves have his own Gerald Ratner moment when telling national journalists the best adviser people could have is themselves?

The co-founder of Hargreaves Lansdown was quoted in the Daily Mail discussing the fact that banks were no longer trusted by the general public. He added: ”Banks can’t run their own businesses well – so why should they trust them with their money? People finally decide that the best adviser they can have is themselves.”

Alongside its execution-only platform, Hargreaves Lansdown runs a financial planning arm of 92 advisers led by head of advisory services Bruce Pearce. It recently launched a new telephone based advice service. 

Informed Choice executive director Nick Bamford compares Hargreaves’ comments to those of Gerald Ratner, who famously discredited his own jewellery business in 1991 by describing some of its products as ‘crap’.

He says: “For me it was entertaining. It was reminiscent of Ratner criticising his own business. He [Peter Hargreaves] wants to emphasise the direct to consumer business. But if I’d been an adviser at HL I’d have felt slighted by it.”

Bamford said Hargreaves’ comments were overly dismissive of the role advisers can play, even for investors that may prefer to go down the DIY route. 

He says: “What happens in the direct to consumer market is people build funds and the ask ‘is there structure in my funds?’ At that point they go and ask for advice.”

Investment Quorum’s chief executive Lee Robertson says there is a risk such comments could confuse consumers about the value of advice. He says: “You’ve got to ensure you’re not confusing customers. Hargreaves is putting a lot of effort into its advice arm and may be looking to hoover up business as banks and other advisers withdraw.”

Concept Financial Planning managing director Paul Richardson says: “People in glass houses shouldn’t throw stones. Which part of the business is Peter Hargreaves trying to represent? This kind of comment shows the potential conflict when promoting the two sides of the business.”

Hargreaves Lansdown head of financial planning Danny Cox rejects the Gerald Ratner comparison. He says: “I think it shows a complete lack of awareness of Hargreaves Lansdown’s business. Other advisers may want to drive a wedge between advice and DIY investing but we don’t see it that way. Hargreaves aims to offer a one-stop-shop. While DIY is our biggest form of revenue we aim to offer a whole host of services. Offering both is not a challenge at all.  

”Some other firms will approach things from an adviser perspective and say ‘if you don’t need advice we can’t help you’. We give clients choice because the majority want to make all or part of their decisions themselves. In an ideal world you make the decision but ultimately there is sometimes a need for financial advice.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. So, did Peter Hargreaves of Hargreaves Lansdown score an own-goal over his comments – read more here – on DIY financial advice? No.

    He was making a perfectly valid observation of the market as it stands and it will have no detrimental effect on his business or on ours.

    I have very fond memories of a much-loved uncle who would toss a hand grenade on to the dinner table simply to see what would happen. Hargreaves is continuing a noble tradition.

    We are a mere nine months in to the ‘new world’ of the ‘Retail Distribution Review’ (RDR) and it will take at least 10 years before the sector itself settles down, let alone the perception of ‘the poor bl**dy infantry’ (aka the ‘public’), to accept and understand the very positive changes that are currently evolving.

    As a ‘competitor’ of Hargreaves Lansdowne, I am perfectly aware that I can level charges against them, but only because I’m attempting to steal a marketing advantage based upon my own biased view; in other words: “Don’t knock your competitors”

    Competition is good; competition is healthy; don’t fear your competition.

  2. Can’t resist a titter. Of course he didn’t have a Ratner moment. These two – Hargreaves and his partner – built a FTSE 100 company. I think he was saying something like “given the mess the banks have made, is it any wonder that a lot of people have decided to advise themselves”. If that was his point, he is very probably right.

    He might have added that there has been dreadful advice in and all over the market for years. By the by, I’ve not read about Hargreaves being done for duff advice, and I doubt I will ever see such a story.

  3. Peter Hargreaves (along with Stephen Lansdown) has probably done more good for UK financial services than anyone else over the last three decades and my money (literally) is on Hargreaves Lansdown continuing to do great things over the forthcoming decades.

    However, all successful people create jealousy amongst some of their fellow persons. There are a number of less successful people out there (advisers and product providers) who cannot cope with the success of HL.

    Personally, I consider HL to be the best at what it does – it has no peer group because it is based on such a unique model.

    I wish Peter and his colleagues all the very best for a long and profitable future.

  4. A great headline but you are drawing the wrong conclusion about Hargreaves Lansdown.

    As a customer of HL I find this comment reassuring, not worrying.

    It makes it clear that Peter Hargreaves still sees the core of the firm as being execution-only services – competing primarily on quality and value – not on price.

    I have been worried that in recent months their materials have placed increasing stress on the advised service. I am happy with making up my own mind rather than paying for advice. But the growing number of EC and regulatory health warnings that are peppering everything that is published are, I think, having the effect of pushing people towards advice. I had begun to wonder if HL were going the same way.

  5. Given Peters quote when Danny Cox refers to a non understanding of HL we must presume he is talking about Peter.!

  6. All publicity is good publicity.

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