Hargreaves Lansdown deal volumes fall as investor confidence takes a hit

Hargraves Lansdown suffered a drop in deal volumes in the last quarter after investor confidence was dented by volatile markets and economic uncertainty.

The group told investors Wednesday that “issues with the cost of living, rising interest rates and market volatility” weighed on deal volumes in the three months to the end of June.

HL said stock trading volumes averaged 685,000 per month in the quarter, down 11 percent from the previous three months and down 12 percent the year before.

But the company’s net new sales of £1.7 billion for the period were 6 per cent higher than the previous quarter.

Assets under administration came in at £134bn, up 2% in the quarter.

The group also experienced net customer growth of 13,000 during that period, bringing the total to 1,804,000 customers.

It said clients “focused on using their ISA and SIPP tax exemptions, particularly in the closing days of the 2023 tax year and the beginning of the 2024 tax year.”

It added: ‘Active Savings saw net inflows of £0.8bn in the quarter (Q4 FY22: £0.7bn) as customers continue to manage their savings through us and the broad access we provide to a range of rates and banks.’

Hargreaves Lansdown Shares rose today and rose 4.86 percent or 40.80p this morning to 881.00p.

Shares in the retail investment platform have plummeted by about 60 percent over the past five years.

Chris Hill, the group’s chief executive, said: ‘We added net new business of £1.7 billion in the period, up 6 per cent on the previous quarter.

“The end of the fiscal year remains a critical time for our clients and this year we focused on supporting them as they navigate the changes in the tax landscape, make the most of their benefits and deliver more value to our overall client proposition.”

He added: “The prior quarter’s improvements, including the launch of a new cash ISA, three new Portfolio Funds and price reductions on our LISA and JISA accounts, were further enhanced by the removal of dividend reinvestment fees and regular monthly investing, along with the addition of new partner banks to Active Savings.

“The breadth of and continued investment in our customer proposition means we remain well positioned to grow and support both new and existing customers with their investment and savings needs.”

Criticism: Hargreaves Lansdown co-founder Peter Hargreaves has criticized the group’s strategy and high operating costs

It was revealed on Tuesday that Hargreaves Lansdown’s chairman, Deanna Oppenheimer, is on the verge of stepping down after a bloody run-in with the company’s co-founder, Peter Hargreaves.

Mr. Hargreaves, the company’s largest shareholder, launched a sharp attack on the group’s high costs and strategy earlier this year, led by Chris Hill.

In an interview with the Financial Times earlier in 2023, he said: ‘The board has indulged in totally unnecessary irrelevant programs, which have diverted the company from its main purpose. It is not surprising that the shares have collapsed.’

In a statement this week, the Bristol-based DIY investment outfit said it had begun scouting “candidate for the seat succession” for Oppenheimer, who has overseen the company since 2018.

Neil Shah, a director at Edison Group, said: ‘These are modest results for Hargreaves Lansdown, with a 2% increase in assets under management and a 6% increase in new business.

They are unlikely to materially change the conversation about the Bristol-based investment manager, whose chairman stepped down on Monday following criticism from the co-founder, and whose share price has fallen 65 percent since 2019.

“Questions remain for the company about high executive compensation, employee costs and a controversial automated investment advisory service that is currently being developed.”

He added: “In the midst of this turmoil, CEO Chris Hill has signaled a “back to basics” approach to the company, pointing to steady customer growth, new product launches and a pick-up in new business.

This is the bread and butter of an investment manager, a far cry from the bold technology plans of the outgoing chairman of the company.

“With an anemic investment climate, coupled with the ongoing debate over the future of the company, these slow and steady results are perhaps the best Hargreaves Lansdown can hope for at the moment.”