Hargreaves Lansdown’s marketing team had an embarrassing moment last month when Monzo contacted them asking them to stop running an advert on social media encouraging people to “register for alerts on the Monzo IPO”.
The ad spurred confusion. While some challenger banks, such as Starling Bank, have been very vocal about their plans for listing, Monzo, which is currently being investigated by the Financial Conduct Authority over potential breaches of money laundering rules, has been much quieter.
A spokesperson from Hargreaves confirmed that the basis for the advert was from a Wired magazine interview with Monzo chief executive officer TS Anil in April where he said: “An IPO is very much on the cards as a potential option for Monzo, and could take place as soon as 2023.” Hargreaves’ so-called ‘investment squad’ survey a variety of sources for rumoured IPOs, drawing attention to those they think will be of interest to its customers.
Monzo contacted Hargreaves to say it had no imminent plans to IPO and asked Hargreaves to change the language of the ad to be around “rumoured” or “potential”, but Hargreaves decided to pause activity until Monzo publicises further information about any plans to list.
At a time when social media is awash with misinformation and unregulated ‘investment’ opportunities, regulated established providers find themselves trying to balance the need to compete for eyeballs while also differentiating themselves from more wayward players. Sam Richardson, analyst at consultancy Platforum, says: "Platforms have to appeal to customers by promoting some of the more glamorous aspects of investing, while simultaneously trying to encourage them to adopt a more long-term mindset.”
Hargreaves' marketing and distribution costs were £28.3m for the year to 30 June 2021, up from £23.9m the previous year and £12.7m for the year ended June 2019. In its latest results the company said “Our increased focus on digital marketing has been key in winning new and engaging with existing clients, ensuring we become integral to their lives in terms of saving and investing for the future.”
Mike Barrett, consulting director at the Lang Cat, says established providers can play a part to warn against the dangers of high=risk and scam investments, and also to highlight a more sensible investment approach.
“I would encourage firms to take this approach, rather than attempting to mimic the clickbait nature of the scam adverts,” he says.
