View the article online at http://citywire.co.uk/new-model-adviser/article/a700680
Hargreaves attacks advisers' 'delusional' hourly fees
by Jun Merrett on Sep 04, 2013 at 11:51
Hargreaves Lansdown founder Peter Hargreaves has attacked advisers' hourly charges, branding them delusional, and said the company had benefited from banks exiting advice and new re-registration rules.
The FTSE 100-listed company posted a 28% rise in pre-tax profits, £195 million, for the year ended 30 June 2013 and announced that it had 507,000 clients, up 76,000 since June 2012.
Peter Hargreaves, founder and executive director of the company, said the business had been boosted by regulatory changes which had forced banks to exit advice, advisers to change their charges, and platforms to re-register client assets.
‘We have 76,000 new clients in 12 months [this is down to] banks curbing their services and a lot of IFAs didn’t feel like taking exams or couldn’t charge fees,’ he said.
Hargreaves said advisers would struggle to charge clients fixed or hourly fees and enjoy the same level of profitability they had before the RDR when they could accept commission.
‘Anyone who says they can charge an hourly rate for investment advice is delusional,’ he said. ‘Because if you ask how much advisers are valued at per hour they come up with £15-£20 per hour but on commission they were on £200-£300 an hour, and you can’t live on that difference.
‘Very few advisers will be able to charge an hourly rate and the ones that can they’re exaggerating so a percentage basis is the only way to charge.’
He said there had been ‘a huge amount of pent-up demand’ for investors to move assets from advised platforms over to Hargreaves and that the company was benefiting from re-registration.
Hargreaves Lansdown previously said it would unveil its new charging structure this month but has decided to postpone this to next year.
Hargreaves said: ‘We don’t know how investors will respond to the new pricing structure,’ adding: ‘There’s no advantage in being a first mover.’
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
Alastair Mundy met Citywire's Daniel Grote at the London Stock Exchange Studios for a detailed interview about the Investec Cautious Managed fund.
More about this article:
Look up the shares
More from us
- Hargreaves nets FSCS refund as profits jump 28%
- Hargreaves plans 20% boost to adviser numbers every year
- Hargreaves Lansdown demands best price for new 30-fund buy list
- Hargreaves Lansdown plans international expansion