I’ve spent a lot of time thinking about platforms and their fees over the past 12 months. Yes, perhaps lockdown has got the better of me. But I increasingly question the extent to which Hargreaves Lansdown (HL.) deserves its market dominance.
In its defence, Hargreaves has done great things for private investors in the UK. The platform has a market share of over 40 per cent with 1.5m customers, many of whom have transferred from much more expensive services over the past four decades. It has an impressive, easy-to-use website with lots of content, an extensive product range and has taken steps to simplify and reduce its fees over the past couple of years.
However, as competition from rival platforms gets stronger, it is worth scrutinising what exactly Hargreaves offers. First, take the fund fee. A 0.45 per cent annual fee for most customers is higher than its closest competitors. Often Hargreaves offsets this, as it is so influential that many fund managers cut their fees to have their funds available on the platform. While lower fund fees benefit customers, the platform is, to an extent, charging its clients a premium for its bargaining power.