Hargreaves Lansdown is lowering its headline platform fee as part of a broader shake-up of its charging structure, in a move analysts say is aimed at reasserting its competitive position amid mounting pressure from rival investment platforms.
Britain’s largest direct-to-consumer investment platform told media that it would reduce the platform fee from 0.45% to 0.35% on the first £250,000 held in stocks & shares ISAs, fund accounts and self-invested personal pensions (SIPPs).
The change is expected to benefit close to half of its roughly 2 million customers, though new charges elsewhere may offset the savings for some account holders.
A fund dealing fee of £1.95 will be introduced, while the annual cap on charges for holding shares will rise from £45 to £150.
Customers holding shares in fund accounts will also face new fees. Share trading charges are set to fall.
The company has yet to formally notify clients of the changes, analysts said, but press reports circulated ahead of an expected official update.
Analyst Julian Roberts at Jefferies said the changes are likely part of an attempt to arrest rising outflows, which were a feature of the platform’s performance prior to its being taken private by a consortium comprising CVC, Nordic Capital, and Platinum Ivy, which completed last year.
“We would assume that this is an effort to stem outflows as much as anything else because the headline fees are still higher than some of the closest competitors’, and we saw rising outflows as the main problem for their net flow numbers before the company delisted,” he said.
While the platform fee cut appears attractive, Roberts said HL's overall fee structure remains higher than peers such as AJ Bell PLC (LSE:AJB) and Barclays PLC (LSE:BARC), while Interactive Investor – now part of Aberdeen Group PLC (LSE:ABDN) – continues to offer a flat-fee model that is more cost-effective for larger portfolios.
The rebalancing of the cost burden appears to place more of it on customers who hold individual shares, though the precise revenue impact will depend on the composition of HL’s client accounts.
“Without knowing what proportions of revenue come from which sizes of account, we cannot assess the exact impact,” Roberts said.
“Presumably this is a competitive move tailored to soften the revenue margin impact by increasing some fees. Without a detailed or recent breakdown of HL's revenues we cannot assess the effect, but it may well help stem outflows from these accounts and help HL rank better in price comparisons.
Rae Maile at Panmure Liberum, said the changes reflect a long-term trend and are a "fact of life" in financial services, but one move generally sparks more.
“Despite this, when any one industry participant changes its pricing there can be an outbreak of competitive action – although we mean among commentators purporting to be witnessing the end of days more than between industry participants,” he said.
Maile pointed to HL estimates that nearly half of customers will be better off under the revised charges, though he said around 10% may pay up to £1 per month more and roughly 3% could see increases of £10 per month or higher.
He noted that Interactive Investor's pricing changes in December will take effect in February.
"The wealth industry more generally has been increasing its marketing in various guises – which is a good thing overall but may not benefit all players equally,” he said.