Hargreaves Lansdown PLC (LSE:HL.) has been downgraded by Jefferies over the gains made by US passive fund giant in the UK.
Vanguard this month said it recruited more new customers than HL and AJ Bell's direct-to-consumer platforms combined in 2022, although the Jefferies analysts said it wasn't clear if the number was gross or net.
The US exchange-traded funds group, which launched its UK fund platform in 2017, appeared not to make much progress for some years but a recently news report stated that last year it added 118,000 new customers, taking the total to 450,000 – bigger than AJ Bell's D2C platform and abdrn's interactive investors too (426,000 and 408,000 last reported).
And 41% of the new adds were under 30 years old and 74% under 45, apparently, with Vanguard's net inflows in 2022 were £3.54bn, and the platform now has £14bn of assets under administration.
Furthermore, the analysts noted, AJ Bell has provided a quarterly update showing slower customer growth.
This all adds up to "renewed doubt" about HL's ability to replace or retain departing customers and, when the share price at 928p is well above the bank's 800p target, a downgrade was made to an 'underperform' rating.
"HL faces a structural problem of its best clients being quite old and prone to leave the platform in search of advice. One solution - adding lots of new young ones - has become much harder to achieve."