Other Citywire websites
Stay connected:

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 attacks advisers' 'delusional' hourly fees

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.’

Sign in / register to view full article on one page

85 comments so far. Why not have your say?

Duncan Carter 2

Sep 04, 2013 at 12:03

I wish I was on Peter Hargreaves hourly rate - how much was that last dividend? And don't H-L charge a percentage for not giving advice?

I wonder also how its financial advisory arm charge?

report this

IFA Surrey

Sep 04, 2013 at 12:07

Yes and I guess HL made a profit of £195 million because their charges are so low. Let's just hope that the new 76,000 customers look under the bonnet...

report this

Phillip H

Sep 04, 2013 at 12:08

Did he realise he was talking to a report or was he talking in his sleep. Very funny thoughts indeed Mr Hargreaves, very funny indeed...

report this

Phillip H

Sep 04, 2013 at 12:08

should read "reporter"!

report this

martin beazer

Sep 04, 2013 at 12:08

yea good old Pete is smiling in this picture, I bet he just worked out his hourly rate!

28% rise in pre-tax profits, £195 million - times are tough ah Pete?

report this

David D

Sep 04, 2013 at 12:09

Bit rich coming from HL who keep most of the trail commission AND the platform commission on their platform despite providing no advice services for the trail commission.

With regard to their repricing, they would not be a first time mover. Most other platforms are there already, including DIY ones. They are just holding on as long as possible as their old pricing will earn them more than the new one will.

report this

Xiang Xhi

Sep 04, 2013 at 12:10

I'd also be interested to know how much of the fund rebates they have keeping over the years. Certainly the full benefit of the 'trail' on old retail funds was not passed back to investors; would they have been receiving the platform kick backs as well as pocketing half the trail?

Unbelievable if so, and in which case don't talk to me about fair and reasonable hourly rates.

report this

Paul Boyd

Sep 04, 2013 at 12:11

H-L ,smoke and mirrors ,giving advice whilst not been seen to give an advice,directly.Well done for fooling some of the people some of the time Peter and ensuring you get the profits.It all reminds me of he 1980's when 'professionals' all used Equitable life because they did not pay commission,and we all know hat a joke that was. H-L people constantly referred to in the press for their "advice" and at a charge that is far too high for the service they do not offer! One day the public will work them out as well ,unless the regulator gets their first.As for fees ,there is a time and a place for them at an hourly rate,and clients will pay as they do with solicitors ,for quality advice.

report this

Simon Webster1

Sep 04, 2013 at 12:15

Read Hargreaves ToB. The hourly rates for their advisers was £450 last time I checked. To many that would appear high but in fact it is a blooming site closer to reality than the many who say they struggle to get their clients to pay £50. We charge £200 - £250 and get it, but maybe because we are arrogant enough to think we are worth it, so our clients do too.

report this

Hickky

Sep 04, 2013 at 12:16

I also guess people are only willing to pay £20 per hour to service their BMW, or fix their central heating boiler, but, trust me here, they pay a lot more if they can see sufficient value for themselves.

When you first talk to a client, ask them what past experience they have had with advisers, it actually is most informative. Fears, bad or good past experiences come out, gut feeling attitude to risk, likeing one adviser and not another as they were too pushy, the list is endless. But you can use this information to really work out how to approach fees etc.

But Peter made one great statement ' “It is easier to promote gambling, alcohol or payday loans to the UK public than the concept of investing in reputable investments or financing British companies to support our economy. That needs to change.' So I will forgive him for the rest of his comments, but does he care if I forgive him or not?

report this

Smudger 2

Sep 04, 2013 at 12:20

Thanks Hickky good comment.

report this

Graham Holliday

Sep 04, 2013 at 12:26

I think a few people may have missed the point here. Saint Peter is saying we advisers should charge a percentage fee for investment advice because an hourly fee won't work. He's wrong, of course. Clients will and do pay an hourly fee for ADVICE. We usually charge a fixed fee (but it's calculated with reference to the hours work expected) for ADVICE. Once the advice is given the charge for IMPLEMENTING the product will often be a percentage fee. The reason Peter would like me to charge a percentage fee for the whole lot is because my percentage fees would then look bigger than his. As it is, once clients have paid me for my ADVICE, my percentage fee for IMPLEMENTATION is less than his. Clients value my ADVICE and are happy with the fee they pay. Once my ADVICE is given, they are free to IMPLEMENT the product through H-L if they wish. But why would they.... he's more expensive for IMPLEMENTING.

report this

Chris Miller

Sep 04, 2013 at 12:29

QUESTION FOR NMA EDITORIAL

Can you clarify how much you charged Hargreaves L for the blatant advert?

report this

Michael W

Sep 04, 2013 at 12:33

I think Mr Hargreaves is correct to make the point that there are, and always have been, very different areas and levels of requirement, within all markets for services in the UK.

