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Hargreaves Lansdown shows the value of trail

Advisers believe that a £600m valuation of Hargreaves Lansdown as it looks at a stockmarket flotation or sale reflects the value of basing a business on recurring income.

JS&P certified financial planner Patrick Connolly says the figure shows the value that can be achieved when advisers focus their business model on trail commission rather than more transactional models that rely on chasing up-front commission.

He says: “This is such a profitable model because it is based on recurring income. The approach that we and HL have taken – and it seems that others are starting to agree – is that a recurring income model makes a business far more attractive.”

The Money Portal group head of distribution Alan Eas-ter says Hargreaves Lansdown has also benefited from its confident approach and from using the media to raise its profile.

He says: “They have had a very clear business model for the last 20 years. They have have been mavericks and they have spoken out and proved people wrong.

“I think this is fantastic news and I hope they pick up more than the figures being touted around at the moment.”

Easter says Hargreaves Lansdown founders chief executive Peter Hargreaves and chairman Stephen Lansdown have been ahead of the curve in spotting distribution trends.

This is reflected in the success of its Vantage platform which has £7.6bn in assets under management, mainly held in Isas, unwrapped investments and in its Sipp.

But Transact sales and marketing director Malcolm Murray says: “I think that if Hargreaves Lansdown did want to start competing in the true wrap space, they would need to offer a full range of assets and integrate all their tax wrappers with a complete range of funds.”

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