Upcoming full-year figures from Hargreaves Lansdown (HL.) are keenly anticipated, as they will give an early indication as to how the investment service's existing customer base has reacted to recent pricing changes. These changes came in response to the Retail Distribution Review (RDR) carried out by the UK financial regulator, which resulted in a ban on middlemen taking fees from fund managers for selling products. The upshot is that UK investors who use the company's online platform are now paying user fees - 0.45 per cent a year for fund holdings of up to £250,000, with a sliding scale thereafter.
The changes have been designed to bring transparency to industry pricing structures, stimulating competition. The danger for Hargreaves Lansdowne is that the benefits of the RDR changes might not be readily appreciated by some investors. Numis predicts that Hargreaves' "frenetic pace of customer acquisition could have slowed a little" since the March introduction of the changes. But the broker reckons the fundamental strength of the company's business model will allow it to ride out any temporary effects of the changes.
