A decent runabout

I am a long-time admirer of Hargreaves Lansdown for its approach to providing investment advice and investing services to the average investor, and I am astonished by the negative comments this highly successful business attracts from other advisers.

The latest bout has been over HL’s recent launch of a low-cost retirement planning service introduced in response to the pension freedoms. This is by no means a Rolls-Royce service but it does offer some help for a fee of £395. This includes an hour with an adviser and a report on a client’s key issues including a cashflow projection.

It is not a full advice service but it is a type of low-cost service I have been long calling for; an affordable solution that the Great British Public can actually afford. Research suggests many do not want or cannot afford to pay more than £500 for pensions advice.

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As usual, however, the comment forums have been full of what I can only describe as bitching and negative and often derogatory comments about HL and its new service. There is certainly some envy mixed in with these comments, and also far too much silly stuff which does not reflect well on the financial adviser community, from those who cannot see that HL’s model, for all its faults, is a highly successful one. Here I should disclose that while I am not a HL client, my wife has been in the past. My comments, though, are not related to any specific experiences we have had with HL.

Apart from HL, I am also a great admirer of full-service financial planning with all the bells and whistles. I believe that clients who have found a highly competent, experienced and professional financial planner or IFA have truly found someone who can transform their lives. However, it is not for everyone, and probably never will be for one very good reason: cost.

Saying that full-service independent financial planning advice is for all is a bit like saying everyone should have a Bentley.Most people would have to consider a less pricey vehicle that can be relied upon to get them from A to B. That is where HL comes in – it is the alternative to full-service.

It is worth remembering at this point that HL’s founders, Peter Hargreaves and Stephen Lansdown, were no wealthy pair of individuals who started up HL as a sideline. They were a pair of hard-working accountants who came up with a good business idea and launched it from a bedroom in 1981, selling investment products mainly through newspaper advertisements.

They struggled to build the business for a number of years, at great personal financial risk. Just over 30 years later the company is one of the largest employers in Bristol, with staff numbers heading towards 1,000. It has £50bn under management and is part of the FTSE 100. It also has a thriving financial planning arm for clients who want more than just execution-only.