All the professional and qualified advisers and planners in the UK, and their clients, know that proper advice, support and guidance is not just about how cheaply can buy your investments....but far far more.

At the end of the day, I could go to Aldi to get my shopping - but I much prefer my visit to Waitrose.

report this

Kins

Sep 04, 2013 at 12:34

Ditto to all the above comments.

What a pointless article. Mr Hargreaves is an a*se.

report this

SteveO

Sep 04, 2013 at 12:38

HL should operate like Transact have for the past few years, they reduce their costs as their business has grown and profits increased.

Do we winge about Microsoft charges and how much Bill Gates makes?

report this

David Curley Dip extrodinaire

Sep 04, 2013 at 12:41

Peter Like Mr Fisher from Towry Law haas his point to get across, whether we like it or not. I dont but I have hedged my bets and bought shares in HL so I too can benefit from their business model, the latest divi is most welcome.

report this

Jonathan Kirby

Sep 04, 2013 at 12:43

HL may be fine for those that know what they are doing.

For the vast majority it could be the most expensive site they ever sign up for.

report this

RegulatorSaurusRex

Sep 04, 2013 at 12:45

All that trail commission, sorry fees, for providing little advice if any.

report this

Richard SALTER

Sep 04, 2013 at 12:51

The only reason to delay so very long in revising their charging structure is that HL know they will have to cut their costs. Meanwhile our small IFA practice can offer full face to face advice and still afford to undercut HL - and indeed have just won a sizeable exiisting HL client case from them on this basis.

Once HL clients realise they are paying for nil advice or adviser liability from a restricted service and getting no more than bombarded with information and constant appeals for further assets to be transferred to them (in return for a set of pens) then this marketing machine will start to hit trouble. Every other competitor now has equal or better fund reporting platform based services and most give advice included.

Indeed i can point to several rivals with better reporting and the same 24/7 updates and analysis avialable via platforms. Poor deluded HL souls who self select from strongly promoted funds, most carrying greater risk than a balanced or otherwise risk appropriate portfolio, are taking greater risk and paying for no advice or comeback yet HL continue to pocket a very large part of the fees....

HL are good at spreading the word about the need to save and invest and marketing to the nation the need for help but they are a one trick (and restricted advice) pony with no protection or mortgage offerrings. It should be made much more clear that they are restricted and all about assets under management on their platform with a 'Wealth 150' list of higher commission (sorry fee) earning funds.

report this

Smithling

Sep 04, 2013 at 13:01

Erm, sorry but why does anybody care what the head of a retailer thinks?

He has nothing to do with IFA's businesses.

I still don't understand why NMA is putting up tedious articles/adverts for a retailer. Why don't they do a story on my local corner shop owner thinks of my charges. It's just as relevant (although I suspect they wouldn't get paid as much by the client or get the search engine optimisation results from all the "outraged" IFA's commenting on their antagonistic "jouranlism" and pushing it up the google rankings).

I provide advice. We are not in the same business.

report this

Terence O'Halloran

Sep 04, 2013 at 13:02

The 'supermarket' tells the small retailer how to run their business. Ironic. Check how much Peter spent on PR alone.

Hourly rates do work. It is how they are presented and collected that creates the successful business strategy. It worked for me and my provincial firm. I placed the 'how' in the market place. Fee-pac is what I did, verbatum. Google my name, the actual working practices that generated 98% rolling 10 year persistancy and a 95% take up rate cannot be wrong; can they?

Peter lives in a world far removed from small business. Good luck Peter; but please do not preach what you do not know.

report this

Simon Webster1

Sep 04, 2013 at 13:04

Here's a thought Peter Hargreaves is arguably the most successful IFA there has ever been. He started advising clients then built a business and then it got mega...Now HL is about the largest FS business in the UK.

Every adviser is in competition with Mr Hargreaves because clients that don't come to us go to him. But whose fault is that? Devise a proposition and market it in your area. Don't slag HL for being better at client acquisition than you are.

HL have been canny enough to restrict themselves to things they can make money out of. Clients realise that. But slagging him off for being more successful than anyone here by a significant margin smacks of sour grapes.

report this

Brian Johnson

Sep 04, 2013 at 13:04

If anything is delusional its his so called execution only , non advised service. We don't give advice but perhaps you will be interested in XYZ, and if you haven't a clue if it's right for you or not then take comfort from the fact it's cheap.

report this

The Facilitator

Sep 04, 2013 at 13:17

Seems Mr H has adopted a rather arrogant attitude, generalising about Adviser value, while HL continues sucking up retail "XO" business on legacy share classes and pocketing rebate commission. He even has the arrogance to say he's not publishing their future fee structure yet in a way that he thinks makes him look clever.

