Analysis: Hargreaves Lansdown – not just a wealth manager but a wealth builder

November 11, 2011
By

The business model which has powered Bristol-based wealth managers Hargreaves Lansdown from a back bedroom to a £2bn-plus FTSE-100 listing in 30 years continues to pay dividends not just for investors but also employees and, in particular, its long-serving directors – many of whom are now multi-millionaires.

Indeed, co-founder and executive director Peter Hargreaves is not just a multi-millionaire but – as he acknowledged in one interview earlier this year – as rich as Croesus. He was ranked 65th in the Sunday Times Rich List with an estimated fortune of £1.02bn. 
 
His wealth is built on the slogan that appears on the the firm's website: We aim to provide the best information, best research and best prices on ISAs, SIPPs, funds and shares. The company's Vantage range of tax-free ISAs and low-cost SIPPs are a major force in UK financial services. In the year to June 30, HL added 50,000 new Vantage clients, boosting the total to 380,000.

In its latest financial year, HL's revenues leapt by almost a third, rising 31% to £208m. This was driven largely by a surge in assets under administration, which shot up 41% to £24.6bn. Thanks to a booming top-line, HL's pre-tax profit soared by almost half, up 46% to £126m. As a result, HL boosted its dividend by a handsome 59% to 18.87p per share (including a special dividend of 5.96p).

The share price closed on Friday at 511p mark – something which must give much pleasure not only to Peter Hargreaves but also his hardworking, talented team of share-owning directors and employees. Just how much pleasure became clear earlier this week in a Stock Exchange announcement about the shareholdings of nine long-serving directors who each added a further 12,650 shares to their holdings under a share option scheme dating back to 2006. 

Of the nine, Stuart Louden has nearly 351,000 shares with a combined value approaching £1.75m. He is Director of Library Information Services – a key component in the success of the HL business model. Stuart formed the Funds Library in 2003 to provide data distribution services to Hargreaves Lansdown and other fund management groups.
 
The biggest shareholder in the list is marketing director Theresa Barry with 13,599,781 shares – worth around £68m. She joined Hargreaves Lansdown as its first full-time employee in 1982.
 
Others include:
 
- Group finance director Tracey Taylor with 734,091 shares, worth around £3.67m at £5 a share. (Friday's closing price was 506.5p). She joined the Hargreaves Lansdown team  in 1999 and her responsibilities within the group since then have included systems, HR, group finance, treasury, client accounting and the company secretarial function.
 
- Vantage and Broking Operations director Nick Marson with 660,326 worth around £3.3m. Nick joined Hargreaves Lansdown in 1997 initially working in the Stockbrokers Back Office, before moving on to equity and fund trading.

- Group Compliance director Nigel Bence with 200,334 shares worth around £1m. He joined the compliance department in 1992.

- Corporate & Pensions managing director Alex Davies with 1,128,479 shares worth around £5.64m. He joined in 1999.

- Investment marketing director Ian Hunter with 736,526 shares worth around £3.68m. He joined the investment helpdesk of Hargreaves Lansdown in 1997 and after three years he moved to the marketing team where he is now responsible for the marketing of all investments and the Vantage Service.

- Head of Research Mark Dampier with 926,837 shares worth around £4.63m. He joined Hargreaves Lansdown and the board of Hargreaves Lansdown Asset Management in 1998 as research director.
 
- Investment Director, HL Fund Managers, Lee Gardhouse with 916,529 worth around £4.58m. He took responsibility for the Hargreaves Lansdown multi-manager fund range in 2001, and manages the Portfolio Management Service.

Setting aside shares they may already have sold before the latest declaration, their wealth looks set to rise inexorably, given the scale and strength of the business they have helped to create.

The proportion of HL's revenues that is recurring rose to 78% from 72% in its latest accounts, indicating that its growth is no 'flash in the pan'. In addition, HL's operating margin – a powerful indicator of a firm's strength – followed suit, climbing to nearly 60% from below 54%.

Hargreaves Lansdown, with a Bristol workforce of 650 in stylish Harbourside offices, is a West Country success story that looks truly unstoppable.

 

 

 

 

 

 

 

 

 

 

Comments are closed.

ADVERTISE HERE

Reach tens of thousands of senior business people across Bristol for just £120 a month. Email info@bristol-business.net for more information.