Unfazed Hargreaves greets growing competition

The retail distribution review (RDR) has brought about a surge in the number of advisers launching execution-only platforms, but Peter Hargreaves, the man who led the way, is not worried about increased competition.

A vindication of past decisions

Nationals and networks, including Openwork, RSM Tenon, Succession Advisory Services and Lighthouse, have all unveiled plans to offer face-to-face advice for their higher-net-worth clients and set up a low-cost execution-only service for those with smaller portfolios, a move Hargreaves, the founder and executive director of Hargreaves Lansdown, welcomes rather than views as a threat.

He said these services would get business from advisers’ existing clients rather than steal from an established player like Hargreaves.‘They won’t compete with us. We won’t notice they’re there and they won’t be chipping at the edge as far as we’re concerned. But it will be reinforcing what we’ve said for years: clients want to do [investing] themselves.’

He said the rise of self-directed investing vindicated the decisions he and his firm had made over the past 30 years, moving from traditional IFA status in 1981 to become the UK’s largest execution-only platform and a FSTE 100 company.

‘Everybody’s finally agreed with us because we’re right. They’re not a threat, but competition increases the pond,’ he said.

An ‘unprecedented’ number of new clients

The business model was further vindicated by the company’s results for the last six months of 2012 when it posted a record pre-tax profit of £94 million and record revenues of £140 million.

It also attracted 21,000 new clients in the first half of 2012, a rise from the 16,000 new clients over the same period in 2011.

Hargreaves said he expected even more new clients over 2013 because the RDR had widened the advice gap, with IFAs retiring or dropping unprofitable clients.