Let's see if his tune changes once the dust has settled and the true impact filters through to HL's bottom line of being forced to transparently charge their customers. I wonder if they'll find it so easy to attract new business then?

report this

alan mcintosh

Sep 04, 2013 at 13:25

Rich comments coming from someone who has been well rewarded for his endeavours within the financial services. Offcourse many of Mr Hargreaves points are to simply wind up the iFA community into thinking they are under threat by HL. Offcourse this may be the case, but their remains a place in the market for many people who still wish personnel service and have built up a strong relationship with their qualified advisor over many years.The same can be said of good solicotors, accountants etc

Like all things in life it really depends on what is important to each indivdual.

report this

Olly Supersonic

Sep 04, 2013 at 13:45

There appear to be some very opinionated people on here.

The HL business model is one of the best business stories of our generation.

Dont take this the wrong way; I don't think Peter has got much of an eye on you local IFAs. He's got his sights set on larger things like Schwab.

report this

Richard SALTER

Sep 04, 2013 at 13:54

HL are RESTRICTED ADVISERS. To Simon Webster and others who persist in perpetuating the myth that they are IFAs you really ought to know better.

I expect journalists to make this elementary mistake but not fellow professionals. Only a tiny percentage of HL clients recieve whole of market advice - but I would still then question whether they are selling anything other than investment advice to further load more assets under influence on their platform. (as far as i know you are only eleigilbe for 'advice' if you have over £50k or even £100k of investible assets).

Certainly even the few who pay HL for advice (and possibly get Independent advice) are then themselves shunted onto their nil advised service - and yet fees continue to be duducted BUT for no ongoing maintenance ! My understadning is that you can only get paid if you dleiver ongoing advice.

I agree most of all with those above who note we are not in the same business. IFAs give advice, HL promote a selection of financial products and give only information. A very neat and succesful business model but not one which directly compares with most IFA practices. When clients appreciate the difference we have found we can wrestle them from the giant and deliver more, for less.

report this

Simon Webster1

Sep 04, 2013 at 14:11

@ Richard

Totally agree with most of what you say but please read the posts - nowhere do I say HL are independent in particular at 13.04 I say they adopted a restricted model. Mr Hargreaves himself started as an IFA which perhaps could be more explicit, but hey this is a chat not a compliance doc.

report this

Charles Rickards

Sep 04, 2013 at 14:20

Adviser hourly fees are only delusional, if you have no prospect of achieving them. Advisers have to cover their costs and make a profit to remain commercially viable. The only way to do that is to offer a service which clients are prepared to pay for. It's all about the client's perception of the value of the advisers services.

Many are still using percentages as it is aligned with commissions. However, it does not necessarily represent value to the client or adviser. However, it does allow the cross subsidy to perpetuate, allowing those less able to afford advice. to get advice.

In an ideal world adviser fees should be an agreed amount, payable in the most efficient way for the client, rather than as dictated by product providers.

Unfortunately the demise of commission payments has brought about tax consequences for clients, that did not previously exist. But hey ho, that must be treating customers fairly!

report this

JHA

Sep 04, 2013 at 14:21

I believe that HL currently have over 130 CF30 registered advisers which suggest that they all have SPS and provide some sort of advice, restricted or whole of market. The business as a whole appears to be profitable and should be praised as the success it is. PH is right. His business has benefitted from the recent regulatory changes and will probably continue to do so from the disenfranchised. I would love to be in his shoes now....

report this

Keith Cobby

Sep 04, 2013 at 14:22

I agree with Richard Salter. HL is an execution only broker for funds. Good business model and good luck to them. These comments perpetuate the basic problem RDR was supposed to address, namely demarcating selling from advice. It seem to me there is a long way to go.

report this

Arthur Schopenhauer

Sep 04, 2013 at 14:48

Pride comes before a fall...

not hard to take out HL on advice for decent sized clients I am not sure I would not be happy with being the B&Q of the advice world even if i did make big profits out of the staff who do the work

report this

Mark Coomber

Sep 04, 2013 at 14:48

HL are NOT competition to any good quality advisers.

Instead , they are an alternative: a cheaper(?), less effective, less personable alternative continuing (for now) to benefit from the subsidy that is the historical trail commission/rebate model. Plus they seem to have their shareholders' interests at heart....way over and above the customers (not clients....big difference) coming in second or third in the pecking order.

