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Hargreaves Lansdown is moving over to fees

Hargreaves Lansdown, the UK&#39s biggest investment IFA, is switching from commission-based advice to become a predominantly fee-only advisory firm in a move it says is essential to its survival.

Following the recent consolidation of its advice arms, the company is restructuring the merged financial practitioner business to enable it to conduct at least 80 per cent of its advised business on a fee basis within the next three to six months. Currently, just 20 per cent of its advice is fee-based.

The decision will affect more than 30 self-employed and directly employed advisers.

The firm is in negotiations with the advisers about switching to standardised contracts which reflect the change.

Hargreaves Lansdown admits that some advisers may leave the company, preferring to work for a commission-based firm, but it intends to expand the advice arm through a recruiting drive and increased investment.

The execution-only part of the business will continue to operate with commission but Hargreaves Lansdown says the fee side will benefit from its sister arm&#39s negotiating power.

Head of individual advice Danny Cox says the decision to switch to fees was taken as a result of the Sandler and depolarisation reviews but says the company would have made the move eventually to avoid falling by the wayside.

He says: “We want to offer best advice and that needs to be done through fees rather than commission. It would surprise me if other firms like us were not considering doing the same if they want to survive in the new world order.”

Chartwell Investment Management director Patrick Connolly says: “The fee model certainly fits well with the depolarisation proposals but it is not an easy move to make.

“Hargreaves Lansdown is not going to create a successful fee-based operation overnight.”

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