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Hargreaves Lansdown profits hit by platform fee cut

Lower platform charges have pushed down Hargreaves Lansdown’s pre-tax profits by 2 per cent in the six months to 31 December to £101.9m, down from £104.1m in 2013.

However, the company’s interim results, published today, show assets under management grew to a record £49.1bn over the same period, up 13 per cent year-on-year from £43.4bn in 2013. The firm also acquired 23,000 new clients.

Chief executive Ian Gorham says the fall in profits was caused by lower interest rates on client cash and reduced clients charges on the Vantage platform, announced last March.

Margins on the platform are down to 47bps from 60bps following Hagreaves’s price cut introduced as a result of the RDR.

It says new fees range from 45bps down to nil but commission is still being received on funds purchased by clients before RDR.

Gorham says the firm expects interest rates to stay between 0.5 and 0.6 per cent for the rest of the 2015 financial year.

In addition, net business inflows fell 20 per cent to £2.25bn in 2014, down from £2.80bn in 2013. Gorham says this shows Hargreaves “continued to perform well compared to the wider retail investing market during the period”, and cites the 34 per cent fall in UK net retail fund sales, according to the Investment Association, during the same period.

The business update also reveals the firm will be launching a “retirement planner” in April in response to the new pension freedoms introduced by the Government at last year’s Budget.

Gorham says: “We expect the package of tools, income functionality, help and advice to be very popular given that over 143,000 people have asked Hargreaves Lansdown for information about pensions in the last six months.”

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  1. This is the Hargreaves Lansdown disclaimer:

    “Nothing provided to you either verbally or in writing whatsoever should be construed as financial or investment advice as defined by the Financial Services and Markets Act 2000 unless it is expressly stated. ……When you act on a Non-Advice Basis, we will not provide any advice in relation to the suitability of the scheme in your own particular circumstances concerning, for example, but not exclusively:

    How does HL conduct transfers into their SIPP on an execution only basis and assuming this is possible (my compliance advice says I could not) then do consumers really want to be excluded from the protection of the regulatory system on perhaps the largest asset they may ever own?

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