Hargreaves Lansdown is a direct-to-consumer monster without parallel.
No other competitor even comes close. Hargreaves accounts for a 38 per cent share of the D2C platform market, increasing its market share over each the last four years in an increasingly crowded space. It is a full 29 percentage points ahead of its nearest competitor, Barclays Stockbrokers.
Regardless of your views on the firm, and its founders as individuals, you have to hand it to Messrs Hargreaves and Landsdown (combined worth nearly £4bn); their creation has fast become one of the most lauded success stories in UK financial services history.
Hargreaves’ destiny doesn’t just matter for consumers. Its future matters for advisers too. If it is successful in keeping clients in its own self-directed ecosystem, then the pool of IFA business many are predicting from the pension freedoms may not grow as fast as expected. If Hargreaves manages to keep hiring more advisers, it could soon have a ready redirect for many of its wealthier clients to its own planners, not external IFAs.
New entrants to the UK self-directed market like Vanguard will have a tough task winning novice investing clients, and an even tougher one convincing them to leave Hargreaves. The US giant has far from the brand power Hargreaves does as an almost-household name over here and if Hargreaves is good at one thing, it is keeping in regular contact with its clients and making them feel like interaction is easy and worthwhile.
The pitch has to be on costs. Hargreaves is a long way from the cheapest option in the market. In fact, it has the fourth-highest costs of the 25 D2C platforms scored on a £50,000 portfolio in a recent FCA study.
Advisers and other platforms should also take solace in the fact that advised platform assets are growing at a faster rate than D2C assets, and that the regulator is paying serious lip service to the potential conflicts within a vertically integrated model like Hargreaves’.
As new chief executive Chris Hill notes in our interview for the cover story this week, the firm thinks it has all the elements it needs in place already. Evolution, not revolution, is order of the day. But we are in the middle of a savings revolution in this country. People are being told they can do it themselves by a horde of new robo-advisers and apps. Don’t expect Hargreaves to give up the fight easily, but it might have to evolve faster than it wants to.
Justin Cash is editor of Money Marketing. You can find him on Twitter at @Justin_Cash_1