In the results statement, the company brushed off any potential impact from this, stating: “The company received a letter purporting to be a pre-action letter from a law firm in March 2021. In June 2021, the company rejected all the claims made for lack of a substantive basis of claim.
"The company is aware that the law firm has since filed a claim form with the court against both Link Fund Solutions Limited and Hargreaves Lansdown Asset Management Limited (HLAM) for an unspecified amount in October 2022.
"As at the date of issuing these financial statements, the law firm has not yet confirmed that it has secured sufficient funding to progress the claim, HLAM has not been served with the claim form and no timetable has been set for the conduct of any claim.”
Economic climate
On the prevailing economic outlook, Neil Shah, director of research at Edison Group, says net inflows were £1bn, down from £1.6bn the prior year.
And even that number does not tell the full tale, as the accounts show a net of £300mn was actually withdrawn from the company’s investment products, and the corresponding £1.43bn of inflows was into cash products.
Hargreaves Lansdown's Olley says one feature of the withdrawals is that "clients are not withdrawing their investments from us to go to another platform, instead it is to pay down debt".
Demographic issues
A feature of markets in recent years has been the desire of younger investors to own alternative assets or direct equities rather than funds.
Hargreaves Lansdown to a large extent has a foot in both camps, as its clients can invest in funds or equities.
The more pertinent question might therefore be: is Hargreaves Lansdown attracting the next generation of clients?
Olley says that while the average age of a Hargreaves Lansdown client is 45, the average age of a new client is “under 30”, but says one feature of this new client group is they are keener on buying overseas equities, such as US technology stocks, than is the average Hargreaves Lansdown client.
Duncan has a buy rating on the stock, as he says the recent share price performance is a function of investors being concerned about the prospects for markets as a whole, rather than a view on the business model of the firm.
Fund manager Nick Train is among the largest shareholders in Hargreaves Lansdown. Previously he has highlighted in his investment reports the capacity for the firm to grow as stock markets grow.
In his most recent update to shareholders in the Finsbury Growth and Income Trust, he says the ability to use artificial intelligence as part of the customer experience may be a key advantage for the firm in future.
