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(HL) Hargreaves Lansdown General Share Chat

Discussion in 'General Share Chat' started by Microem1, Nov 10, 2015.

  1. Microem1

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    (HL) Hargreaves Lansdown General Share Chat
     
  2. Groucho

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    Trading update

    11 October 2018


    Hargreaves Lansdown plc ('the Group') today publishes a trading update in respect of the three month period to 30 September 2018 ('the period').


    Highlights


    · Net new business of £1.3 billion in the period

    · Net new clients of 29,000

    · Assets under administration ("AUA") of £94.1 billion as at 30 September 2018, up 3% since 30 June 2018

    · Net revenue for the period of £120.8 million (2017: £104.1 million), up 16%


    Chris Hill, Chief Executive Officer, commented:


    "I'm pleased to report a solid start to our financial year for growth in clients, net new business and revenue. The past quarter has seen an uncertain market environment and weak investor sentiment resulting in an industry-wide slowdown in net retail flows. Despite this backdrop, we believe the strength of our business model positions us well for when sentiment improves."


    Assets under administration and net new business
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    Net new business of £1.3 billion for the period was driven by continued investment in our digital marketing presence, higher client numbers and ongoing wealth consolidation onto our platform. During the period, we also added three further banks to our cash marketplace service, Active Savings, enabling clients to manage their cash more easily at attractive rates of interest. As a result, we increased the level of marketing and promotional activity in early September and now have over £100 million managed by clients in this service. AUA rose to £94.1 billion as at 30 September 2018 due to net new business and positive market movements.


    We welcomed 29,000 new clients in the period (Q1 18: 30,000), taking active client numbers to 1,120,000.


    Net revenue

    Net revenue for the period was £120.8 million, up 16% on last year, benefitting from higher AUA levels due to net new business and market growth.

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  4. Groucho

    Groucho Member

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    29 January 2019

    Hargreaves Lansdown plc

    Interim results for the six months ended 31 December 2018


    Hargreaves Lansdown plc ("HL" or "the Group") today announces interim results for the six month period ended 31 December 2018.


    Highlights

    · Net new business of£2.5 billion.

    · Assets under administration down 6% since 30 June 2018 to£85.9 billion.

    · 1,136,000 active clients, an increase of 45,000 since 30 June 2018.

    · Profit before tax increase of 4% to£153.4 million.

    · Interim dividend up 2% to10.3 penceper share (H1 2018: 10.1p)

    Chris Hill, Chief Executive Officer, commented:

    "The diversified nature of Hargreaves Lansdown has enabled us to continue growing despite a period of geopolitical uncertainty, market volatility and weak investor confidence. We have a significant long-term market opportunity and our recent investment in service and developing our proposition are bringing real benefits to the business and our clients, both in difficult times such as the present and as and when conditions improve."

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    Analyst presentation

    Hargreaves Lansdown will be hosting an analyst presentation at 9.00am on 29 January 2019 following the release of these results for the half year ended 31 December 2018. Attendance is by invitation only. A conference call facility will be in place with the following participant dial-in numbers - UK (toll free) 0800 640 6441, UK (local) 020 3936 2999 and all other locations +44 20 3936 2999. The participant access code is 762014. Slides accompanying the analyst presentation will be available atwww.hl.co.uk/investor-relationsand an audio recording of the analyst presentation will be available by close of business on the day.

    The Interim Results contain forward-looking statements which have been made in good faith based on the information available to us at the time of the approval of this report and should be treated with caution due to the inherent risks and uncertainties, including both economic and business risk factors some of which were set out in the 2018 Annual Report, underlying such forward-looking information.

    Unless otherwise stated, all figures below refer to the six months ended 31 December 2018 ("H1 2019"). Comparative figures are for the six months ended 31 December 2017 ("H1 2018"). Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances the sum of the numbers in a column or a row in tables contained in this document may not conform exactly to the total figure given for that column or row.



    Chief Executive's Statement


    External market and opportunity

    Geopolitical developments abroad and at home have resulted in a year of significant uncertainty and volatility not only for financial markets but also for our clients. Through this period, Hargreaves Lansdown has continued to grow and has maintained its focus on client service and developing our proposition.

    The market opportunity for Hargreaves Lansdown remains significant, extending across £1.0 trillion of addressable investment assets within the private wealth market and up to £2.4 trillion when cash savings are also included. People need to take charge of their money and manage it over a longer period and yet savings and investments are becoming more complicated. Clients therefore need help and want solutions more than ever before. They want to feel valued and supported by their chosen financial service providers, particularly during these uncertain times. Our relentless client focus, combined with our scale, knowledge and expertise uniquely positions us to provide the solutions required and capitalise on this opportunity.

    With this opportunity, and in order to serve the needs of our clients, we continue to invest in our stated strategic agenda and in continuous improvements to our service in order to maintain our leading client and service proposition. Of course, we remain cognisant of balancing our levels of investment and strategic priorities at levels appropriate to the external environment and client activity levels but, for now, it is business as usual.

    Growth and service

    We believe it is critical that we continue to invest in opportunities for growth during difficult times if we are to capitalise on our significant long-term market opportunity. This ensures that we are as well placed as possible to take advantage of better market conditions and improved confidence levels as and when they arise, just as we saw following the Brexit referendum. We remain focused on investment to support higher levels of client activity, deepen our marketing skills, improve our technological development capacity and broaden our offering, all whilst maintaining compliance with regulatory change. Following a period of elevated cost growth to position us for this market opportunity, we are now moderating the rate of investment and remain watchful about the rate we put new costs into the business whilst market conditions remain challenging.

    We have maintained a visible brand and marketing presence during this period and retained the headcount resources to deliver the levels of client service that we aspire to. We have also extended our opportunities for growth should these conditions persist for longer, for example through direct book transfers and the development of our cash marketplace proposition, Active Savings.

    External market conditions have impacted investor confidence and driven industry-wide net outflows over this short reporting period. This includes our own UK measure of investor confidence, which is at its lowest point since the index was launched in 1995. The Investment Association has reported the worst period for industry net retail fund outflows ever over the three months to November 2018. For Hargreaves Lansdown, whilst these conditions meant that AUA fell 6% to £85.9 billion (30 June 2018: £91.6bn) due to negative market movements of £8.2 billion, we were pleased to welcome a further 45,000 net new clients, taking our total active clients to 1,136,000, and deliver net new business inflows of £2.5 billion.As discussed last year, we benefited from elevated transfer levels and new clients following service issues at a competitor platform in the comparative period of H1 2018.

    This progress demonstrates that the investment we are making continues to pay off and we believe positions us well for when conditions improve. Whilst market share data is slow to emerge, we believe we have continued to maintain our leading position in our chosen areas. For example, it is pleasing to see that whilst dealing volumes for the industry across the period have been subdued, we have managed to increase our share of the execution only stockbroking market to 31.9% (source: Compeer Q3 Benchmarking Report).

    We look to develop a lifelong relationship with all our clients, and hence retention and satisfaction are key measures for us. The client retention rate has remained very high at 93.5% during a period where client numbers, transactions and contacts have all increased. Investment into our Helpdesk and Operations teams through increased training, use of technology and better management techniques has helped to elevate client satisfaction levels. Improved call answering, email response rates and quicker completion of transfers are just some of the tangible benefits coming through. Consistent focus on such client service measures gives us greater insight into client expectations and service levels and helps determine where we invest and deploy resources.

    Delivering value for clients

    Our excellent client service needs to be matched with an outstanding client offering. Back in December 2017 we soft launched Active Savings, our cash management service. In the following months we developed the proposition further, adding more banks and improving the rates on offer. In September 2018, we increased the level of marketing and promotional activity, believing it to be strategically imperative to capture the scale advantage of being a first mover for the long-term benefit of our clients, the banks on the platform and our shareholders. We are therefore currently focused on growing AUA. Our chosen route for achieving this in the current low interest rate environment is via reducing our revenue margins to ensure the rates offered on Active Savings are highly competitive. This will attract the new clients and assets into the service that we need to capitalise on this opportunity. We are pleased with the growth we have seen in the last four months from a standing start as a consequence of this approach. At a time when investment products have not been favoured by consumers, having a leading cash savings solution is a great benefit to clients and diversifies our product offering. Rates on offer across the range of maturity terms are now consistently top quartile, with several products at the top of interest tables and, as at 31 December 2018, AUA had grown to £385m across over 13,000 client accounts.

