Hargreaves Lansdown’s preliminary results have shown the extent of the move from annuity to income drawdown, with the former down 41 per cent and the latter up 29 per cent.
Ian Gorham, Hargreaves’ chief executive noted that “whilst in the short term we have seen a reduction in annuity business of around 50 per cent, this has been counteracted by a substantial shift to drawdown arrangements; new assets into pensions drawdown arrangements were up 35 per cent on the year”.
He added that the firm is planning a “range of enhancements” to its pension services to reflect the opportunities offered by the new regime. “
Meanwhile, Hargreaves saw total assets under administration up 29 per cent at £46.9bn, with the total number of clients increasing by 144,000 to 652,000 since June 2013. Operating profits increased by 8 per cent to £208m.
The firm also detailed plans to launch three new multi-managers - UK All Companies, European and Emerging Markets - alongside the launch of more premium services like discretionary direct and the aim of capturing more of the advised market.
Mr Gorham said that new clients and their assets led to an 8 per cent increase in net revenues and 7 per cent growth in profits.
“Hargreaves Lansdown will again pay its corporate taxes in full in the UK, and we shall continue to seek to be a role model for how financial services companies deliver a great service, reputable behaviour and profitability in harmony with the UK public.”
“We are looking for various ways to offer clients better returns on cash. There has been some recent speculation as to whether we’ll apply to be a bank. We’ll only apply to become a bank if we need to, we will investigate other options first and that is what we are currently doing.”
The firm’s Corporate Vantage range reached £1bn in assets under management and by 6 April 2016 Hargreaves will not retain any commission on Vantage fund investments.
Mr Gorham said: “This change has been a massive undertaking, requiring the design of a new competitive charging structure with few reference points, and then the communication of the changes to clients and seamless implementation.
“It was gratifying to note that the third quarter of our year, where these changes took effect, was a record quarter. In this year of change, client and asset retention ratios have remained high at 93.3 per cent and 92.3 per cent respectively.
Regulation also “substantially” affected revenue from cash in the form of interest margin.
Mr Gorham explained that risk averse governments and regulators requiring greater capitalisation of major banks has reduced banks’ demand for cash deposits.
“At the same time, recent regulatory constraints on the ability to place cash on longer term deposit have also been imposed.”
He added that the firm expects that in the short term its cash margin will reduce slightly, but longer term mitigating strategies should offset some of the effect.
