Hargreaves Lansdown's plans to 'redefine' wealth management

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Hargreaves Lansdown's plans to 'redefine' wealth management

Hargreaves Lansdown is aiming to redefine wealth management with a £175mn investment across its digital services and investment offering.

Chris Hill, chief executive officer, Hargreaves Lansdown, told a capital markets day today (February 22) that the firm’s vision is to “transform” the savings and investment experience.

“[We will aim] to deliver a uniquely personalised experience service that helps you not only manage your wealth, but your financial health and resilience,” he said.

Hill outlined that the firm is aiming to change how customers "feel and interact" when they're managing their money.

“Digital transformation is at the heart of what we do," he said.

The company announced this morning it will invest £175mn over the next five years, across its technology and service teams, as well as in expanding its investment advice.

Some 80 per cent of this investment will be self-funded by internal cost savings over the next five years.

The result will be a new "omni-channel" advice proposition that will "bridge the gap" from D2C to advice and offer and "integrated service" with a platform that helps clients manage key life events.

The proposition will begin in 2023.

The company is also planning to launch 19 new funds within the next two years, including ESG funds. It will also introduce "portfolio health checks" and tools to build portfolios by 2024.

The news was announced alongside the group's half year results, which saw its pre-tax profit drop 20 per cent in the six months to December 31 last year.

The company reported pre-tax profits of £151.2mn in the period, highlighting that it has already begun to invest in its technology and supporting functions, with its statutory costs rising by 25 per cent in the period.

Hargreaves Lansdown's share price crashed 21.5 per cent when the markets opened this morning, though it had regained ground slightly and at 11.30am was sitting at 13 per cent lower that at close yesterday.

CEO's excitement

Hill said he had “never been more excited” to share the news.

“The wealth management market has never been bigger and continues to grow at pace driven by structural trends, but it is also at a key inflection point, ready to be disrupted by a next generation service,” he said.

The pandemic has seen client expectations and demands accelerated, he added, and the company has used the data it gleans from clients to track investing patterns and behaviours.

“[We can] anticipate and build what clients need,” he said.

The investment will be used to expand the company’s digital capabilities to increase automation, as well as “leveraging data insights” to build new products and services. 

This will means in practice that clients will be offered an “increasingly tailored, faster and seamless omnichannel client experience…adopting the ‘buy it now’ ease of retailers and benefiting from “timely personalised nudges”.

Hargreaves will also grow its existing cash savings offer, it says “given the outlook for UK interest rates”, which includes new bank partnerships.

Hill said: “The impact of volatility in the economy, and the broader impact on the cost of living means that everyone needs to pay attention to how they save and invest and ensure their own financial resilience.

“This means the market is now growing faster than ever, and the opportunity is even bigger.”