    Whilst Active Savings has been gaining traction we have been busy on the next stages of development. The ability to hold and manage cash through our platform and receive a competitive rate of interest, should prove very appealing during uncertain times for investors and we will look to add an easy access account shortly. We are also looking forward to welcoming new clients from Witan Investment Services following their announcement to withdraw from administering their retail Investment Trust Savings and ISA Schemes. The deal could involve the transfer of up to 16,000 retail clients, representing up to £420 million. This is the seventh such transaction we have undertaken and once again demonstrates our ability to provide the best solution for fund managers and the best value for their clients.

    Putting clients first is at the heart of our culture and it is always pleasing when our proposition and service scores highly in independent research. In November, Platforum issued their UK D2C Investor Experience report which looks at the customer experience of investing in 2018 and how it has evolved over the past year. Hargreaves Lansdown scored top marks in all the online proposition categories, for its mobile proposition, and customer service. Only on pricing did we not score top marks, but we continue to offer an excellent value proposition for our clients with fund discounts and low costs to hold shares and investment trusts. In the coming months, we are also expecting the final outcome from the Financial Conduct Authority on their Investment Platform Market Study which we hope will help deliver overall benefits to the consumer.

    A year ago we rebranded our content and platform to create a new, clean visual identity. This has enabled us to tailor our look, feel and tone of voice when we interact with groups of clients. Much work has been done in segmenting our clients so that we can increasingly personalise content and guidance in communications to them and this is now delivering improved conversion rates on marketing campaigns. New names to our marketing list in the period are higher than last year, driven by share related content through third party online channels. Given the environment, converting these leads is the next challenge but we won't hold back on marketing despite investor uncertainty. It is times like these that clients and potential new investors need clear and concise communications giving them the confidence to make the right investment decisions for their future benefit.

    Many improvements to our service are born from listening to the needs of different groups of clients and analysing their activity. Our newly launched Wealth 50, a shortlist of our experts' favourite funds, is a prime example of this. We spoke to over 6,000 existing and potential clients, undertook 12 surveys, discussed with focus groups and conducted a number of one-on-one and user-experience sessions. Their insights guided us to replace the Wealth 150 with a simpler more focused list of funds across a range of sectors and its launch gave us the opportunity to renegotiate with the fund managers who made our shortlist. Many of the funds on the list are now available with even bigger discounts on their annual fund charges. All such discounts are to the sole benefit of clients, and not to Hargreaves Lansdown in any way. Since its launch, the Wealth 150 has outperformed its benchmark by 5.8% and sector by 11.8% and clients will now save an average of 30% on a Wealth 50 fund's annual ongoing charge because we have used our collective buying power to secure them a better outcome. We believe that the total cost of owning funds via Hargreaves Lansdown is now even more competitive, particularly when compared to traditional advice channels. Overall this creates a truly compelling value proposition when combined with the excellence of our investment research, breadth of our offering and service delivery.

    Dividend

    The Board believes the Group has sufficiently strong profitability, liquidity and capital positions to execute its strategy without financial constraints and to operate a sustainable and progressive ordinary dividend policy. We remain confident in our business model and the Board has declared a 2% rise in the interim dividend to 10.3 pence per share. The Board remains committed to paying special dividends when sufficient excess cash and capital exist after taking account of the Group's growth, investment and regulatory capital requirements at the time.

    Outlook and Brexit

    Brexit is on the horizon, and until certainty is reached, it will continue to impact markets and consumer confidence. Financial decision making becomes trickier and clients can become reluctant to invest more in volatile markets and prefer to sit on the side-lines. As we have done already, throughout the whole Brexit process, we will keep clients updated on our views, potential scenarios and impacts. We will also ensure that we have sufficient resources in place in order to help clients at the critical moments. For many clients, however, their investment goals are long-term and they remain willing to invest and look to us for guidance in such times. We will continue to deliver tailored content that will help empower them with the confidence to make appropriate investment decisions for their future.

    The second half of our trading year is traditionally our stronger half for new business, including as it does the tax year-end, which acts as a natural incentive for clients to use tax allowances. Investor sentiment and stock market levels are usually key to the levels of new business but this year has the added complication of Brexit. Such uncertainty during our busiest time of year is clearly not helpful for predicting new flows and business volumes, but we will be prepared operationally to deal with any outcome. Our fundamental objective will be to ensure continuity of service and a seamless client experience throughout the Brexit process and, as ever, over the busy tax year-end.

    Irrespective of this short term volatility in markets and the impact on consumer confidence, the long-term growth and structural opportunity in the UK savings market continues to excite us. We believe our platform and investments position us well to capture this growth and deliver long-term growth for our shareholders.

    I would like to thank our clients for their continued support and recommendation and I would also like to recognise my colleagues for their hard work and commitment. All these improvements to our client service and proposition would not be possible without the immense contribution from our talented and diverse population of employees. We continue to focus on attracting, developing and retaining outstanding people, embedding our client driven culture, improving employee well-being and providing training programmes to ensure we have a strong talent pipeline of people who can deliver our future strategic goals, thereby underpinning our future growth.


    Chris Hill

    Chief Executive Officer

    Hargreaves Lansdown - Half-year Report @HLInvest https://www.voxmarkets.co.uk/rns/announcement/26b6ce21-d2a9-497e-a6c9-9bd445ea889d

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    Last edited: Jan 29, 2019
  5. Groucho

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    Sunday Times 26/5/19
     

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    Sunday Times 23/6/19
     
  7. Groucho

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    08 August 2019

    Hargreaves Lansdown plc


    Results for theyear ended 30 June 2019



    Highlights:

    · Net new business of£7.3 billion

    · Strong growth in Assets Under Administration, up 8% to£99.3 billion

    · 1,224,000 active clients, an increase of 133,000 in the year

    · Profit before tax increase of 5% to£305.8 million

    · Total dividend up 5% at 42.0 pence per share

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    Chris Hill, Chief Executive Officer, commented:

    "We are pleased with the underlying strength and resilience of our business and our increase in market share. We continue to focus on our clients' evolving needs and where we see opportunities for growth. We now have a record 1,224,000 clients and Assets Under Administration (AUA) of£100 billion.

    The second half of the financial year was particularly strong, supported by our best ever tax year end with clients continuing to use their ISA and SIPP allowances. Our Active Savings launched with a full tranche of term deposits and through considerable momentum, now has over£1bnAUA. Our HL Select Global Growth Shares fund now has over£350 millionAssets Under Management and is our most successful Select fund launch to date.

    I have apologised to all clients who have been impacted by the recent problems around the Woodford Equity Income Fund, because we all share their disappointment and frustration. In these difficult times we recognise the financial and personal impact the gating of the fund has had on them. Our priority is to support them, keep them informed and ensure that the fund reopens as soon as is practicable.

    We recognise that there are industry headwinds, but we continue to execute our strategy and remain on track. We are confident that we are well placed to help our clients prosper, whilst continuing to deliver strong and sustainable returns for shareholders."



    Chief Executive's Review


    Continued execution of our strategy

    2019 saw Hargreaves Lansdown continue to execute our strategy. We delivered strong growth, increased market share and maintained our focus on clients' evolving needs and the service we provide.

    Net new business was £7.3 billion and we welcomed a further 133,000 net new clients. We now have a record 1,224,000 clients. I am also pleased to report that AUA exceeded £100 billion for the first time in July 2019. We take great pride in what we do and I am confident that we are well positioned for the future.

    This growth came despite external challenges, including uncertainty over Brexit and the wider macro-economic outlook. Investor confidence was understandably volatile in the UK market overall and, by our own measures, it hit record lows in the second half of 2018 with the Investment Association reporting the worst quarter ever for net retail fund outflows in Q4 2018.

    Our growth and the resilience of net new business reflects the execution of our strategy and our relentless focus on putting the client at the centre of all that we do. The second half of our financial year was particularly strong, driven by a number of ongoing diversification initiatives that broaden our accessible market and by improved marketing effectiveness. This contributed to our best ever tax year end as clients continued to use their ISA and SIPP allowances.

    We continue to develop new and innovative products and services where there is client need. Our new Active Savings service has gained considerable momentum and made a significant contribution to growth. Its AUA went above £1 billion in early July. We launched the HL Select Global Growth Shares fund in May 2019, with £298 million placed ahead of the launch. We were also delighted to welcome new clients from Witan, JP Morgan and Baillie Gifford during the year, continuing our successful history as a provider of choice for organisations wishing to transfer direct books. These books contributed £1.2 billion.

    Due to this growth and our diversification initiatives, we have continued to add market share. We have grown our share of the direct to consumer platform market to 40.5%1 and increased our share of the execution only stockbroking market to 34.1%2.

    I would like to thank our clients for their continued loyalty and support. Our relationship with them is based on a desire to help them to save and invest with confidence and build for their long-term prosperity and our strong retention rate of 93.6% is a demonstration of our strong service performance.

