If you are looking for a one-stop shop for your investment needs and don’t mind paying a little extra for service, research and choices, then look no further — Hargreaves Lansdown, or HL as it is well known, could be the place for you.
You have probably heard of it. Founded in 1981, it’s the oldest DIY platform in the UK and has grown to become a FTSE 100 company with over 1.4 million customers and assets under management of over £100bn. Its aim is to simplify your financial life by making it easy and straightforward to manage your savings, investments and pensions under one roof — a lot of people believe HL achieves this.
HL offers a huge investment selection including over 3,000 funds, shares listed on most major exchanges globally, ETFs, VCTs, investment trusts, bonds and gilts. You can choose and switch between the investments you believe will give you the best returns or you can get help creating portfolios (more detail on that below), or, if you need more help, you can choose to receive advice.
The range of tax wrappers and accounts is impressive and includes Stocks and Shares ISA, Junior ISA, Lifetime ISA, Fund and Share Account, Junior Investment Account, SIPP, Junior SIPP and was the first D2C platform to offer an Active Savings Account — this is account for your cash savings that gives you access to a range of savings products and different banking partners through one online account.
The point of all this choice is that it provides you with the convenience of being able to hold and manage your investments in one place, with consolidated valuation reports, a single dealing service and instant online access. The range of services offered are impressive too. You can access retirement services, share & fund Dealing, currency services and financial advice.
Opening an account is dead easy and can be done in about 10 minutes, you just need your personal information to hand like your NI number and bank details. HL carries out an online address verification check using publicly available information, and if you pass this, there is no need to go through the hassle of sending in verification documents such as utility bills, bank statements etc. The typical minimum amounts are very affordable at either a £100 lump sum or £25 a month.
From DIY to discretionary
If you know what you are doing and are happy researching, selecting and managing your investments, then this platform is one to consider, given its huge choice and rich research capabilities, news service and support functions.
But if you’re less sure about investing or making your investment choices, HL offers various ways to help. You can use the extensive fund and stock research available or take inspiration from the Wealth Shortlist, which is designed to help you build well-balanced and diversified portfolios. HL’s renowned research team puts funds under the microscope and only the funds that its in-depth analysis indicates have the greatest performance potential make it onto the list. Most of the major fund sectors are represented and there are both passive and active fund choices.
The next option to consider is using HL’s Master Portfolios, which are designed to get you started, but leave you with ultimate control. There are five example portfolios to choose from depending on your aims and attitude to risk. You choose your investment style, amount to invest, and HL provides a portfolio suggestion.
The underlying funds are selected from the Wealth Shortlist and you can then tailor each portfolio by changing the percentage invested in each fund according to your preferences. The portfolios are designed as a starting point, and while each fund is professionally managed, the overall responsibility for selecting and managing the portfolio rests with you.
HL sends out updates with its latest views on each of the component funds to help. The minimum investment is £500 or £125 per month. You can play around with the amount of your investment and see what the suggested portfolios look like. What is perhaps a little surprising, is that whether you invest £10,000 or £10m, you are presented with the same number of holdings, which means, if you follow the suggested portfolio, and invest £10m, you could have 20% or £2m invested in one fund, which could mean that you are over-exposed or under-diversified.
In safe hands
If you would prefer to hand the decisions over to HL, you can use Portfolio+ and let the HL team of experts choose and manage the investments for you. There are six ready-made portfolios — 3 for income and 3 for growth — that invest in a broad mix of assets across a range of countries and regions. Once you have opened an account, you select whether you’re investing for income or growth, and the level of risk you’re comfortable with.
The six portfolios consist exclusively of HL Multi-Manager funds, which in turn invest in a selection of underlying funds, meaning that although you will only own a few multi-manager funds you will actually be invested in at least 20 underlying funds. The minimum investment is £1000.
Whilst you can access both passive funds and responsible investments (ESG/SRI), it is interesting to note that there are no passive-only or ESG-only portfolios. Given the mood of the investing nation and the considerable drive towards these types of investments, it is somewhat surprising that these options are not yet available to HL platform users. (We urge HL to introduce passive and ESG variants in its Portfolio+ service or risk losing current and potential clients.)
Last but not least, HL also offers Simply Invest, a service for novice investors wanting to start investing. The underlying investment is the the L&G UK Index fund, an ETF which tracks the UK stock market and gives you access to around 650 UK companies. Investors can start with £100 lump sum or £25 a month.
Finally, if you need advice, HL offer this service too. There is a free initial consultation and then a fixed advice fee of £495 to get you started.
Fees and services
Hargreaves Lansdown has a reputation for being expensive compared to the other platforms and on the face of it, this is true. The fees are charged per account/wrapper and not on the aggregate amount you have invested across the platform.
|Up to £250,000||0.45%|
|Between £250,000 and £1m||0.25%|
|Between £1m and £2m||0.1%|
For UK and overseas shares, investment trusts, exchange-traded funds, VCTs, gilts and bonds, the fee is 0.45%, capped at £45 per year. This applies to most of the wrappers, although it’s waived for shares in a Junior Investment Account or a Fund and Share Account. There are no dealing fees for trading in funds, but for shares, fees start at £11.95 per deal and tier down the more active you are.
So these fees do look higher than some of the competition, especially as they are charged at account level and are not based on the entire value of your investments. But that should be balanced against the total cost of ownership and the service provided.
HL has negotiated very competitive fees with most of the largest investment managers for the most popular funds, providing a considerable saving on the fund management cost. This should be taken into account when assessing your overall cost of ownership and is done by adding the fund management fee to the platform fee and making the comparison (using our calculator to help).
The other aspects to consider are the services provided by Hargreaves Lansdown. It provides very high levels of customer service, online or via their support team based in Bristol. The fund and share research is well regarded and provides significant value to the enthusiastic DIY investor who wants to be kept informed and doesn’t have access to other professional research. If this is important to you, then bundled together, the HL service is good value.
There is no doubt that Hargreaves Lansdown provides a comprehensive and best-in-class service. It has made a huge choice of investments and wrappers available to suit everyone from the absolutely beginner to sophisticated investors.
It does come at a price and you need to consider the overall package when deciding if HL is right for you. Total cost of ownership is what should be scrutinised, rather than just the platform fees, as well as the support and ancillary services offered.
The website contains a huge amount of information in the form of education, news and research, it is well-written, easy to find, well laid out and simple to understand. For people landing on the site for the first time, it is easy to move around the website, be guided to what you are looking for, and quick and straightforward to open an account and get invested.
This is replicated in the mobile app, which allows you to access all of your account information, prices, news and research and the ability to transact, all while on the move.
There is of course always room for improvement. For example, broadening the passive and ESG investment options, but overall, HL deserves its reputation and awards for its services.
‘Price is what you pay, value is what you get.’ Warren Buffett.