Hargreaves are losing the baby boomers!

[Eden]

@Rob14

Lots of markets are wide open for neo-brokers e.g. new brokers are still launching in the UK despite being late to the party.

@bitflip

but you are forgetting that Freetrade is not actually disrupting HL. Not even close. It is not even clear that it is attempting to do that.

Yeah, its worth remembering that the UK actually has a pretty horrible investment uptake by the regular person

3% of the population have a S&S ISA, this is a fairly solid stat though a couple years old. the number of people who say they have any sort of shares is apparently around 30%. Some of this i expect comes from employer share programs. the extremely poor uptake of tax efficient share accounts speaks for its self i think. and it means there is potentially million of potential customers out there that don’t have an HL account.

I don’t think its a game of taking customers from other platforms as much as it is making new share holders.

@Rob14

If Freetrade ended up with loads of wealthy clients they could add specific partner services which suit those clients needs and monetise that way.

This is hopefully a future ambition. I think to freetrades determent they’re just not a platform that holds well to wealthy clients (for now), theres to many holes. thats my opinion at least. holes i hope get filled eventually.

@bitflip

Many of the new brokers don’t have sustainable businesses

Honestly, they shouldn’t have taken away the £1 trade fee… just my opinion i know nothing on the actual data. but £1 was highly competitive. people always made the comparison to 212 but at the time freetrade never looked like it was aiming at a 212 competitor. they never lent shares, they never used loss making products (for the customers) to fund the business, the platform was always quite transparent and clear on share holdings. they fit i think between 212 at the bottom, and HL at the more expensive side.

They got rid of the fee imo to attract those at the bottom of the barrel (forgive the phrasing) that would boost customer numbers from people unwilling to pay for services. it gets your numbers up but it does come with risk, you have customers who aren’t willing to pay and want everything from your for free.

The expansion into Europe with already established paid products might counter that a bit there… well see.

@bitflip

And as far as the UK market is concerned anyway does anyone think Hargreaves will roll over and die? What do you think would happen if they dropped some of their trading charges?

They’ve already made a few things clear recently

they have no current ambition to go after small traders, those making lots of small worthless trades (from a cost perspective), freetrade can take those people up easily. the platform is free, and you can trade as much as you want for zero cost (even to the determent of freetrades cost)

• Their customer numbers have gone up. While not as much as Freetrade, there not as the same stage as a company. currently 1.7 million active clients (not sure what they define as active, 30 days presumably like most). up 100k since last year i think.
• £141 billion under administration (doubled AUA in the last 5 years)

HL are still aiming at “life long” customers, as well as tying their focus to client services, and they’re doubled down their focus on providing wealth management services. they talk about it here (159) Hargreaves Lansdown Capital Markets Day 2022 - YouTube

By comparison on the numbers Freetrade as of end of 2021 have 1 million registered users (they never mentioned active users this time around, unless someone has recent active user numbers?), and £1 billion in AUA. Freetrade has massive growth in terms of number of new accounts. But it didn’t reduce HLs active accounts either. both increased.

I think the current factor in them both increasing their client base is partly due to people looking to invest a little more, and that their aiming at what i think are fundamentally different types of clients. not necessarily older and younger (HL in the video above did mention that their average client age has been going down), but the difference between long term, perhaps more ‘stable’ investing compared to getting your feet wet investors new to the scene or those wanting to trade frequently in smaller amounts.

All that is to say, they’re both currently aiming at different types of customers, and freetrade imo isnt yet looking at long term high value life long cusotmers.