    The hard work of colleagues is behind all that has been achieved and I would also like to thank them for their dedication and resilience throughout the year.

    Serving our clients

    We have a significant opportunity in an evolving and growing market. Societal changes such as improving life expectancy, the transfer of long-term savings from companies to individuals, and a prolonged low interest rate environment offering minimal risk-free returns all require that individuals and families build their own wealth and capital. This is against a backdrop of ever-shifting regulatory and tax environments. In this complicated world, our clients need support more than ever.

    Our business grows as we add clients then deepen our relationship with them. We aim to develop this throughout their financial lives as they save and invest to accumulate before moving into a decumulation phase in retirement. By providing the service and solutions that they need, when they need them, engaging with them at the right times and communicating in the ways they prefer, we optimise the value that we can bring to them.

    We have worked hard this year on the areas that our clients tell us cause them inconvenience, such as transfers, where we have reacted by facilitating higher numbers of online transactions and a reduction in overall completion times. We have improved our Helpdesk service by responding to high volume call drivers, providing new training to managers and through deployment of technology tools. We have also maintained our marketing efforts through quieter periods of client activity. It is through uncertain times that clients seek knowledge, information and our insight more than ever.

    Given all of the hard work and resource we put into service, I was delighted that Hargreaves Lansdown received top marks from Platforum in its November 2018 UK D2C Investor Experience report for customer service, as well as for our online and mobile propositions. We also won the Boring Money Best Customer Service award, sponsored by The Times and The Sunday Times. We have achieved records in our internal measures for client satisfaction with our Helpdesk and improved our performance in Operations, whilst at the same time improving efficiency.

    At the heart of our business is an extensive and complex technology infrastructure. We ensure that the monitoring and maintenance of our systems is thorough and rigorous to ensure that client information is always safe and secure and our hardware, software and client portals enable a smooth and efficient experience. This year we have delivered a number of key projects that have improved our ability to handle electronic trading volumes and to make our back office systems and websites work faster. We also completed changes to the way our clients log into the platform, making the process simpler and safer. Throughout all of these changes, platform uptime has been maintained and we have made enhancements to capacity and responsiveness of core applications.

    Investing for the future

    A key part of maintaining a lifelong relationship with clients is to provide a home for their assets not only throughout their lifetime, but through the market cycle. To that end, we continue to invest in our proposition. Our research told us that clients wanted to manage their cash savings as well as their investments all in one place with simple switching and easy execution. We therefore "soft" launched our cash management service, Active Savings, in December 2017 and spent some time to get the proposition right, adding more banks and making sure that the rates on offer were the best they could be.

    We launched with a full tranche of term deposits and a focus on growing AUA in September 2018. In order to achieve this and establish a leading presence in this market, we have reduced our revenue margins to make sure that the rates we can offer on the platform are competitive. We followed this up by introducing Easy Access in January 2019. We have been pleased with the growth that we've seen this year which has taken us to almost £1 billion of AUA as at 30 June 2019. Our rates continue to be among the best available to the 28,000 clients who have opened accounts and we are committed to maintaining top quartile rates.

    Through the uncertainties of 2018, clients indicated a desire to invest in global funds and this continued into early 2019. We therefore launched the HL Select Global Growth Shares fund in May 2019.

    This now has over £350 million of AUM, our most successful Select fund launch yet. It is a high conviction fund that will typically hold shares in 30-40 companies and is actively managed by our experienced team in Bristol. We are committed to transparency and engagement with fund holders, so for all our HL Select funds we publish every shareholding once dealt, as well as the complete portfolio breakdown and regular updates on performance.

    As Hargreaves Lansdown grows, it is paramount that we invest so that we continue to provide the very best service to our clients and develop capabilities to maximise the significant long-term market opportunity. By continually developing our people, technology and marketing capabilities we believe we will nurture the trust, engagement and ease of doing business that is critical to our success.

    The Wealth 50

    Behavioural economics suggest that when people are presented with a wide or unfamiliar choice, for example about financial planning, this can result in them not making any decision at all. One tool that people can use when making investment decisions is 'best buy' lists. In their Investment Platforms Market Study, the FCA found that 'best buy' lists and/or model portfolios help investors pick independent well-performing funds.

    We are committed to a favourite funds list as one of many tools which are important for our clients.

    At Hargreaves Lansdown, we have had a favourite funds list since October 2003. This is now known as the Wealth 50 following its relaunch in January 2019. This was as a result of feedback from 6,500 current and potential investors who told us they wanted a shorter, more focused list with the ability to filter by objective, risk, yield and cost.

    The process of selecting and reviewing the Wealth 50 constituents is a rigorous one driven by our 14 person investment research team. They devote thousands of working hours every year to conducting quantitative and qualitative analysis of fund managers and the funds. This process helps identify managers who have added value over the long-term through repeatable skill rather than market movements or thematic biases.

    This research has resulted in the selection of funds which have on average outperformed both their relevant benchmark index and their sector average after charges, by 5.8% and 11.8% respectively over the period they have been on our favourite funds list.

    It is important to note that Hargreaves Lansdown is paid directly by our clients, not by fund managers. Our fee income is calculated as a percentage of the clients' assets held on our platform, and we earn the same fee regardless of the funds our clients hold.

    We use the combined buying power of our 1.2 million clients to get the lowest cost we can for each fund, as a lower price delivers better investment returns. These discounts are passed in full to our clients. In 2018, we saved our clients £61 million of fund management costs as a result of the terms we have negotiated on their behalf and the Wealth 50 relaunch has enabled us to deliver a further £7 million of discounts to clients.

    Woodford Equity Income

    The nature of active fund management portfolios means that there will be periods of outperformance and underperformance by all managers. There are a limited number of individuals who deliver outperformance over their peers and benchmarks over the long term, and investors who own these managers' portfolios benefit from these outcomes.

    We have followed Neil Woodford's career from 1999, when he was at Invesco Perpetual, and supported the launch of his new venture in 2014. For the first two and a half years from launch, the Woodford Equity Income fund was among the top performers in the sector, but at the end of 2016 the fund started to underperform. We had seen the fund manager display similar periods of underperformance in 1999, but then bouncing back strongly to 2003 and again underperforming in 2009, rallying strongly to 2016.

    We believed there was a reasonable expectation that the fund would do the same again. As a result, the research process concluded that the Woodford Equity Income Fund should be kept on our favourite funds list.

    As I detailed in my submission to the Treasury Select Committee, we began an active dialogue with Woodford in November 2017 over the proportion of small and unquoted assets in the Woodford Equity Income fund.

    During the course of 2018, redemptions from the fund began to increase. This meant the manager sold stocks where he had the least conviction to meet demands for investor cash. This in turn meant the unquoted portion of the portfolio was not reduced as quickly as we had desired.

    On 3 June, the authorised corporate director, Link Asset Services, decided to suspend dealing in the Woodford Equity Income Fund. We responded quickly and decisively. We immediately removed the fund from the Wealth 50, communicated the suspension to clients and dealt with all calls and emails received since in a timely and orderly manner. We waived our platform administration fee on direct holdings in this fund and we believe that Woodford Investment Management should suspend collecting its fees whilst their investors cannot access their cash. This is the right thing for them to do.

    Since these announcements, Hargreaves Lansdown's own business flows and service levels have held up well. We have actively engaged with external stakeholders, including Link, Woodford Investment Management, and the regulator as well as the financial press which followed the story closely, keeping them informed. Our priority remains to support our clients and pressing for the Woodford Equity Income Fund to reopen as soon as is practicable, whilst protecting the interests of all investors.

    I am determined that we learn from events such as these. I have apologised to all clients who have been impacted by the recent problems because we all share their disappointment and frustration. In these difficult times we recognise the financial and personal impact the gating of the fund has had on them. Philip and I, together with the unanimous support of the Board, have therefore decided that we will not take a bonus award for 2019.

    Our aim remains to provide the best possible service and choices to allow people to manage their investments simply and effectively. The shortcomings of one fund should not detract from the benefits of favourite fund lists like the Wealth 50. We are confident in the robustness of how we analyse, research and compile our favourite fund list with a focus on ensuring best value for clients. Nonetheless, we recognise that there will be learnings and improvements we can make from reviewing this event and we will ensure we apply these to benefit our clients in the future.

    The regulatory environment

    The FCA's final Investment Platforms Market Study report was published in March 2019. The FCA confirmed its view that the platform market is mainly working well. There is not excessive profitability, consumers who pay more get more and that platforms help consumers make informed investment decisions. There are no material barriers to entry in the market and whilst the cost of customer acquisition is a barrier to expansion, making transfers between platforms easier should be an appropriate solution.

