Hargreaves Lansdown is set to shake up how it selects funds for its best buylist following a “thorough review” of its current system.
In its half yearly results, out today (January 31), the investment platform said it would be making changes to improve the transparency of the process by adding more detail and a new structure to its research notes.
It will add a new functionality on its platform to help those who want to follow a “more independent path”, the firm stated in its results.
Best buylists have come under scrutiny recently despite the Financial Conduct Authority’s 2017 review finding they were a positive tool for investors.
The City-watchdog was urged to look into the role of such lists in the aftermath of the Woodford Equity Income saga.
The criticism was particularly focused on Hargreaves’ Wealth 50 list, which featured the now-defunct Equity Income fund on its list from 2014 until the day it was suspended on June 3.
It remained on the platform’s list despite an extended period of poor performance and Hargreaves has since confirmed it had concerns about the fund for 18 months before its eventual suspension.
Outgoing FCA boss Andrew Bailey has also raised questions as to whether the effect of being on Hargreaves’ best buylist had caused a large influx into Mr Woodford’s fund which “exceeded the investment strategy”.
Hargreaves also announced today it was adding non-executive directors to the board to provide “independent challenge and oversight” to investment decisions. The first is John Troiano, who will join from Schroders where he was global head of distribution.
The news comes as Hargreaves reports a 9 per cent drop year-on-year in net new business for the six months to December 31.
The platform received £2.3bn of new business in the second half of last year compared with £2.5bn for the same period in 2018.
Despite this Hargreaves’ total assets under administration grew 22 per cent in the six months to December 31, reaching £105bn.
Its revenue was up 9 per cent to £258m while its profit before tax bumped up 12 per cent to £171m.
About 50,000 clients joined the platform after June 30, despite the Woodford saga hitting the firm from June 3, bringing Hargreaves's total client count to 1.2m.
Chris Hill, chief executive at Hargreaves, said: “The first half of our financial year was another period of growth.
“Despite market challenges, the resilience of our business, continued execution of our strategy and our focus on ensuring the right outcomes for clients, means we have seen growth and increased market share through the period.”
Mr Hill said he remained “excited” about the structural growth opportunity in the UK savings and investments market and “confident” in the firm’s ability to deliver sustainable growth.
He added: “The secular transfer of long term financial provision from businesses to individuals, an increase in life expectancy, ongoing low asset yields, and a complex saving and investment environment all present immense challenges for our clients.