Here we look at Hargreaves Lansdown – the UK’s biggest DIY investment platform.
Hargreaves Lansdown (HL) is by far the UK’s biggest DIY investment platform, looking after more than £1.30 billion on behalf of around 1.5 million clients. It was founded in 1981 and has grown at pace to become a FTSE100 company.
HL is a one-stop ‘investment supermarket’ for shares, funds, Junior ISAs, adult ISAs, pensions and cash. It also offers a range of investment tools and guides for any level of investor.
Through HL you can invest in:
- A choice of 3,700 funds
- Shares listed on the Canadian, European and UK stock exchanges
- Exchange Traded Funds (ETFs)
- Investment Trusts
- Corporate and Government bonds
What predominantly makes HL so popular is how easy it is to set up an account and access its products. It should take about 10 minutes to open an account – choose from an ISA, Self-Invested Pension (SIPP), General Investment Account (GIA), or trading account. This is like a ‘basket’ for the investments you want to put in.
The HL website is well laid out and includes some excellent investment guides. Its app is also extremely user-friendly (especially compared to many in this market), making it easy for you to manage your investments on the move.
Is it safe?
Yes. HL is covered by the Financial Services Compensation Scheme (FSCS). This protects up to £85,000 of investments per person, per platform. Note that you will not be compensated for investments falling in value, or if a company in which you hold shares goes bust. This is unless its poor performance resulted from bad advice given by a regulated Independent Financial Advisor that has also since gone bust.
Sustainable investing option
Thankfully, as a platform with a huge amount of power in its pocket, HL is increasingly seeing environmental, social and governance (ESG) factors as key to a healthy investment – not just for the planet, but for returns too.
Its most notable step towards making sustainable investments a more central part of its strategy was the relaunch of its Wealth Shortlist last year to include responsible funds for the first time. The list is made up of funds chosen by experts as having the greatest potential to financially outperform their peers over the long term.
There are currently five funds in the ‘Responsible Funds’ category (up from three in 2020), which are Aegon Ethical Equity, BNY Mellon Sustainable Real Return, Janus Henderson UK Responsible Income, Troy Trojan Ethical Income and Legal & General Future World ESG Developed Index.
While this is still a small percentage of the 68-strong list, it’s a promising move in the right direction. It has also added a “Responsible Investing” section to its platform that includes sustainable funds hand-picked by its analysts. Commendably, it is very easy to search for responsible funds only on the HL site.
Unique selling points
- The ‘Wealth Shortlist.’ HL curates a selection of funds that it believes have the best potential for growth and returns within their sector.
- Fund Finder. Investors can search for a specific fund by sector, unit type, or provider.
- Portfolio+. There are six ready-made portfolios that invest in a broad range of assets from a number of countries. This helps to diversify risk. They are monitored regularly and rebalanced by a fund manager twice a year. Minimum investment in Portfolio+ is £1,000.
- Master portfolios. HL fund managers put these ‘stepping stone’ portfolios together. Responsibility for managing them – including how much to allocate to each fund in the portfolio – then lies with the investor. There are five to choose from including ‘Adventurous, ‘Medium,’ or Conservative’ risk levels, ‘Investing for Children,’ and ‘Investing for Income.’
- Pension calculator. Find out how much your pension will be worth by the time you retire.
- ISA calculator. Find out what your ISA could be worth by the time you want to use it.
- Cash management service. HL offers an Active Savings Account, which lets you maximise the interest you receive on your savings.
The plus points
- Choice. An enormous range of investment options, including ready-made portfolios.
- Easy investing. Suitable for beginners right through to more experienced investors. HL has plenty of handy educational tools to help any level of investor find their way around.
- Foreign currency exchange. You can transfer money in around 40 different currencies either online or on the phone.
- Fees are on the higher side, especially for larger portfolios. (See below).
- Choice could be confusing for beginners. HL’s choice of investments is undoubtedly a positive thing, but it might feel a little daunting for someone investing for the first time.
Cost of use
There is an annual fund charge of 0.45 per cent on funds up to £250,000, 0.25 per cent on the portion of funds between £250,000 and £1 million, and 0.1 per cent on anything between £1 million and £2 million. Anything above that is free.
For holding shares, there is a 0.45 per cent fee capped at £45 per year (this is for an Isa – there are no management charges for shares held in a GIA).
If you make less than 10 trades, you’ll pay £11.95 per deal, between 10 and 19 is £8.95 and more than 20 is £5.95. There is no dealing charge for buying or selling funds.
How do these costs compare to competitors?
HL is not the cheapest platform on the market. But if you’re prepared to pay a bit more for good service, an easy-to-use site and helpful tools and guides, you may feel it’s worth it.
If you have larger amounts to invest, however, you could find yourself paying chunky annual charges as they come as a percentage of your portfolio value.
HL is fairly competitive for dealing shares compared to its competitors, especially for larger portfolios, because of its £45 cap on share management costs in an Isa, and zero share management costs in a general investment account.
As a comparison, AJ Bell charges an annual platform fee of 0.25 per cent up to £250,000, 0.10 per cent for £250,000 to £1 million and anything over £2 million is free.
Interactive Investor charges a fixed fee of £9.99, £13.99 or £19.99 per month depending on the plan you choose. These fees include an unlimited amount of trades. This could make it cheaper for investors with larger portfolios, compared to HL.