Hargreaves vows to take cost fight to fund groups

Speaking as the Bristol-based investment platform reported record profits for the 12 months to 30 June, the firm’s co-founder said it was committed to lowering prices.

Accounts for the firm reported strong results for the financial year with revenue up by 22 per cent to £292.4m, pre-tax profits up 28 per cent to £195.2m, and total assets under administration of £36.4bn, up 38 per cent on the previous year.

When asked if he was experiencing resistance from fund managers over the drive to cut costs, Mr Hargreaves said: “Yes, we experience resistance, just like Tesco does with its suppliers, but we will continue to battle with them as we continue to bring down prices for investors.

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“I also believe that we can offer clients more value from a fund manager from our range of services. The culture of the firm has been built around looking after the interests of our clients.”

Mr Hargreaves said the firm, which employs more than 700 staff, had ambitious plans to further increase its reach, having attracted 76,000 new clients, and could also look at launching overseas. He added: “The business is very scaleable, one of our biggest assets is our website, and we intend to fight on more fronts.”

Pointing his ire at the advisory community, he said: “Advisers are delusional if they believe they can charge an hourly rate for investment advice in the post-RDR world. If you ask how much advisers are valued at an hour they come up with £15-£20 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.”

Gina Miller, the founder of the True and Fair campaign on costs and transparency and co-founder of boutique asset management company SCM Private, said: “What Hargreaves’ strong figures show is that there is a continuing trend of investors wanting to DIY their assets – resulting in the 38 per cent growth in its last year.” However, she said that, despite Mr Hargreaves’ assertion that it was driving down costs, the “all-in” costs were actually higher than other platforms.

She said: “If you look at what the firm is offering, HL funds are not price-competitive when you factor in the ‘all-in cost’. The firm needs to be more transparent, and use its clout to bring innovation on pricing.”

The Investment Management Association was invited to respond to Mr Hargreaves’ comments but nobody was available for comment.