This deck of cards will fall in due course, but by which time the HL founders will have exited with their £millions and in doing so done nothing to enhance the reputation of the UK's Fin Svs industry.

I hope they can sleep at night, and that their kids and grandchildren will be proud of them and their legacy!

report this

Justin Thomas

Sep 04, 2013 at 14:54

Presumably Mr H has based this on in-depth research?

report this

Bob Donaldson

Sep 04, 2013 at 15:27

Don't insult the intelligence of the 76,000 new clients HL have taken on. Advisors may hate them and what they represent but they are good at what they do and obviously 76,000 new clients can't all be stupid.

Too much sour grapes if you ask me. They are operating in a totally different market to where the likes of most advisors are operating in. Get over it!

report this

Arthur Schopenhauer

Sep 04, 2013 at 15:34

Bob

No one is insulting the client intelligence it is the intelligence of the statement in the article that is in question

report this

Kins

Sep 04, 2013 at 15:35

I agree that comparing HL with an IFA is not apples with apples but I do object to PH sounding off about a business model that doesn't really advise its customers and has to date been less than visible on its charges/services.

FYI I am not an IFA.

report this

Simon Kershaw

Sep 04, 2013 at 16:17

He is, as usual, several streets ahead of the regulator.

Any potential client, who is initially averse to internet based "non-advice" investment, is dealt with by a "financial practitioner" who guides them to the next step.

DIY - full-fat Vantage. Ex-only.

Investment Advice - 2%, min £495 plus 0.5% trail plus Vantage.

DIM - well you can guess the rest.

76,000 new clients and only 55 CF30s - do the math!

Come on Peter, being the best bucket-shop in the business shouldn't be this easy.

report this

Simon Mansell

Sep 04, 2013 at 17:43

I have never understood how HL can send a newsletter/email/website advising clients to transfer anything and everything into their HL Vantage SIPP and then claim its an execution on sale. Perhaps if I was able to bypass a myriad of compliance requirements then I could afford to relax my fees.

report this

Ian Lees

Sep 04, 2013 at 17:46

Hargreaves Lansdowne - a successful business model Year after Year - and they have earned the right to charge their fees. It is interesting no one has been able to " copy " their successful - business model - in an industry where copying products is a way of life. Hambro Life and Sir Mark Weinberg used to say - they had some 6 months before the first " copy cat " product would be introduced following the Hambro Life's research and development - yet even then no company could copy the success of the company. Interestingly figures show St James Place has increased their sales people - in their profitable business model - where LloydsTSB had a 49% stake - and it appears the only element of LloydsTSB - to make a profit - when sold ( in stages ). Well done Peter Hargreaves and all his colleagues ! Building on success - and their professional financial services.

report this

Ian Lees

Sep 04, 2013 at 18:04

@SImon Mansell - In the same way Tenet can sell a stocks and shares ISA within 15 to 20 minutes under their compliance structure. I assume it is like which. They provide the information - and the investor or purchased has the opportunity to conduct their due diligence - or accept the information at face value ( because they Trust Hargreaves Lansdowne ) and the information provided - and each individual purchases the product based on their knowledge - their experience - without the assistance of anyone - and for which they are fully responsible - and they sign up to these terms. Clients are lazy ( eg supermarkets have been successful because people will drives miles to save a penny - it is their own perception ) - People will not in general look at the consequences - of how one product or one fund interacts with their portfolio ( if they did people would not have spent so much time and effort and interest and charges and payments - purchasing property residential and buy to let and holiday homes and commercial property - with their pension funds.) . Your service is entirely different - in the market and type of client - but most importantly in the service and quality of knowledge and experience you can bring to their service.

report this

Mark Coomber

Sep 04, 2013 at 18:33

@ Ian Lees:

Can you improve the standard of punctuation within your postings? We might all then be able to begin to understand your point(s).

Your postings include some of the longest, most indecipherable sentences known to man.

report this

Simon Mansell

Sep 04, 2013 at 18:33

@Ian Lees

My compliance advice has always been that the regulator will not accept execution only advice on a pension product and especially a SIPP and transfer.

The rationale being that a layperson cannot be taken to understand the implications of such a complex transaction.

The literature that HL sends out is a positive inducement and endorsement to take action (advice) and how they get that past the regulators I just do not know. I’m not criticising the HL business model, I’m criticising the duplicity of the idiotic regulatory machine.

report this

Newbie

Sep 04, 2013 at 18:44

HL have a model that works for the mass market and is very profitable. Knowing the dividend payouts and share price trends, how many of the people whom have posted negative comments would not 'entertain the notion of' buying shares in HL. I suspect most will consider it as the business model itself is a winner and the success is likely to continue.

