Hargreaves Lansdown shares plunge as pandemic trade boom wanes

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“There has been a permanent shift in consumer behavior in areas from groceries to health services, from online investing to wealth management…Young people now have a greater appetite for investment,” Hill said.

“The pandemic has accelerated two trends that were already clear to us: a permanent shift to digital and a change in the demographic mix,” he added.

In March, the city watchdog sounded the alarm at young investors who were “financially vulnerable” and overconfident in speculative assets, such as cryptocurrencies, without understanding the risks involved.

Like other investment platforms, Hargreaves has received a boost from Britons who are bored trading volatile stocks during the lockdown.

The wild market volatility during the crisis prompted an army of retail investors to mobilize on social media platform Reddit and pile into so-called “meme stocks” such as GameStop, the US retailer, and AMC, owner of Odeon.

However, the increase in customer numbers was impacted somewhat by a 24% increase in costs to £266m. Serving its new customer base and investing in technology made up a large portion of the cost.

Analysts at Jefferies said Hargreaves will continue to struggle with lower revenue margins due to increased competition and higher costs this fiscal year: “Despite strong client recruitment and retention and clear market leadership, we believe Hargreaves Lansdown may be at risk.”

Total assets under management rose by nearly a third to £135.5 billion, while the company’s profit fell 8% to 50.5 pence.

Analysts at RBC said the company is well positioned “to capitalize on the cash hoard of wealthy families as well as the potential upside from a legacy of client interest in investments after Covid-19. It remains a good operation.”

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