15th Jan 2014 08:38
LONDON (Alliance News) - Hargreaves Lansdown PLC Wednesday saw its shares decline as it warned that it will have to seek billions of pounds in new assets over the next three years to offset lower prices and commission it will charge clients for investing with it.
In a statement, the stockbroker said its lower pricing is expected to reduce client charges by GBP8 million over a year, while it is also predicting a revenues hit of about GBP9 million from enforced changes to the amount of commission it will be able to charge on its products from April 2016. It said it will have to gather about GBP3.5 billion of new assets over the next three year to offset the overall impact of the pricing changes.
Its net new business in its last financial year was GBP5.1 billion, while new business was GBP1.26 billion in the first quarter of the current year.
"Management notes that previous historical reinvestment in pricing improvements has driven increased business volumes which have more than offset any revenue impact," it said in a statement.
The move follows new rules put in place by the UK regulator requiring brokers to lower commission charges, change the way commission is charged, unbundle products and be more transparent with clients on where their money goes.
Hargreaves Lansdown said that from March 1, the average fund annual management charge for a fund on its Wealth 150 list will fall to about 0.65%, whit an even lower average charge of about 0.54% on its 27 favourite funds on the list.
As a result of the new regulator rules, it said it will now charge 0.45% a year for fund investments of up to GBP250,000, 0.25% for investments of up to GBP1 million, 0.1% for investments up to GBP2 million and no charge for investments above that.
Hargreaves Lansdown shares were down 2.6% at 1,468.50 pence early Wednesday, the second-biggest fall on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Hargreaves Lansdown