Whether they are restricted is a completely different matter. But what is clear is that HL competes and is a threat to most if not all FS firms out there be it advisory, exec only, stockbrokers, wraps, platforms.

Put up as much negative comments as you like but who would not mind getting access to some of their clients ?

report this

Ian Lees

Sep 04, 2013 at 18:55

@Simon Mansell . . . following your "rationale " - you are preventing people using their own skill, their own judgement in making a choice - in this case a purchase - whether financial or otherwise. It would be a Breach of their Common Law Right to buy or sell a product - and the consequences of Law are, " Let the Buyer Beware ". Every advertising hoard is " an advertising inducement ". Many people do not want advice - but want the common law right to buy what they want - without a sales person hanging over them like a bank employee or direct salesperson - or someone providing them with advice. People have the right to choose. It is not the job of a regulator - to say " someone cannot purchase a product on an execution only basis ". MY experience with a slovenly insurer meant that the " sales people were guided through the various levels of management - to put transactions through as " execution only " - only to prevent the PIA /FSA /FCA from understanding that flogging products is about just that. A financial planner or chartered financial adviser - provides a good reason for the sale of a product - backed up with reasons. For your information there are many, many, execution only offerings - on the market - not just Hargreaves Lansdowne - it is just that Hargreaves Lansdowne are much more successful.

report this

Ian Lees

Sep 04, 2013 at 18:58

@Mark Coomer . . . Apologies for my punctuation - and long sentences ( I work on an hourly rate ) - and I am only down here on missionary work and with educational standard going downhill - I will try to revise these especially for you.

report this

Paul Boyd

Sep 04, 2013 at 22:06

@ Ian Lees,sorry I also struggle to understand what you are saying as well,using - instead of , is not helpful ,never mind good English.I am sure YOU understand your shorthand ,but this is not an exam . I am sure you are making good points ,so using proper sentences ,grammar and punctuation would help your cause.

report this

Julian Stevens

Sep 04, 2013 at 22:38

Just ignore him. He doesn't give two hoots about what any of us think or write. And if we were a tenth as successful and wealthy as he is, neither would we.

report this

Chartered Mark

Sep 04, 2013 at 22:49

Strange that HL feels the need to bitch about IFA hourly rates. It reminds me of the comment about a footballer, that he had to clog the opposition because he was not as good, or had an inferiority complex.

The two most profitable (for themselves, not necessarily the clients) and valuable "advice" brands in the UK today, are probably HL and SJP.

Both have been picked out by the Sunday Times recently, as the highest charging funds and services.

Both seem to be able to get around the RDR far better than mere IFAs.

You have to wonder if perhaps they know something we don't?

report this

Mark via mobile

Sep 04, 2013 at 22:55

@cm

Do you have a link to Sunday times article or know when published? Thanks

report this

Ian Lees

Sep 05, 2013 at 08:22

@Paul Boyd . .Apologies I will speak slowly just for you . . . .

On the subject of professional financial planners at Hargreaves Lansdowne - it is clear from the " range of bitching " , that it is envy driving this particular seam of content. Advisers charge any rate they wish . . . whether this has any sound foundation - appears to be the argument put forward by Mr Hargreaves. However, what has not been placed into the content is the volume of contented investors at Hargreaves Lansdowne. The amount of people who have been successful - and purchased products with and with out advice - these are the consequences of a professional firm - who in the end it is the results which count. In the case of Hargreaves Lansdowne - they have replaced the old guard of insurance companies from equitable life down - through the with profits orientated firms - and provide a much better much clearer service proposition - and much better returns for investors.

report this

Simon Mansell

Sep 05, 2013 at 09:24

@ Ian Lees. . .Sep 04, 2013 at 18:55

following your "rationale " -

Ian you are either misrepresenting me or I am failing to communicate my message. Either way let me make it clear: It is not my rationale at all it is regulatory prescription.

I merely make the point that regulators will not allow "execution only" pension transfers, and especially into a SIPP. HL can only apply their charging structure because they do not have the regulatory burden of advice.

When I read their newsletter, literature and view their website I find it difficult to conclude that they are not giving advice on the merits of their offering. One regulator one set of rules applied to all equals a level playing field. We may even be able to reduce the cost of advice if we have a slice of the lack of regulation that seems to apply to HL.

report this

James Clancy

Sep 05, 2013 at 09:31

H&L do charge fees for advice see below

The first consultation is without charge, obligation or time limit. Fees generally based on £150 per hour plus VAT. Commission can be used to offset against fees where appropriate. Time involved for the first year varies, around 10 to 20 hours is common. Annual reviews are normally between 3 and 10 hours.

