The billionaire co-founder of UK investment group Hargreaves Lansdown has called on its board to slash costs and focus on the core business after its share price tumbled.
Peter Hargreaves, the company’s largest shareholder, said it has “been one of the worst performing shares in the FTSE 100” over the past few years and blamed the strategy pursued by the board and outgoing chief executive, Chris Hill.
Hargreaves Lansdown stock has fallen from a high of £24 in May 2019 to between £8 and £9 today.
In an interview with the Financial Times, Hargreaves said: “The board indulged in completely unnecessary irrelevant programmes, which have distracted the firm from its prime objective. It’s hardly surprising the shares have collapsed.”
Hargreaves cited the company’s rising costs and its plan to offer “hybrid” advice, combining automated financial guidance with help from advisers.
The aim is to provide customers with a wider range of help with financial decisions. For example, Hargreaves Lansdown plans to nudge customers to take advice when stock markets fall, to prevent panic-selling.
The Bristol-based company has 1.7mn customers and offers investment, pensions and savings products to retail investors. The plan to provide hybrid advice will be an additional service that would sit between the current option of “do it yourself” investing or the more expensive option of a consultation with a financial adviser.
The strategy was unveiled last year by Hill and is expected to continue after he steps down in November and is replaced by Dan Olley, who has sat on the board since 2019.
Hargreaves said automated advice did not take proper account of how much risk customers wanted to take and could lead them into the wrong investments. He said the company should instead focus on its original strategy.
He added that the company also needed “a huge round of cost-cutting” and had employed “at least 1,000 people that they don’t need”.
Hargreaves Lansdown’s costs increased 7 per cent to £285mn in 2022. Last February, it said it would spend £175mn over five years to upgrade technology and improve its efficiency, which sent shares down 23 per cent in just over a week.
Peter Hargreaves established the business in 1981 with Stephen Lansdown. He remains the largest shareholder with a stake of nearly 20 per cent but stepped down from the board in 2015.
He said the board at Hargreaves and other blue-chip companies were paid high fees, which was also inflating costs. According to the annual report, Hargreaves Lansdown’s chair Deanna Oppenheimer was paid £334,500 in 2021.
“There are too many boards who sit pretty on ridiculously high salaries of which they are not worthy,” said Hargreaves. “That is prevailing in the big companies in Britain. There are very few boards that seem to be worth the . . . big bucks paid out to them.”
Hargreaves Lansdown declined to comment.
