15th January 2014
Hargreaves Lansdown, the UK’s largest fund platform for self selecting investors, is cutting its charges from March this year.
The new platform fees will be tiered from 0.45 per cent for assets under £250,000 falling to 0.25 per cent for customers with assets above £250,000. The charge will be 0.1% on assets from £1 million to £2 million, and zero on assets above £2m.
The changes are explained on the Hargreaves Lansdown website and were announced to the stock market this morning. Fund charges will be typically around 0.65 per cent for funds featured on the firm’s Wealth 150 list, a reduction of around 0.1 per cent taking the cost of investing for most customers to around 1.1%. A full range of unbundled funds will be available on the platform.
A further 27 funds on the firm’s Wealth 150 plus list will have charges of 0.54%. The rebate on existing funds, which Hargreaves describes as a loyalty bonus, is to be increased to 0.75%.
Ian Gorham, chief exective officer of Hargreaves Lansdown, says customers will save £8m a year collectively.
“We are now reducing the cost of investing in funds, saving our clients an estimated £8 million per annum. As a result, most clients will be paying even less when investing through Hargreaves Lansdown.”
To offset the expected costs Hargreaves estimates it will need to gather £3.5bn in assets over the next three years. The platform brought in £5.1bn in net new business in 2013.
Gorham says: “We have always sought to share our success with clients through using our negotiating power and by continually reinvesting in our service through new technology, more staff, better information on a wider range of investments, or as we have done here, in lower charges for funds. In 2011 we reduced charges for holding and dealing in shares by £9m when we launched our new low-cost stockbroking service.”
The move comes in response to new requirements from the City watchdog the Financial Conduct Authority which has banned certain types of payments described as rebates between fund managers and fund platforms and supermarkets.
The firm received a huge boost this week when Morgan Stanley upgraded its share price target to £16.70 from its previous prediction of £11.13 suggesting that clients are willing to pay for advice and platform services under the new regulatory structure.