The Hargreaves Lansdown Group was established in 1981 and is now one of the largest brokers of investment, life and pension products in the UK. Our continuing aim is to provide the best service, the best information and the best prices. Our size and influence in the marketplace enables us to negotiate special discounts on your behalf. Insurance companies and fund management groups take notice of us because of our purchasing power. The Group's funds under management currently total £10 billion. It is always important to ensure that your financial adviser is financially secure. You can rest assured that we will still be here for you in the future to help you with your ongoing requirements.  

report this

Ian Lees

Sep 05, 2013 at 10:16

@James Clancy, one point being made by many is that consumers can go direct to HL - and accept the " execution only service ". Some advisers appear to seek to force people to seek the advice of an IFA/Tied Agent or restricted adviser - which is not in the consumers interest. Should a consumer wish advice - they can go to HL and are given their service proposition. I switched my Scottish widows retirement benefits scheme pension ( SWRBS ) - after poor service, Breach of Trust by Scottish Widows - and their on-going refusal to pay out my full pension cash equivalent. Having lost all Confidence . .. ..and . .ALL Trust in scottish widows Trustees and Management . . . . - I am more than happy that HL are looking after my best interests ( after charges ) - my RETIREMENT FUND . . .and the peace of mind - they provide . . . the reduced stress and great service is testament to the high quality of service available at Hargreaves Landsdowne.

report this

Ian Lees

Sep 05, 2013 at 10:26

@Simon Mansell . . Execution Only service - survives and THRIVES . . For the FCA to refuse to permit "Execution Only business", would be a BREACH OF LAW. I purchase my business as an " Execution only Client". There are many many "share holding" groups - who operate an Execution Only basis. Many Bank Managers purchase their own products under " Execution Only " . Finally there are many discount brokers - who offer " Execution Only Services ". I point clinet s with Scottish widows policies in these directions - when they get little or no service from this LloydsBank wholly owned subsidiary Scottish widows. I accept the FCA do not like " execution only business from IFA's or tied agents ", but I believe this is because the FCA believe the agent is cutting corners - to avoid due diligence - or complete any proper Compliance documentation. ONe reason for this may be lack of income ( fee or commissions) from the sale of a product e.g an ISA ( which has many benefots - but is not profitable - with one exception . . . claims made by The Tenet Group ( owned by four insurance companies Stranded Life A Viva Friends Life and Aegon ) and their product offering their . . . . symphonia ISA .

report this

Simon Webster1

Sep 05, 2013 at 10:34

@Ian Lees

Lack of income (fee or commission) from ISA sales...

The joke is commission is still allowed on execution only - it is not allowed on advised sales.

report this

RegulatorSaurusRex

Sep 05, 2013 at 10:43

What do consumers think when they stumble across threads like this?

report this

martin beazer

Sep 05, 2013 at 11:05

Regrex I agree. We are like a bunch of kids on here sometimes. Any opportunity to attack each other and we are off! Button for turn off alerts for this thread pressed.

report this

Smudger 2

Sep 05, 2013 at 11:13

They think, what a strange name RegulatorSaurusRex is.

report this

RegulatorSaurusRex

Sep 05, 2013 at 11:14

Same here Martin

report this

Kins

Sep 05, 2013 at 11:26

"I don't care what people are saying so long as they are talking about me" - Tony Wilson.

We are doing HL's PR for them.

Time to call it a day.

report this

Simon Mansell

Sep 05, 2013 at 11:44

@Ian Lees Sep 05, 2013 at 10:26

"For the FCA to refuse to permit "Execution Only business", would be a BREACH OF LAW"

Ian, I'm sorry to tell you this but you are mistaken. The FSMA 2000 places the FSA/FCA above the law. They are a quasi judicial regulatory with statutory authority. It may well be that you are not otherwise involved in financial services and therefore do not see what actually is going on.

You see the executive FSA/FCA is not supposed to make laws (the role of the legislature) or interpret them (the role of the judiciary). The role of the executive is to enforce the law as written by the legislature and for its actions to be adjudicated upon by the judicial system. Yiou are right in assuming this should be the case, but it is not!

Any practicing adviser will tell you that this is not the case in financial services. Read up on Hectors Sants statement when he as an (unelected official of a bureaucracy) snubbed the TSC, an elected body of parliament on the 9th of March 2011.

report this

SJ

Sep 05, 2013 at 11:53

We were approached recently by a chap who wanted to transfer his public sector final-salary pension to the HL Vantage SIPP.

