Why it might be time for Hargreaves Lansdown customers to transfer out

By Antonia Medlicott

  • Published: June 19, 2024
  • Edited by: Clare West
  • Last Update: 4 weeks ago
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What's going on with Hargreaves Lansdown?

As the news buzzes with the recent revelation that Hargreaves Lansdown is courting a takeover bid from private equity funds led by CVC Capital Partners, I look at what this means and how clients of Hargreaves Lansdown should respond.

Skip to the bottom of this article to find out why we feel a transfer to AJ Bell would suit most people better.

Explaining private equity

Private equity funds are investment funds that acquire companies with the intention of restructuring and improving their value in order to sell them for a profit down the line. In order for this to happen, the company cannot be listed on a stock exchange, so Hargreaves Lansdown would need to be de-listed from the London Stock Exchange and shareholders would need to be bought out.

What could this mean for Hargreaves Lansdown?

The private equity firms will need to identify areas that could increase the value of Hargreaves Lansdown. This could include:

  • Restructuring the company, including layoffs, reorganization, and strategies that focus on areas of the business that generate higher returns.
  • Financial adjustments in order to leverage debt used to finance the purchase and tighter controls on expenses to increase profit margins.

What could this mean for account holders at Hargreaves Lansdown?

There could be a number of potential changes for account holders although it’s important to recognise that this is speculation at this stage. Shifts in customer focus could include:

  • Adjustments that focus on leveraging high-margin products.
  • Changes to fees and charges in order to increase profits.

Hargreaves Lansdown Junior ISA Holdings

What actions should account holders take?

First of all, account holders need to understand that they are already on one of the most expensive platforms available in the UK. Is this cost worth it? We looked at Hargreaves Lansdown's service, assets, accounts, performance, and tools and found that there was much better value to be had elsewhere.

Given that a takeover by a private equity firm could result in more focus on profit for the company, this could mean that it’s time for account holders to cast their net elsewhere.

Here at Investing Insiders, we would encourage investors to read our review of AJ Bell which we feel offers much better value without sacrificing any of the products and services at Hargreaves Lansdown.

AJ Bell Tesco plc