Hargreaves Lansdown added 84,000 clients to its books in the second half of last year as individuals with more time to spare during lockdowns dabbled in markets for the first time.
The platform’s assets under administration jumped 15% between 30 June and 31 December 2020 to £120.6bn. This was driven by £3.2bn in net new business and £13.4bn from market movements.
Profit before tax for the six months to the end of December increased 10% to £188.4m.
It comes after ONS figures published in October last year revealed a boom in personal saving. During Q2 2020, UK households saved 29.1% of their income on average, compared to 9.6% in the previous quarter.
Trading volumes up 123%
Hargreaves chief executive Chris Hill noted investor confidence fluctuated over the reporting period as uncertainty in markets over the summer faded into the firm’s Q2 and on through to December after the US election and positive news of the Covid-19 vaccine.
“These trends have led to strong equity trading volumes, up 123% on prior year, driving strong growth in profit before tax, where we have delivered an increase of 10% on prior year at £188.4m,” he said.
Average age of new clients dropping
Hill also noted the average age of new Hargreaves clients dropping as the pandemic has made people prioritise household savings which has led them to invest for the first time.
In 2012, 46% of clients were aged between 55 and 80 and that proportion is now 34%. Also since 2012, the age of new clients has decreased from 45 to 37. This was reflected in the reporting period where 47% of new clients were in the 30-54 age bracket.
“This event is extending a trend we have seen over several years now where investing has become not just a task for those approaching retirement but is now an important tool for individuals to support themselves across their entire lifetime,” he said.
“In turn, this change in behaviour is leading to a dynamic shift in the broader investment and wealth market. Younger people are taking a greater interest in investing for the future, recording an increased appetite for investment, and prioritising financial resilience and saving.”
During the reporting period Hargreaves’ mobile app saw 57% growth in clients logging in compared to prior year, with clients checking their investments on average 10 times a week.
“We have supported 6.5 million equity trades, 113 million client log-ins and 25 million minutes spent reading our insightful articles,” said Hill.
Multi-manager range revenue drops 13%
Elsewhere, revenue from Hargreaves’ 10 multi-manager funds fell by 13% to £29.4m due to the average funds under management being 13% lower as a result of market falls and modest net outflows.
Earlier this month, Hargreaves published its value for money report in which it revealed the decision to lower the annual management charge on some multi-manager funds and introduce further price reductions linked to economies of scale.
These price changes are expected to take effect in the last quarter of Hargreaves’ financial year.
“Based on the current fund values, the annualised current loss of revenue is estimated at £3.5m and hence the margin for this year is now expected to be in the range of 70bps to 74bps and in the following year, where there will be a full-year impact, we anticipate the margin will be in the range of 66bps to 70bps.”
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