HL wouldn't accept the transfer on an execution-only basis; they insisted that he should receive advice.

He didn't want to pay HL's advisory arm for the advice because he thought they were too expensive. So he came to us.

We know exactly what sort of clients we deal with, and he definitely wasn't one of them. So we didn't take him on.

report this

Ian Lees

Sep 05, 2013 at 12:51

Good to see such great advice - from reasonable and responsible Independent Financial Advisers . Good news for the remaining Professional Indemnity insurers left in the market.

report this

Chris Miller

Sep 05, 2013 at 12:53

SJ

Quite right. A walking I E D by the sound of it.....and what about implications for the PII renewal. ooerr!

report this

Ian Lees

Sep 05, 2013 at 12:59

@Simon Mansell .. I take your point, and your clarification> I would ask you to look to Share Centre and many other " execution only dealers " - often referred to as " Discount Brokers". The FSA/FCA - may imply their Rules and regulations upon advisers - and attempt to stop them trading under execution only . . . but this would not hold up in a Court of Law - unfair Unfair Trading Practices. Secondly if a client signs a contract for services - these are applied under - Contract Law. Following this is the Sale of Goods Act and many others - where unacceptable terms are imposed. In my opinion if I wish to purchase a contract of services or a contract for services - using my own judgement - the FCA will not stop me - or impair me in any way . This is my basic human right.

report this

Olly Supersonic

Sep 05, 2013 at 13:00

You guys should spend less time leaving comments at the bottom of journalist's articles, and more time getting new clients or servicing your existing ones ...

report this

Ian Lees

Sep 05, 2013 at 13:16

Mr Supersonic . . I have a client ! ? ! another one would become a crowd . . .

report this

Ian Lees

Sep 05, 2013 at 13:21

@ Simon Webster1 . . .thanks for that Simon I was not aware of that fact - which could explain the Tenet Group Services proposition . . .Comissions eh ? From their own " in house " Arrangement ? Good job RDR simplified everything

report this

Simon Mansell

Sep 05, 2013 at 13:24

@Ian Lees Sep 05, 2013 at 12:59

In this case I am talking specifically about pension transfers into SIPPS.

The adviser only has the right to challenge the FCA via a judicial review, which costs circa £30K & is not a right of appeal. A regulated adviser would never get near a court of law. Many have tried. This debate has been covered many times before and if you feel you can take on the FCA without bankruptcy then good luck to you.

Pension transfers and SIPP's are a regulatory hot potato and if you think you can direct a client to HL under this banner then you are heading for a fall. Take the HL proposition to a compliance consultant and ask how they can do this & then come back and post.

report this

Chartered Mark

Sep 05, 2013 at 13:58

@ Mark on Mobile

The Sunday Times, Money Section, ran a thing on 21st July 2013 headed "Greedy pension firms exposed". They highlighted the annual charges for a SIPP as £179.80 via Sippdeal compared to £799.90 via HL. There was some other stuff in the article.

The following week they ran a big spread on "How to pick the right financial help" and covered things like the charges that various bods made either for servicing FUM or as direct charges for the in house funds. That showed SJP as 2.25% and HL as 1.75% amc.

Just a couple of things.

First the ST article on 28th suggeted that there were approx 700,000 more people not seeking advice since RDR and doing DIY investing. As reporters, they have no idea why.

Second. Like all the press, they are a wee bit late in the day to run such an article. It should have run this time last year or even in January at the latest.

And finally, in the 1st Sept ST Business section, there was a small bit about HL. They will be declaring their results this week, and predictions are that they will be much increased t/o and profit. This is predicted to give H a dividend payout of £35.2m to add to his ST Rich List estimated worth of £1.5b.

So you know what, he doesn't give a rat's deriere what we think.

report this

Mark via mobile

Sep 05, 2013 at 16:02

@cm

Thanks

report this

Ian Lees

Sep 05, 2013 at 18:09

@Charter red Mark . good to see Hargreaves Lansdown making money - and profiting from their hard work over this year and previous years and decades.

report this

Ian Lees

Sep 05, 2013 at 18:30

@Simon Mansell .. it appearswe are sying the same ting in different ways - I believe that no one should transfer without paying a fee and having a good adviser look at the whole picture. It is my belief that HL or SJP would take the same view - trough people I know in these companies. Everyone is entitled to make their own decision and purchase a product on an execution only basis (we would not offer such a service - for reasons explained previously ) - but there are execution only services out their - and on the internet . . .

report this

Chartered Mark

Sep 06, 2013 at 08:18

@ Ian Lees.

