InvestmentsFeb 15 2017

Hargreaves faces wave of fixed-price competition

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Hargreaves faces wave of fixed-price competition

Investment giant Hargreaves Lansdown is battling lower cost and fixed price investment rivals, according to the latest figures.

 

Although the industry leader managed to increase market share in the 12 months to September 2016, lower cost and fixed price rivals grew faster, according to research from Platforum.

Hargreaves now has 38 per cent of the market after four years of consecutive growth. Closest rival Barclays Stockbrokers has just nine per cent, while the gap in market share between the two has widened from 14 percentage points in 2010 to 29 this year.

When Interactive Investor completes its purchase of TD Direct Investment later this quarter, it will have 11 per cent of the market, making it Hargreaves' largest competitor. It will continue to offer a fixed-price service.

Both Interactive Investor and fixed-price rival The Share Centre grew faster than Hargreaves in the twelve month period.

Jeremy Fawcett, head of direct at Platform, said that consumer research showed that twice as many people prefer fixed price charging, as opposed to the percentage based model.

"We know from our consumer research that competitive price is now the top consideration among investors when choosing a platform service," he said, adding that platforms AJ Bell's YouInvest and Charles Stanley Investor have grown strongly by offering well-priced percentage charged services.

Mr Fawcett added Hargreaves would face increased competition from Barclays' new fully integrated investment and banking service Barclays Smart Investor.

This will allow customers to run their banking and investments concurrently at a price he described as "competitive", he said. "The challenge for Barclays will be to acquire customers from outside its existing customer base," 

Hargreaves' own cash management service, HL Savings, has been delayed until October 2017. The group described it as "priority" when announcing six-month figures earlier this month, but added that the delay was due to development issues.

A spokesman for Hargreaves Lansdown said: "The growth in our market share and the tens of thousands of new investors joining each year shows we are delivering exceptional services which are highly valued by our clients.

"We are well placed to take further advantage of the structural changes to the savings and investment landscape and continue to listen closely to feedback from our clients which helps shape our service."