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Hargreaves chief: Trust and strength mean more than costs

Charges are an ongoing debate in our industry and I often get asked for my views. Good value matters but wise investors should consider several factors well ahead of costs.

Alongside health and family, money is one of life’s most important assets. Like family and health, it should be entrusted to others only after due diligence and with caution.

Most investors hope to build up a substantial pot of money, so even a pot that starts small is likely to grow to exceed relevant Government compensation limits.

Given that unprofitable companies are usually unsustainable companies, the wise investor will choose a profitable, safe company, ideally one listed on a stock exchange and hence subject to greater scrutiny. The trustworthiness, financial strength and longevity of the company one chooses to invest with should be the paramount consideration.

As money is so important, having someone look after it is a relationship, not a transaction. Maximising returns requires good information and data. Clients need to follow the progress of their investments and get their questions answered. Information needs for tax and other purposes will arise. Great service, including usability, data and information and access to statements and summaries when needed, is therefore also vital.

Investors want to make a good return. The risk reward profile of different regions and asset classes change, as will an investor’s risk appetite, over time.

Accordingly, investments will be bought and sold, often many times over many years. Excellent investment choice with simple, cost-effective switching is key.

The final consideration is cost. Reducing investing costs is important as they make a difference to returns. Over the years, costs have reduced.

It should be remembered investments often remain inherently good value compared with competing areas popular with the public. Unlike property, investments are relatively cheap (and becoming cheaper), do not take up space and are usually easily realisable.

Take note of charges and make sure you are getting good value but keep it in context. Most clients understand that superior security, service and value should come before marginal reductions in charges.

Ian Gorham is chief executive of Hargreaves Lansdown

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Oh dear, this sounds dangerously like Fred Goodwin just before he bought ABN Amro…

    “Never mind the customer value, just look at the Ivory Towers!”

    Hargreaves should be using their size and influence to be pushing for far greater consumer awareness of both the pivotal importance of charges/costs when investing AND for measures like HMT’s new and imminent Total Cost of Ownership (TCO) measure to reflect ALL the costs investors suffer and not just those covered by TER. (In these times of low returns, the impact of charges has never been more pivotal for the investor.)

    That would serve their customers in a way that would earn them real loyalty, but of course would reduce those juicy profits quite a bit.

    To see HL standing up as industry’s apologist and defender of the far-from-perfect status quo is very disappointing and I fear exposes rather a lot of ‘imminent dinosaur’ tendency.

    Trust should be earned by real value and real commitment to your customers, not by how big your balance sheet looks. After all, Fred’s looked pretty good once…

    Martin Campbell

  2. Perhaps Paul McMillan could enlighten us as to the publishing criteria that this advertisement piece met.

    Does the readership of MM need to have a sanctimonious, “holier than thou” puff piece from Hargreaves Lansdown rammed down its collective throat?

    Is there any value from a learning standpoint to the IFA readership of what is supposed to be a trade journal?

    Has Peter Hargreaves further tightened his purse strings like a true Yorkshireman and instructed his minions to seek out free advertising opportunities?

    If this were Nic Cicutti I would be dusting off my fine dining taunts.

    We deserve an answer.

  3. Simon, I think you’ll find Peter Hargreaves is not a Yorkshireman. If you’re going to make personal comments at least try not to make things up.

  4. Peter

    Yorkshire or Lancashire
    Hand picked qual/quant only fund selection wealth 150 or Funds that pay the greatest undiscolsed rebates
    Tomato / Tomato
    Editorial / Advertorial

    Let’s call the whole thing off….

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