Yep. I suppose if I charged 4x as much for SIPPs and 3x as much for fund management, some day I could be a billionaire.

report this

Ian Lees

Sep 06, 2013 at 08:51

@ Chartered Mark . . .What you refuse to acknowledge or accept . . .is the great work these people do . . .and the success they have brought to financial planning . . .but in the main the success in investment funds for their clients . . . The price they say . . is the price their clients pay . . .for the service . . they receive . . . if you can do the same - for the same charge or more . . . or less ? . . .Then my question is . . . . . Why haven't you ?

HL clients receive good service - good returns - that is why they are successful . . and the envy of many advisers ( and companies ) who cannot compete - with either their sales or strategy . . .or success .

report this

JHA

Sep 06, 2013 at 09:18

Good to see that the tradition of chopping the legs of anybody in the UK who is successful is alive and well...

Here is a saying which some may want to reflect on:

“Common Law of Business Balance”.

"It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better."

report this

Smithling

Sep 06, 2013 at 09:20

@ Ian

By your rationale, a Wonga loan is better than a high street bank loan. It must be because it's in my bank quicker and it feels like it's a better deal with easy online access that doesn't need a chip and pin reader. I mean the cost doesn't matter, it's what I'm under the impression feels better right?

As for the jealousy line. Would I like to earn what they do? Absolutely. Am I envious of their earnings? Absolutely. Would I like to earn it the way they do? Not really. Fortunately, once I've sent the kids to school, paid for the house and got a decent pension, I'm not really sure I need a yacht, albeit it would be a nice toy.

In addition, forgive me if I have the wrong person here, I don't really follow individuals as such on here, but aren't you the chap that lost a huge chunk of your own pension over something or other?

report this

Chartered Mark

Sep 06, 2013 at 10:19

@ Ian Lees.

Not sure ... why ... you have so many.... dots.....

Think you have missed my point.

I do acknowledge and accept that H & L have done “great work” .... in creating a massively successful business and making themselves very rich.

They were brilliant in spotting an opening and an opportunity early, that they filled with a model that they have adapted and improved along the way, to keep at least one step ahead of the competition, and more importantly, the regulator.

Their clients may well have made money over the years. But so have most others who dealt with IFAs, and if we use the FSA/FCA flawed rationale that lower charges mean better returns, then the IFA clients will have made more, because the charges that HL impose are among the highest in the industry.

Because HL got in there early and invested in and developed the technology to stay ahead, they have achieved a strong position for the Company, and a fortune for themselves.

As for doing it myself? The problem is that to set up a competing model today or in the last few years, would cost millions in start up capital, and with the current uncertainty in the industry the business angels are a wee bit reluctant to invest.

In fact, thinking about it, Mr H’s comments in this article are brilliantly designed to continue to pour petrol on the fire of uncertainty, that means that the perception of the industry is still fractured and HL will sail on undamaged by the changes.

report this

Tony_Laverick

Sep 06, 2013 at 10:59

For once, I agree with a lot of what PH has said in this article. Surely it is too early for anyone to state that any particular payment system will both prevail and thrive so let's not get too evangelical. All we can say with any confidence is that the regulator will act if they see client detriment.

If FUM are banished, what will become the benchmark to evaluate the fairness of fees charged?

report this

Ian Lees

Sep 06, 2013 at 11:01

@ smith Ling . . .your view on a Wonga Loan is correct . . ask Hearts ( an Edinburgh Football team . . . .

report this

Ian Lees

Sep 06, 2013 at 11:17

@ harterd mark . . success breeds success . . . . ( the dots are for my " dotty readers ".

report this

Smithling

Sep 06, 2013 at 11:21

Sorry, I don't follow football.

I just wanted to put some of your comments in context, which I think that now firmly has. Best of luck.

report this

Simon Mansell

Sep 06, 2013 at 13:45

Ian Lees Sep 05, 2013 at 18:30

" it appears we are saying the same thing in different ways"

The HL proposition, supported by direct mailshots, e-mails, application packs with "execution only" disclaimers makes it quite clear that they are soliciting transfer business, without (as they claim) advice into their HL SIPP. The nature of their sales pitch along with supporting testimonials seems to me to be advice, but without the regulatory burden (cost).

Peter Hargreaves has attacked advisers' hourly charges, branding them delusional! Well this is quite an easy statement to make when HL seems to have a golden ticket from the regulators exempting them form the standards applied to the advisory community.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Long time coming: is the recovery here to stay?


Click here to watch a series of sponsored interviews with Jupiter's fund managers on the UK equity market.

Today's top headlines

More about this article:

Look up the shares

  • Hargreaves Lansdown PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive


Sorry, this link is not
quite ready yet