    We welcome the proposed remedies which are reflective of our own core value of putting the client first. The FCA cited the need to make transfers easier and Hargreaves Lansdown is already at the forefront of this, chairing the industry's STAR working group. We anticipate that the study's focus on switching will enable a faster and more straightforward process.

    We also believe helping clients to compare and contrast platform services and fees and making it easier for them to switch between providers, will lead to healthier competition. This should promote greater engagement among clients across the entire industry. We look forward to working with the FCA on the outcomes from this study.



    Conclusion and outlook

    I am pleased with the performance and progress we have made throughout a very challenging 2019. We recognise that there are industry headwinds and that the environment continues to be difficult and we remain vigilant to these conditions. However, we are confident in the underlying strength of our business and that we are well placed to help our clients prosper whilst continuing to deliver strong and sustainable returns for shareholders.


    Chris Hill

    Chief Executive Officer

    7 August 2019


    1 Source: Platforum UK D2C Market Update (July 2019)
    2 Source: Compeer Limited XO Quarterly Benchmarking Report Quarter 1 2019

    Hargreaves Lansdown - Final Results @HLInvest https://www.voxmarkets.co.uk/rns/announcement/d7afc1a1-d5c7-4e4d-a51e-3a998ac888bb
     
    Last edited: Aug 8, 2019
  8. Groucho

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    Hargreaves Lansdown abolishes controversial exit fees for clients
    By Jonathan Jones

    STOCKBROKER Hargreaves Lansdown has removed nine investor charges, including controversial exit fees, as it seeks to repair its reputation after its involvement in the Neil Woodford debacle, The Daily Telegraph can reveal.

    In the wake of the freezing of Mr Woodford’s Equity Income fund, this newspaper called on the broker – Britain’s largest – to let affected customers switch providers free of charge.

    Hargreaves had refused to do so, but has now decided that all investors will not be charged fees normally levied ostensibly to cover the cost of administrative tasks, including selling lines of stock or funds when moving money elsewhere.

    The move will save customers about £3m a year based on the rate of switches in the past.

    Previously, Hargreaves charged a £30 account closure fee, plus £25 per fund or stock and £25 for any cash held. These fees – and a £295 plus VAT charge for closing a pension early – have now been scrapped.

    By removing these costs, investors will potentially save thousands of pounds when switching accounts. One Telegraph Money reader faced a £2,000 bill to move his £800,000 portfolio to another firm.

    Hargreaves’ Danny Cox said he hoped the rest of the industry would follow suit. Pressure now builds on the 16 major providers that still charge a fee, including The Share Centre and AJ Bell, as well as wealth managers including St James’s Place.

    Hargreaves Lansdown stopped charging customers three other fees in June: the internal stock transfer fee of £12.50, used either for transferring shares between spouses or from an Isa to a pension; a £75 fee for pensions going into “drawdown”; and a £25 cost to transfer a shareholding to a certificate.

    Two other charges were scrapped at the start of September: the 1pc fee to reinvest income in a fund; and the £1.50 per fund charged if a customer did not have sufficient cash in their account to cover management fees.

    Mr Cox said: “This makes our charging structure one of the simplest and most transparent in the market.”

    Daily Telegraph 19/09/19
     
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    The Woodford connection has battered Hargreaves shares. Can they recover?

    The investment shop was a key backer of the former star manager and the market seems to fear for the effects on its customers’ loyalty

    Richard Evans

    The Woodford saga is not yet over but we know roughly what is going to happen: investors in his flagship fund are expected to get the first of their money back in the new year but could suffer losses of about 33pc in the process.

    Woodford Investment Management itself will be wound up, but what of the other business closely involved in the disaster, Hargreaves Lansdown, which this column tipped in January 2017?

    Hargreaves’ involvement with Woodford came in two forms: it included his funds in its influential best-buy list and held stakes in them via its “multi-manager” funds. As a result, a large proportion of its customers had exposure to the fallen fund manager.

    It’s easy to imagine that those clients might blame Hargreaves for their losses, or just lose some of their faith in the firm, and move elsewhere. This certainly seems to be what the stock market fears: shares in Hargreaves have fallen from a high of £24.33 in May, just weeks before Woodford suspended dealing in its main fund, to £18.18 at yesterday’s close – a decline of 25.3pc.

    But will its existing clients actually desert the firm for a rival? And will potential new ones shun Hargreaves and choose a different platform?

    As we have written in the past, we are sceptical about such an outcome. Customers of financial firms seem to be remarkably reluctant to switch, even under extreme provocation. Questor is thinking especially of the IT disaster that overtook TSB last year: customers were unable to spend their own money as the bank in effect closed for business but since then it has lost remarkably few of them.

    When businesses make these huge mistakes it seems that customers fume while the situation lasts but forget about it once things return to normal.

    Hargreaves is famous for the efficiency and reliability of its systems and for its customer service, none of which has been called into question by the Woodford saga. Questor wonders whether clients will consider that Woodford has already happened, they can’t do anything about it now, so why risk having to put up with inferior service from a rival in future just to vent their frustration at Hargreaves?

    Figures published by the broker since the debacle began seem to bear out this view. On Oct 10 it released a trading update for July, August and September – months in which Woodford was in every newspaper. Despite all that negative publicity, Hargreaves gained 35,000 customers on a net basis, which was more than the 29,000 it added in the same three months of last year. New clients accounted for £1.7bn of assets, again better than the £1.3bn achieved last time. It’s true that £900m of this sum came from bulk transfers from two fund groups that had closed their savings schemes but Hargreaves also spoke of “organic new client growth [and] ongoing wealth consolidation on to our platform from existing clients” – hardly signs that customers new and old had decided to give the firm the cold shoulder.

    If Hargreaves can turn in that kind of performance while coverage of Woodford was at its height, Questor has few fears about its attractiveness to clients once the scandal does eventually die down.

    We tipped the stock at £13.21 and readers who followed our advice are sitting on a gain of 37.6pc. We have every confidence that the shares will recover from recent weakness once memories fade and will therefore hold.

    879C0D29-8FCF-4997-BEEF-DD1804FA923D.jpeg


    Daily Telegraph 20/11/2019
     
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    Cut pension fees and retire sooner
    An American fund firm’s low-cost pension could help you to quit the rat race early, finds Sam Meadows

    More than half of savers are in “expensive” self-invested personal pensions (Sipps), research has found, as one of the world’s largest money managers rolls out Britain’s cheapest offering.

    Vanguard, an American fund management firm, will launch its first Sipp in the new year at an annual cost of just 0.15pc. There will be fund fees on top, so a saver who invests in its popular LifeStrategy range of funds would pay 0.37pc in total, capped at £375 a year.

    The same funds with Hargreaves Lansdown or AJ Bell would cost a total of 0.67pc or 0.47pc respectively.

    But 55pc of savers pay more than 1pc for their Sipps while one in 10 pays more than 1.5pc, according to research from Profile Pensions, an adviser. The average charge on this type of pension is 1.09pc and just 14pc of those surveyed paid less than 0.5pc. Unlike for Sipps, charges for company pension schemes into which employees are automatically enrolled are capped at 0.75pc a year.

    Michelle Gribbin of Profile Pensions said: “Many people aren’t aware they even pay fees, let alone how much money they could be losing – it’s costing them thousands of pounds over a number of years, which could easily be avoided. Most people should be paying much less for Sipps.”

    The analysis suggests that paying lower fees on a pension could save someone £18,000 over 20 years. However, the difference could be even greater.

    A Telegraph Money calculator shows the power of cutting investment fees. Take someone who starts with a pot of £100,000, pays in £500 a month and is charged a platform fee of 0.5pc and a fund fee of 0.8pc. After 30 years their savings would be worth £615,915 with typical investment returns. If the fees were cut in half, the saver would have a pot of £718,905 – a difference of £102,990.

    Profile Pensions’ research also found that women were 19pc more likely than men to be in what it defined as a “rip-off” Sipp – one that costs more than 1.5pc. A higher proportion of women did not know how to find out their pension fees, it said.

    The over-50s and those with older pensions typically taken out in the Nineties were more likely to be paying high fees. Ms Gribbin said: “These people should act quickly to check if they’re being overcharged and take measures to reduce their charges.”

    Vanguard’s Sipp will be available from early next year to anyone who can save at least £100 a month or start with a £500 lump sum. The 0.15pc charge will apply across all Vanguard accounts, so those who also hold an Isa with the company will not pay more. It will introduce drawdown options for those over the age of 55 in 2020-21.


