Fate is capricious, siblings, and laughs at our misguided attempts at self-determination. When it gives us a clear sign, we are best to follow it. And so this week’s Wednesday finds me Updating you from the lush confines of a Travelodge in the South West of Englandshire on the very day that the South West’s very own Beast from Bristol – Hargreaves Lansdown – releases its trading statement.

So let’s take a look. Before we do figures, it’s worth thinking why we care about a trading update from one provider. The answer, I think, is that HL is now the best bellwether we have for how the investing public thinks. It does a bit of everything – platforms, corporate schemes, advice, fund management – and does it all at some scale and usually pretty well. If HL is unhappy, then, there’s a reasonable chance that we’re all unhappy.

It’s also absolutely massive. Today’s trading statement takes it to £97bn AUA, which clearly makes it the biggest retail platform in the UK, whether advised or direct. The next biggest, The Artist Formerly Known As Cofunds sat at £90bn at the end of Q1 2019, and a good chunk of that isn’t retail money. SJP is bigger at £103.5bn but isn’t a platform, really, certainly when it comes to exit fees…

So when we look at the direct platform market, it’s a bit like those bookies at the racecourse who offer betting without the favourite. There’s HL, and then there’s everyone else. HL is basically the Death Star. It has its own gravitational pull. Most everyone else is a wee X-Wing flying around and trying to take pot-shots.

The platform we think is best placed to find the structural weakness in HL’s air conditioning system or whatever it is you fire a torpedo down to blow the thing up is Interactive Investor. It’s doing it through acquisition, but HL also plays that game with the recent wins of the Witan, Baillie Gifford and JP Morgan direct back books. But to be honest, we don’t expect II’s performance to make HL weaker. It just seems pretty unstoppable, whether you’re happy about it or not. Which isn’t to say that everything’s rosy in this trading statement.

The numbers, then. The four months to the end of April saw AUA rise to £97bn from £86bn. HL separate out sales from market movements helpfully in its statements, so we know that net new business was £2.9bn and market movements were positive £9bn. That net figure bears looking at. It includes £400m or Active Savings – more below on this – and £267m of assets from Witan. So if we subtract those from the £2.9bn we come out with about £2.25bn – over £1bn down from the same quarter last year.

HL doesn’t use the B word but does talk about ‘low investor confidence’ which is plainly code for the same thing. So if you are finding that it’s hard to get clients to commit, you’re not alone. We think this will hit fund sales at HL and others until the B-mess is resolved.

As you may know, HL isn’t satisfied with just getting funds and shares and pensions business. It wants your cash too, probably followed by your first-born and the rings from your fingers. So its Active Savings cash platform will be a big focus. It’s taken £400m so far, which sounds a lot but when you think that Marcus from Goldmans signed up 250,000 clients and £8bn in eight months, there’s a long way to go.

I think the most interesting figure is that of the number of new customers that came through the door. HL can’t control how much money people bring (though it gives it a good bash) but it can work on footfall. Year to date HL has added 53,000 clients in 4 months including the 16,000 from Witan. Take those out and it’s still doing over 9,000 net new clients a month.

Fee pressure? Exit fees? Stooshies about the constituent parts of the Wealth 50? Meh. I suspect HL doesn’t lose much sleep on those.

And in terms of the HL shares, the ever-helpful Jeremy Grime of Charlton Illingworth tells us (and you if you’re on his mailing list) that HL is trading at 40x PER. AJ Bell is at 55x. So it doesn’t seem to be running out of road there.

The main issue for HL is that expectations are now so great, eventually it must run out of new customers to find. It’s got 1.2m at the moment. So maybe it won’t. Maybe HL and SJP prove that financial services are Veblen goods – more attractive the more they cost. Maybe it should put its price up.


  • Second to last bump for the lang cat Home Game in Edinburgh on 30 May. I’ve got 16 tickets left and they’re really getting on my nerves. Please take them off my hands.
  • Novia reports a successful launch of its new front end, which they’ve called ‘Adviser Zone’. Amusingly this is also the name of Standard Life’s adviser extranet. I haven’t seen it yet but will do a bit on it when I have.
  • I’ve written a bit about mental health in FS in these columns – it’s currently Mental Health Awareness Week and so you should take 2 minutes to read this column from Ollie Smith at Citywire.
  • And for our music slot this week, let’s honour the South West. Lots to choose from – metal from Onslaught, pop from Bananarama, trip-hop from Portishead. But let’s go with Massive Attack and I don’t care if it’s predictable.


See you next week