Banking

Hargreaves Lansdown to spend £175m to ‘redefine wealth management’

During the six months to 31 December, the FTSE 100-listed company saw profit before tax fall by 20% to £151.2m, down from £188.4m for the prior-year period.

Interim revenues were down slightly to £291.1m from £291.5m one year earlier, as market events like ‘Vaccine Monday’ which drove record-breaking stockbroking volumes and client growth were absent.

Costs also grew as the company invested in strategic capabilities, technology, compliance and support functions for the post-pandemic, next generation of wealth management.

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Nevertheless, it also revealed net new business of £2.3bn in the latter half of 2021 and a 17% rise in assets under administration to £141.2bn, while adding 48,000 new clients over the same period. As such, it reported that the interim dividend would rise by 3% to 12.26 pence per share.

Chris Hill, chief executive officer of Hargreaves Lansdown, said: “In the first half of this financial year, we saw a gradual return to the office and calmer markets which led to more normalised share trading levels, albeit still higher than before the pandemic.”

He added: “As the market leader, with a stronger than ever 43.3% market share, now is the right time to target the broader wealth management market and set a new standard for how the UK saves and invests.”

Hill said the company plans to spend £175m to “redefine wealth management” with the industry at a key inflection point.

He highlighted five key external drivers: the importance of financial resilience to individuals and responsibility for managing their own savings and investments; changing client expectations on how they manage and interact with their savings and investments; “expensive adviser fees and confusing, time-consuming and jargon-heavy investment providers and services”; growing competition; and, greater regulatory support for investing.

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Hill said: “Hargreaves Lansdown was the original disruptor and successfully established the D2C [direct-to-consumer] market. The evolvement of our proposition and strategy means now is the right time to target the broader wealth management market and rethink how we set a new standard for how the UK saves and invests.”

As such, the company is planning to offer an integrated service with “digital tools that help to manage and monitor investments and wealth; intuitive, customised and personalised nudges at scale; expanded investment solutions, new products and unparalleled data and insights, combined with essential human support”.

Hill said there will be five core elements to this strategy: developing its “digital backbone” with more data capabilities such as analytics, cloud storage and automation; leveraging data-driven insights for clients to build new products and services; rapid expansion of its investment solutions, with 18 new funds by 2024 including new ESG funds; accelerating its active savings offering with new bank partnerships and increased marketing; and, a new omnichannel advice proposition combining human and digital advice for launch commencing in 2024.

Over the five years from full-year 2022 results to full-year 2026 it expects to spend £175m, generating cost savings of £55m.

The company expects this will deliver net new business growth of around £20bn by full-year 2026 driven by a client base around 50% bigger than today. It also plans to increase the share of AUA in Hargreaves Lansdown funds to reach 20% by 2026.

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