    Daily Telegraph 07/12/2019
     
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    Analyst presentation

    Hargreaves Lansdown will be hosting an analyst presentation at 9.00am on 31 January 2020 following the release of these results for the half year ended 31 December 2019. Attendance is by invitation only. A conference call facility will be in place with the following participant dial-in numbers - UK (toll free) 0800 640 6441, UK (local) 020 3936 2999 and all other locations +44 20 3936 2999. The participant access code is 601416. Slides accompanying the analyst presentation will be available at www.hl.co.uk/investor-relations and an audio recording of the analyst presentation will be available by close of business on the day.

    The Interim Results contain forward-looking statements which have been made in good faith based on the information available to us at the time of the approval of this report and should be treated with caution due to the inherent risks and uncertainties, including both economic and business risk factors some of which were set out in the 2019 Annual Report, underlying such forward-looking information.

    Unless otherwise stated, all figures below refer to the six months ended 31 December 2019 ("H1 2020"). Comparative figures are for the six months ended 31 December 2018 ("H1 2019"). Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances the sum of the numbers in a column or a row in tables contained in this document may not conform exactly to the total figure given for that column or row.



    LEI Number: 2138008ZCE93ZDSESG90


    Chief Executive's Statement


    Growth in challenging market conditions

    The first half of our financial year was another period of growth for Hargreaves Lansdown as we reinforced our support for our clients and invested in our differentiated service. Our purpose remains to empower people to save and invest with confidence. To do this we must continuously deliver an exceptional client experience and respond to their evolving needs.

    The external market was challenging in the second half of 2019, with political uncertainty, a General Election in the UK, Brexit and world trade tariffs all raising concerns. As we have seen in previous unpredictable periods, client confidence and retail investment flows were affected. The Investment Association reported weak retail fund flows throughout and the suspension of the two Woodford funds also contributed to the general unease.

    Against this backdrop, we continue to implement our strategy. The benefits of our client focused business model, the broad range of our investments and savings proposition and our leading client service have seen AUA rise 22% over the past year to £105.2 billion and a 12% increase in profit before tax to £171.1 million. Client numbers grew by 50,000 to 1,274,000 and client retention is consistent with prior periods at 93.3%. In addition, our latest share of the direct to consumer platform market has increased from 40.5% to 41.8%*.

    Earlier this month we entered into an agreement to sell FundsLibrary Limited, our data management and digital services business, to Broadridge Financial Solutions, Inc. The decision to sell reflected our view that, as a business to business service, it was no longer core to our overall business. The deal is expected to complete at the end of February 2020 and I wish staff, management and business every success in the future.

    * Source: Platforum UK D2C: Market Overview, February 2020 (provisional), data as at 30 September 2019.

    Delivering value for clients through our service

    Our clients remain at the centre of everything that we do. They require information that builds knowledge and confidence and helps them to understand the decisions they have to make to meet their individual needs. We provide this together with an ever greater range of investment and savings products and solutions, and make it easy to access and manage them all in one place. With an ever-shifting regulatory and tax environment, our clients need support from us more than ever before.

    By providing the services and solutions our clients need, when they need them, engaging with them at the right times and communicating in ways they prefer, we optimise the value we can bring to a lifelong relationship and help them to achieve outcomes that are right for them.

    As a leading financial services company we take our responsibilities very seriously, striving to play our role in setting the highest standards and recognising the challenges as a result. We are committed to transparency and engagement with our clients as we support them with their evolving needs over the long term. Over the past year, we have removed various fees such as exit fees and ancillary charges which leaves us with what we consider is now one of the most transparent pricing structures in our sector.

    Increasing numbers of our clients are approaching retirement and we are mindful of the challenges they face. During the period we launched a range of 'wake up' packs, helping clients to better understand their options and challenges regarding tax, income and investment.We also made improvements to our annuity process to help clients to secure enhanced annuities, and hence higher income, where available. Although interest rates remain low, we maintain our view that annuities are an important part of a range of tools we offer to get to the right outcomes for clients in retirement.

    The period has seen continued growth and development of Active Savings as an innovative way to manage cash savings, which now has over £1.6bnof AUA and 46,000 customers using the service. This provides access to better rates for those that hold cash, whether they are in accumulation phase or in retirement. Banks increasingly recognise the relative importance of this platform as a means to raise deposits and development has continued with ICICI now offering an Easy Access Account and two new banks offering Fixed Term products. We continue to look at ways of extending this proposition further, including offering a new Cash ISA account in the coming months.

    Our Multi-Manager fund range began a project late in 2018 to transfer assets they invest in into segregated mandates rather than off-the-shelf retail funds. This process gives the team greater control over who manages the underlying funds, and how they run them, as well as reducing the cost of being invested in these funds to our clients. The process is working well as we extend this to the benefit of investors.

    Our values and culture underpin our client service and proposition

    Our values and our culture are hugely important to us and underpin our client focus. I firmly believe that not only are these critical to how an organisation reacts in tough situations, but how it is prepared to learn and put that experience to work to the benefit of clients. The Woodford fund suspensions were disappointing and frustrating for us and our clients, but their impact and the learnings have been incorporated into developments to our service.

    The FCA's 2017 review into best buy lists highlighted that they were a positive tool for investors and help them to make decisions. Our clients agree with this. However, we have now carried out a thorough review of our Wealth 50, spoken to clients to ascertain their views about our favourite funds list, and sought other independent insights. As a result, we will be making changes over the coming months to incorporate what we have learned from this research, including a greater focus on transparency of process. This will include adding more detail, greater transparency and a new structure to our research notes, for those clients who want a deeper level of information, and new functionality on our platform to help those who want to follow a more independent path.

    It has been well documented that Philip Johnson and I, together with Lee Gardhouse and Mark Dampier decided to waive our bonuses for the 2019 financial year and we also waived platform fees for both the Woodford Equity Income Fund and the Woodford Income Focus Fund. A dedicated helpdesk team was created to support clients impacted by the closure of the Woodford Equity Income fund, and guide them through the coming months as it is wound up. We have been in regular and close communication with our clients and kept them fully informed with any updates. This has included writing to any of those invested in Woodford Equity Income, Woodford Income Focus and Woodford Patient Capital, either directly or through our Multi-Manager portfolios, 18 times with updates since the suspension of the Woodford Equity Income in June.

    Additionally, we have communicated throughout the period with a number of parties to encourage a broad consideration of options for the Woodford Income Focus Fund that would maximise value for unit holders. We polled clients to ensure that we were aligned to their needs, asking for their preferred outcome. We are pleased that the appointment of an alternative manager brings a resolution for these unit holders and that the fund will be open again in due course.

    Finally, we are adding non-executive directors to the Hargreaves Lansdown Fund Managers Limited (HLFM) board to provide independent challenge and oversight closer to investment decisions. The first, John Troiano, joins us from Schroders where he was Global Head of Distribution. John's global asset management and investment experience will add further breadth to the knowledge base and skills to both the Plc Board as well as HLFM.

    Dividend

    The Board believes the Group has strong profitability, liquidity and a capital position to execute its strategy without financial constraint and to operate a sustainable and progressive ordinary dividend policy. We remain confident in our business model and the Board has declared a 9% rise in the interim dividend to 11.2 pence per share. The Board remains committed to paying special dividends when sufficient excess cash and capital exist after taking account of the Group's growth, investment and regulatory capital requirements at the time.

    Outlook

    We remain excited by the structural growth opportunity in the UK savings and investments market and remain confident in our ability to deliver sustainable growth through the cycle. 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. We believe Hargreaves Lansdown is well placed to support them with these challenges through our client focused business model, broad investment and savings proposition and leading client service.

    The strength and resilience of our business model has ensured that the business delivered continued net new business and profit growth during the period. Since the Election we have seen an increase in investor confidence, which has translated into increased client activity and early signs of renewed net flows into retail funds. We hope that this sentiment will continue through the key tax year end season and beyond, and remain confident that we are well placed to help our clients prosper and deliver strong and sustainable returns for our shareholders.

    I would like to thank our clients for their continued support and recommendation and I would also like to recognise my colleagues for all their hard work, dedication and commitment during a challenging period.


    Chris Hill

    Chief Executive Officer

    31 January 2020

    Hargreaves Lansdown - Half-year Report @HLInvest https://www.voxmarkets.co.uk/rns/announcement/2d4d31ba-1101-4268-9e65-f31da27630a2
     
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    Barclays Capital Securities Limited
    06 February 2020

    PRESS RELEASE


    United Kingdom, 6 February 2020


    Accelerated bookbuild offering of approximately £500 million of existing ordinary shares in Hargreaves Lansdown plc


    Peter Hargreaves (the "Vendor") is selling approximately £500 million of existing ordinary shares in Hargreaves Lansdown plc ("Hargreaves Lansdown" or the "Company"). The sale will be undertaken via an accelerated bookbuild offering to institutional investors (the "Offering").


