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.”