Experienced Investor
Hargreaves Lansdown to stop providing independent financial advice
Hargreaves Lansdown has become the latest of the large financial advice firms to move to a restricted advice only model.
The firm said the changes laid the groundwork for the implementation of a telephone-based advice service, and new, simplified advice fees. By restricting its advisory services, the firm hopes to improve the standard of its advisory services, and ‘democratise’ its advice by removing the minimum investment requirement of £20,000.
Hargreaves Lansdown decided to transition to a restricted model, as their independent status obliged them to research investments clients rarely held, or the firm themselves believed to be “overly complicated, opaque, expensive or carry excessive investor risk”. Many financial advice firms have taken this step in recent years, including St James’s Place, Tilney Bestinvest and Towry.
For a minimum fee of £495, Hargreaves Lansdown clients can now receive advice over the phone, irrespective of the size of their portfolio. The minimum fee for face-to-face advice is £1,495.
“This change will set the groundwork for us to simplify and reduce our advisory charges, develop our telephone based service and increase the use of technology to improve the efficiency of the advice process,” said Danny Cox, head of communications at Hargreaves Lansdown.
“At the same time we want to ensure everyone who wants personal advice can have advice, and are removing our minimum portfolio requirement.
“In reality investors will see very little change in what we advise over, We shall continue to offer the same broad range of investment advice, including portfolio management, investment and pension advice, retirement planning and inheritance tax mitigation as we do now.”
New advice charges are as follows.
| New | Previous | ||
| Investment Advice | On the first £1 million – 1% | 1% | |
| On the excess – 0% | |||
| Complex financial planning | On the first £200,000 – 2% | On the first £200,000 – 2% | |
| On the next £800,000 – 1% | On the next £800,000 – 1% | ||
| On the excess – 0% | On the excess – 0.5% | ||
| Review service | On the first £1 million – 0.365% | 0.365% – 0.5% * | |
| On the excess – 0% | |||
| Minimum portfolio size | No minimum | £20,000 |
*depending on the type of service selected
Commenting on the news, Patrick Connolly, certified financial planner at Chase de Vere, said the move “wasn’t surprising”.
“Many of the larger and better known financial advice firms have already taken this step – these are commercial decisions because they earn better margins by selling their own products, platforms or investment funds rather than selecting the best available alternatives on the market,” he said.
“While these decisions are understandable, it is disappointing that with more adviser firms going restricted it is becoming increasingly difficult for consumers to access unbiased and impartial independent financial advice.”
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