    The Offering is being undertaken to enable Peter Hargreaves to diversify his assets. Peter Hargreaves intends to remain a significant shareholder for the longer term following the completion of the Offering.


    Peter Hargreaves said, "I have decided to sell some of my shares in Hargreaves Lansdown. This is part of a process of long-term financial planning to diversify my assets. I remain, and will continue to be, a substantial shareholder in Hargreaves Lansdown. I am very proud of the business that I co-founded and helped build."


    Barclays Bank PLC, acting through its investment bank ("Barclays") is acting as Sole Global Coordinator and Bookrunner and Numis Securities Limited ("Numis") is acting as Co-Bookrunner for the Offering and Evercore Partners International LLP ("Evercore") is acting as Financial Adviser to the Vendor. Bookbuilding will commence immediately. The right is reserved to close the books at any time. The sale price of the shares and the final size of the Offering will be determined after the books have closed. The Company will not receive any proceeds from the Offering.
     
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    Daily Mail 27/02/2020
     
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    Trading update

    14 May 2020


    Hargreaves Lansdown plc ("Hargreaves Lansdown" or the "Company" or the "Group") today publishes a trading update in respect of the four month period to 30 April 2020 ("the period").


    Highlights

    · Net new business of £4.0 billion in the period

    · Year to date net new business of £6.3 billion

    · Assets under administration ("AUA") of £96.7 billion as at 30 April 2020

    · 1,368,000 active clients, with net new clients of 94,000 in the period

    · Year-to-date total revenue of £448.1 million, up 13%, supported by record dealing volumes


    Chris Hill, Chief Executive Officer, commented:

    "During this exceptionally volatile and challenging period, Hargreaves Lansdown has performed strongly, adding 94,000 net new clients and £4.0 billion of net new business.

    We have and continue to be focused on the health and well-being of our colleagues and their families. We are not seeking government assistance, nor are we furloughing any employees or enacting any redundancy programmes. I would like to thank all my colleagues for their hard work, commitment and unwavering focus on delivering the right outcomes for our clients throughout this period. I am proud that their resolve and dedication has risen in response to the challenges we are all now facing and that we have been able to support all of our clients through a time of elevated and unprecedented volumes of activity.

    The investment that we have deliberately undertaken over the past three years into our service, its scalability, our marketing and our technology has enabled us to support and protect the interests of our clients throughout the COVID-19 crisis. In these challenging times, it is critical we can support people in managing their investments and savings according to their desired outcomes. Retail investors have a vital role to play in the recovery and I would like to thank all of our clients for their continued support.

    There remains much uncertainty in the coming months and hence, like many businesses, we cannot predict levels of new business or client activity. However, we are confident that the strategy we have invested in, with our focus on the needs of UK investors and savers and delivering the highest level of client service, means that we are well positioned to deliver continued attractive long-term growth."

    B62CA7B7-3233-4E7A-9554-34D346522327.jpeg

    The past four months have presented unique challenges for society, governments, businesses, stock markets and investors. Hargreaves Lansdown's strategy, business model, breadth of proposition and focus on service have allowed us to support our clients and colleagues through these challenges and perform strongly. This has resulted in client engagement and activity building through the period, particularly across the tax year-end, in terms of net new business, net new clients and share trading volumes.

    Net new business was £4.0 billion during the period (2019: £2.9 billion), taking year to date net inflows to £6.3 billion(2019: £5.4 billion). This is a strong rebound from the difficult macro and political environment for retail investment flows during the first half of the financial year. Net new business growth was driven by the usual factors of existing clients using their tax allowances during the ISA season, ongoing wealth consolidation onto our platform from existing clients and flows into our cash management service "Active Savings", where AUA is now over £2 billion. This growth was further accelerated following the significant market falls in early March, as existing clients added money to their accounts and new clients joined Hargreaves Lansdown to take advantage of the opportunity to invest at lower prices.

    Net new clients for the period were 94,000, taking total active client numbers to 1,368,000. Our client service, reputation and breadth of proposition are core to Hargreaves Lansdown and were particularly important during the COVID-19 events. As we typically do during this period, we increased our marketing and advertising presence, this year supplemented by a campaign centred on London and the South-East. The campaign "Switch your money ON" was particularly aimed at the ISA market along with overall brand awareness. This, together with our direct digital marketing expertise, resulted in substantial numbers of net new clients in the period, taking year to date net new clients to 144,000. Many of these clients are relatively new to investing and over the coming months, we will be focused on how we can support them through a lifetime of investing to meet their long-term desired outcomes beyond the near term investment opportunities resulting from COVID-19.

    Falling stock markets driven by the global impact of COVID-19 have led to a negative market movement in AUA in the period of £12.4 billion. There was also a withdrawal of cash by one of our founders following a reduction in their Hargreaves Lansdown plc shareholding earlier this year. When combined with net new business and market movements, AUA was £96.7 billion as at 30 April 2020.


    Revenue

    Revenue for the period was £190.2 million (2019: £159.5m). The period had two distinct phases where revenues initially benefited from a greater level of AUA at the beginning of the calendar year and a higher cash revenue margin. However, at the start of March, the significant market falls caused by COVID-19 and the subsequent emergency cuts to the UK base rate of interest negatively impacted asset-related revenue streams. These impacts were more than offset by significantly higher stock broking revenues driven by record dealing activity. March and April both saw a series of new daily records and monthly dealing levels more than double the highs ever experienced before this period. Overall, this has resulted in year to date revenue of £448.1 million (2019: £395.9m), 13% higher than last year.

    We do not know whether these elevated dealing volumes will continue, but in light of the volumes seen in the period, we now expect the full year revenue margin on shares to be in the range of 35bps to 40bps. As previously discussed, interest rate changes do not immediately impact our net interest margin because of the use of term deposits. Based on there being no further interest rate changes, our guidance for the full year cash margin would be in the range of 70bps to 75bps. As normal, we will give out revenue margin guidance for the next financial year in our year-end results scheduled for 7 August 2020.

    Elevated levels of client acquisition, trading volumes and debit card payments onto the platform boost revenues but also come with associated costs. These activity-related costs will flow into the second half of our financial year, together with our brand marketing campaign. In addition there has been a notified increase in the FSCS' budget for 2020/21, which will give rise to a likely charge in this current year of between £12.5 million and £13.0 millioncompared to £6.8 million last year.


    Dividend

    The Board considers these to be strong trading results, validating the Group's strategy and business model. The Group continues to have a robust capital and liquidity position, additionally supported by the receipt of £40 million Funds Library net disposal proceeds at the end of February 2020. The Board's current intention remains to operate its stated dividend policy for the 2020 financial year.


    Response to COVID-19


    Our Colleagues

    We have been focused throughout on the welfare of our colleagues and ensuring that they can continue to deliver the levels of client service we and they aspire to within a safe and healthy working environment. This has seen the majority of our colleagues move to working from home, with certain functions remaining in the office where necessary to support clients. The office environment has adapted to ensure that appropriate social distancing and hygiene practices are all maintained. The investments we have made in our service, technology and operational resilience over the past three years have been critical to this outcome.


    Our Clients

    These are difficult times for our clients, with each individual having their own concerns over the health, welfare and financial security of themselves and their loved ones. We have done our utmost to support them where possible, from increasing the numbers of colleagues on phone lines, deploying more resources to supplement our usual timely and informative market updates with further insight and comment, enabling more and more digital management of their affairs via mobile and website journeys and ensuring protection of their identity and data.


    Our Community

    We are a firm believer in playing a positive, supportive and leading role in our local community and that has never been more so than now. We support our local charities through our charitable trust, the HL Foundation, and we have stepped up this support through this crisis particularly for NHS charities, in support of the Bristol Nightingale Hospital and through a number of other initiatives. Our colleagues have also stepped up with volunteering and various fund raising activities.
     
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    Chief Executive's Review

    Growth through challenge and change

    2020 has been a significant year for Hargreaves Lansdown and I am pleased at how we have continued to execute our strategy and provide support for our clients in an external environment of persistent challenge.

    In hard times there are challenges for all of us as individuals, clients and colleagues. I would like to take this opportunity to thank our clients for their resilience and continued support and my colleagues for their hard work, commitment and ingenuity in managing the tremendous change that COVID-19 has brought in the midst of our busiest time of year. Despite the personal upheaval we have all experienced, it has been inspiring to see the support we have provided to our clients and it is through their performance that we have been able to deliver strong outcomes for all our stakeholders.

    The first half of the year was characterised by political uncertainty around Brexit and Trade Wars. At the time, we were confident that any certainty provided by the election result would improve investor confidence and lead to a strong performance through the second half. Our thinking was confirmed over the rest of the year where, despite the unforeseen ongoing pandemic and the significant challenge this has brought to the world, HL has delivered a performance of great strength.

    The benefits of putting our clients at the heart of everything we do combined with our investment in the scalability, diversity and resilience of HL's business model, have been demonstrated in its response to the COVID-19 crisis. At the same time we have completed significant strategic initiatives including launching our new Wealth Shortlist, delivering our first multi-channel advertising campaign as well as completing further work to enhance governance, scalability and resilience in our service to clients.

    Building resilience over the long term

    I believe that the acute challenges of this year have reinforced the importance of resilience for us all. Clients must have confidence in HL's ability to remain secure and provide the best service to them. But clients must also build resilience into their savings and investments to enable themselves to be confident to manage through difficult periods and events.

    At Hargreaves Lansdown we have a very strong purpose: to empower our clients to save and invest with confidence over the long-term; and this is supported by a culture and values that are focused on helping our clients in the right ways to deliver the best outcomes for them. We recognise how complex the UK wealth landscape has become and the challenge this brings to serve clients. Financial requirements are becoming increasingly complicated: as people live longer, as long-term saving obligations move from companies to individuals and the low interest rate environment persists with added volatility and uncertainty; people need support.

    The tools, knowledge and insight that we provide as part of our service, equip and empower our clients to manage their savings and investments. Diversification is a key part of building resilience into a portfolio and our proposition offers clients the opportunity to save and invest across a spectrum of asset classes, including in cash with Active Savings.

    HL's role as a lifelong partner for clients is growing and we will continue to develop our proposition, capabilities and digital technology to provide an experience for clients that is appropriate to their evolving lifetime savings and investment needs. Our connectivity with our clients means we can evolve to meet their needs, especially as the external environment continues to change rapidly.

    Our Response to COVID-19

    This culture and focus on our clients guided our swift response to the COVID-19 pandemic. Our immediate priorities were ensuring the safety and well-being of colleagues whilst maintaining the core services that our clients rely on. This included moving the majority of colleagues to work from home whilst swiftly implementing effective social distancing across three sites for those colleagues who needed to be in the office.

    It is through the investment we have made in our service and technology over the past few years that we were able to ensure both the resilience and scalability of HL over this period and to react to the situation with agility. As a result we were able to continue to deliver the service that our clients needed during this time and manage the record volumes of client activity. We also provided critical insight and information on matters that they were concerned about.

    In keeping with our own expectations of our role in the community in which we live we also provided support to our local community. More detail on our response to COVID-19 for key stakeholders will be outlined in the Corporate Social Responsibility section of our 2020 Report and Financial Statements.

    Keeping close to clients

    Our client service and client outcome based strategy is underpinned by an unrelenting focus on understanding our clients' needs, a critical part of which comes from using the insight that we get from their interactions with us. As we act on this insight, and provide a service that serves to retain clients, we build a lifelong relationship that further enhances our ability to tailor their engagement and our service in the most appropriate ways for them.


    This focus was key to our service response to COVID-19 as mentioned above. We used the intelligence provided through our phone and email contact together with observing the activity on the mobile and web platforms to study carefully what clients needed and we reacted as a result. We maintained the Helpdesk phone lines throughout and put additional measures in place to increase our email response rate in line with client contact. We also introduced new measures to support our vulnerable clients including increased information on fraud risk and a specific phone line to provide them with further support.

    We made proactive decisions to stop and then swiftly to adjust our marketing to ensure that the messages were appropriate, and paused other initiatives such as the Wealth Shortlist so that our clients were getting the right focus and attention when they needed it most. As the crisis developed we concentrated on what content clients were engaging with online and identified where they needed insight. The top 10 articles our research team posted were read up to three times as much as the top 10 last year with over double the number of non-client visitors to the website using these resources.

    We recognise that, through the intensive scale of client interaction on our mobile and online platforms, and through calls and emails to the Helpdesk, we gain huge insight and understanding. This allows us to focus on what savers and investors specifically need and then work to deliver this. Across the year, digital visits increased by 41% from 177 million (FY19) to 249 million in FY20. We received unprecedented volumes of emails into the Helpdesk between April and June alone and have continued to see consistently high volumes of calls throughout this time.


    We have also developed our digital and mobile capability in response to changes in how clients want to interact with us. The popularity of our mobile app continues to significantly grow and represents an increasingly important feature for our clients. Of the 1.2 million clients who logged in online, 43% did so through the app whilst 33% of online client initiated share trades came via the apps, more than double last year. Developing digital capabilities further remains a priority for us and it is important that we remain agile and are continually anticipating and responding to changes.

    Developing our proposition

    We recognise the need to constantly develop and improve our offering to ensure we are delivering what our clients need. At the same time, as a leading financial services company we have a responsibility to play a key part in setting industry standards. As such it was essential that we learnt from the experience surrounding the Woodford issue last year.

    We undertook significant work to review the governance framework relating to the investment processes across the business and conducted extensive research with our clients. Changes were implemented and incorporated in the launch of the Wealth Shortlist in June 2020. This new list incorporates new functionality, search tools and a more structured view of our research to provide clients with all the key information they need to make investment decisions, in a transparent and easy to use format.

    The extensive research included interactions with over 8,000 clients, with surveys, face to face interviews and a deep dive into the additional insights we have gained in how clients use our platform. The end result directly reflects what our clients told us about how they use the list and what they wanted to see.

    As part of this process, we also launched new fund tools and updates which make navigating the funds available through our platform more transparent and easier than ever before.

    These changes have been underpinned by changes to governance processes to raise the level of rigour and challenge to decisions that we make. These developments will ensure that not only our Wealth Shortlist and Fund Finder tool, but also future investment propositions and wider developments, will also have a robust, thorough and transparent governance structure behind them. We recognise how evolving the role of governance provides additional rigour and challenge to our decisions and results in better outcomes.

    Executing our strategy

    We welcomed a record 188,000 net new clients during the year, bringing total active clients to over 1.4 million and supported £7.7 billion of net new business, another record.

    The importance of our own resilience and diversification is demonstrated in our growth with the volume of client driven share deals up 96% and revenue from share dealing up 94% and Active Savings now used by 66,000 clients with £2.2 billion of AUA.

    Through the market volatility of early 2020, we have maintained our position as the market leader with our share of the direct to consumer platform market at 41.1%1, and seen a significant increase in our share of the execution only stockbroking market rising to 39.5%2.

    In the lead up to tax year end we delivered our first multi-channel advertising campaign 'Switch your Money ON'. This was an opportunity to deliver a creative proposition with both immediacy and the long-term potential to deliver other HL messages, whilst building the HL brand. Over 12 million of our target audience viewed advertisements in the period, including adverts seen over 304 million times. We focused on reinforcing our position as a leading ISA provider as we approached tax year end, highlighting our scale and service credentials and this approach delivered significant results with both brand awareness and consideration.

    Compared to a few years ago, we are now seeing more clients who, on average, are joining HL at younger ages and the way they interact has shifted with more interest in mobile and access to new asset classes through our Active Savings products. Client needs adapt and evolve over time depending on knowledge, experience and circumstances and our agility in adapting and responding is driven by our proposition and service.

    In order to rise to this challenge, we recognise the importance of continuing to develop more digital and connected technology. We continue to invest into our range of capabilities because these are what enable us to develop and deliver a broad proposition, offering not only choice and flexibility but solutions across a diverse range of asset classes. These solutions are supported by an evolving set of tools, expertise and service that enable clients to engage, giving them confidence to take control and be resilient in managing their savings and investments for the long term. In return, these clients concentrate their investments and cash savings with us, and work to their financial goals over their lifetimes, continuing to save their annual allowances and investing for the long term.

    In February, we completed the sale of FundsLibrary, our data management and digital services business, to Broadridge Financial Solutions Inc. The decision to sell reflected our view that, as a business to business service, it was no longer core to our overall strategy, and the proceeds received from this will be used to enhance the total dividend payment for this year.

    Conclusion and outlook

    Over the next few years, the wealth industry will continue to develop in response to the changing requirements and challenges that people have in saving and investing alongside the pressing demands of everyday life. With our scale, insight and deep understanding of client needs we will continue to be at the forefront of responding to change and evolving our proposition to the benefit of clients. We are already seeing an evolution of our service supporting clients from younger ages and across broader investment and savings options. As we continue to evolve our proposition to reflect changing client needs, that trend will continue to grow in importance.

    The Financial Conduct Authority has acknowledged the importance of people's engagement with managing their financial futures and, after the past few years of significant regulatory change, there has been a growing focus on steering future regulation to one based upon outcomes. We are supportive of this regulatory direction of travel and will continue to work with the Financial Conduct Authority as the industry evolves to design and deliver these outcomes responsibly.

    The experience of this year has reinforced the importance of our service-focused strategy and demonstrated its effectiveness with a very strong performance delivered through a range of difficult conditions. This gives us confidence to look ahead and invest in addressing the significant market opportunity. We will maintain our focus on skills, capabilities and technologies as this is critical in developing the lifelong client relationships which help drive future growth. Our scale and strong market position, together with a robust balance sheet and cash flows will enable us to continue delivering value to all of our stakeholders over the long term.

    In the near term the UK economy faces a period of uncertainty as we work through the many issues arising from COVID-19. Unemployment levels have increased significantly whilst economic growth has decreased. The government has borrowed vast amounts to help the economy and society but the road to recovery could be a long one with various tax implications along the way.

    The impact on our clients and the wider investment community as a result is difficult to call. Interest rates are at all-time lows, which makes cash savings unappealing, but market uncertainty and volatility can equally deter people from investing and access to liquidity is a key part of building financial resilience. However, our focus on clients, the trusted relationships we have with them and the investment we have made to broaden and strengthen our proposition, means Hargreaves Lansdown is strongly positioned to help our clients navigate through these difficult times. We are clear in the structural growth opportunity, clear in our strategy and business model and these provide us with confidence in our ability to deliver sustainable and attractive growth and returns beyond the immediate uncertainties.


    Chris Hill

    Chief Executive Officer

    6 August 2020
     
  18. Groucho

    Groucho Member

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    Hargreaves makes £91m from interest
    but savers get nothing

    Harry Brennan

    Britain’s biggest broker, Hargreaves Lansdown, has made tens of millions of pounds from interest earned via its customers’ cash savings.

    Savers are signing up to “guaranteed losses” if they retain cash with the firm, experts said, and should transfer the money not needed for investing into more conventional bank or building society savings accounts.

    Hargreaves said it received more than £91m in interest in the 12 months to June 30 just from cash sitting in investors’ accounts. It pays 0pc interest on cash in Isas, pensions and trading accounts.

    This followed cuts to the Bank of England’s Bank Rate, which is now just 0.1pc. The Bank is trying to stimulate the economy in the wake of coronavirus by making cheap credit available to businesses.

    Cuts to the official rate hit cash savers hard as firms such as Hargreaves reduced what they paid out. This helped the company to make almost 25pc more from customers’ cash than it did the previous year and pushed the margin it makes on cash interest up to 0.75pc.

    Hargreaves said it expected that figure to drop to between 0.4pc and 0.5pc in the next year.

    The increase was also driven by more customers signing up to invest and more people holding on to cash during a volatile six months for global stock markets. The average customer now has 12pc of their savings in cash.

    The Financial Conduct Authority, the City watchdog, has been warning investors of the detrimental effect that leaving cash in Isas and pensions can have on savings. Its study discovered that a third of pensioners who had not taken advice left their retirement pots solely in cash in accounts for which they were charged or on which they received little or no interest.

    Mike Barrett of the Lang Cat, a consultancy, said: “Holding lots of cash with a broker or Isa provider represents poor value for money, especially in the long term. This is down to the killer combination of providers charging savers to hold cash or paying a rate below the Bank Rate.

    “You are signing yourself up to a guaranteed loss if you hold money this way when you account for inflation. Cash in such accounts really should only be held for a short while.”

    Other brokers, including AJ Bell and The Share Centre, also retain the interest earned by customers’ cash. Some brokers do pass on the full rate, however.

    Brian Dennehy of Dennehy Weller, an advisory firm, said more investors were holding cash as they looked for protection from choppy markets. “Holding cash with a broker is not going to protect you against inflation, so investors should be made aware of the risks,” he said.

    A spokesman for Hargreaves Lansdown said: “Our investment service cash account is an easy-access trading account and the interest rate payable reflects this.”

    The broker added that it also offered a service by which it actively found better rates from banks and building societies for a customer’s cash.

    The best easy-access savings deal is with NS&I, which pays 1pc. The government-backed provider also offers an income bonds account that pays 1.16pc.

    The best rates on fixed-rate bonds are with OakNorth Bank, which pays up to 1.33pc for a four-year fix.

    Daily Telegraph 15/08/2020
     
  19. Groucho

    Groucho Member

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  20. Groucho

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    Feeling the pinch
    12 October 2020
    COVID-19 dividend cuts leave 83% of income investors worried about a loss of income.

    More than eight in ten income investors (83%) are concerned about a potential loss of income from dividend cuts caused by COVID-19, according to new research from the Association of Investment Companies (AIC) conducted by Research in Finance.1

    In the AIC’s survey, 89% of income investors’ portfolios have been affected by the pandemic with 41% having seen a ‘considerable’ or ‘big’ impact.2 Nearly a fifth (17%) have had to change their plans or lifestyle in response. Of these, 63% have cut back on non-essential items or activities, 39% have cancelled or changed holiday plans for financial reasons and 19% have pushed back retirement plans.

    UK dividends fell by 54% between April and June in response to the COVID-19 crisis compared to the same period last year. Dividends globally are forecast to be between 17% and 23% lower in 2020 due to the pandemic.3

    [​IMG]

    Source: AIC/Research in Finance

    Investors move into growth
    More than a quarter (27%) of income investors affected by the cuts have made changes to their portfolios in response. While 46% of these have looked to alternative income-producing investments such as property and infrastructure, nearly half (49%) of them have moved into growth investments to try and compensate for lost income. The research suggests income investors affected by UK dividend cuts are increasingly embracing global strategies, both global equity income and global growth.

    Investment companies prove reassuring
    There is a noticeable link between holding investment companies and feeling more secure about income: 21% of investment company users were not at all concerned about potential losses of income, compared with 11% of non-investment company users. Among those who held the majority (>50%) of their portfolio in investment companies, the percentage of people who were not at all concerned increased to 37%.

    Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Our survey shows that the pandemic has affected almost every income investor, leaving many worried about whether their investment income will be enough to meet their future needs.

    “Although we are less than a year into the pandemic, dividend cuts have already had very real consequences for some investors. One in five have been forced to change their lifestyle or future plans. The majority of these have had to cut back on luxuries, some have cancelled holidays for financial reasons and sadly some have pushed back their hoped-for retirement date.

    “With a never-ending barrage of bad news, it’s understandable that income investors may feel under siege. But the research also revealed investors with investment companies are less concerned than others about a loss of income from their portfolios. A key reason for this is that investment companies can reserve some of their income to smooth their dividends over time, helping them achieve long track records of dividend growth. For example, the 19 ‘dividend hero’ investment companies have increased their dividend every year for 20 years or longer. It’s important to remember, however, that dividends and dividend increases are never guaranteed.

    “Besides dividend smoothing, other income advantages of investment companies include the ability to invest in higher-yielding hard-to-sell assets such as infrastructure and property, as well as the option of supplementing income from capital profits in cases where a higher income is important to shareholders.”

    The importance of consistency
    Income investors care about the level of dividend yield but consistency of income was also cited by many respondents as an important factor. Half of investment company users (51%) consider the ability to smooth dividends a main benefit of investment companies. A similar proportion (47%) identify long track records of dividend growth as a primary benefit.

    Investment companies have the ability to hold back up to 15% of the income they receive each year in a revenue reserve. They can then use this reserve to boost dividends during difficult years, helping investment companies such as the dividend heroes to build up long track records of dividend growth.

    Aspirations for family, renovations and future care
    In addition to providing an income to live off in retirement or to supplement a salary, income investors report a range of aspirations for their portfolios. These include helping with children’s school and university fees, funding large one-off purchases such as home renovations and providing for future care costs.

    What the investors say:
    “We don’t know what the future holds. This could be the new normal couldn’t it? The nice 5% or 6% or 7% dividends that you get from some companies, maybe that is never coming again. It could kill it off, so that is a worry for the future definitely.” Male, 53.

    “Things that we have used [the income] for then, we have to think twice now. It tends to be that discretionary spending, be it holidays or big expenditure. Will we postpone those? Possibly.” Female, 52.

    “At the moment I am lying very low and I haven't really ventured into looking at my investments in these past couple of months. I don’t want to look at it and then see that hit and feel down again. […] I am not buying any more or doing anything until we know how the industry is going to do. It is a good time to buy because prices seem to have gone down a bit more, but it is whether it is going to recover and how it is going to recover in the long term.” Female, 43.

    -Ends-

    Follow us on Twitter @AICPRESS
    https://www.theaic.co.uk/aic/news/press-releases/feeling-the-pinch
     
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