Portfolio Adviser • New PA Mag July/August • Discount U-turn for Hargreaves Lansdown

● Hargreaves Lansdown’s Wealth Shortlist has failed to offer discounts on the scale of its Wealth 50 predecessor

● Despite Hargreaves’ reputation for ‘doing deals,’ only five of the 17 funds on the revamped list offer a discount

Hargreaves Lansdown’s platform charges have been thrust into the spotlight as it made a U-turn on discounted fees for funds in its revamped buy list. The D2C platform giant recently unveiled its Wealth Shortlist, a rebrand of its Wealth 50 list, which was under fire for its championing of the now defunct Woodford Equity Income Fund.

Of the 17 funds that were added to the revamped list, 12 do not offer a discount on fees. Nine of the funds Hargreaves did not broker a better deal on were active funds. This is a far cry from the existing Wealth 50 constituents where only four funds, all Ishares trackers, did not agree to lower fees.

Of the 14 active funds that made it onto the Wealth Shortlist, Hargreaves secured an average discount of 0.04%. The average discount across the 41 active funds in the Wealth 50 before it switched to the Wealth Shortlist was 0.23%.

As such, the average net OCF of funds in the revamped buy list ratcheted up by 10% from 0.48% to 0.53%.

“One of the biggest criticisms of the Wealth 50 was a perception of a reliance on discounts in order to make it onto the list,” said Hargreaves Lansdown investment head Emma Wall. “We have listened to this.

“Our research found that clients were most concerned with potential performance,” she added. “The price we are able to negotiate on a fund is not a factor in deciding whether a fund makes the list. And we have made it easier for investors to compare costs.”

CWC Research managing director Clive Waller said thedecision to backtrack on price was confusing.

“Hargreaves have always used their clout as the biggest broker in town to do deals,” he said. “In the past, it was rebates that made the shareholders a bob or two. When rebates were banned by RDR, they negotiated discounts, which didn’t help the shareholders but gave them a competitive edge.”

Analysis by Which? found Hargreaves was among the most expensive platforms for portfolios with £50,000 in assets, and charged twice as much in fees as AJ Bell You-invest for pots above £1m and eight times that of Vangaurd.

GBI2 managing director Graham Bentley said removing the discount factor dispels the claim that funds got on the list simply through brokering a cheaper price.

“The fact that this makes the total cost of ownership a tiny bit higher seems less than relevant, given, Neil Woodford aside, the high regard the platform experiences from a majority of its customers,” he said.

The D2C giant has been accused of excluding Terry Smith’s top-quartile Fund-smith Equity Fund due to unwillingness to negotiate on fees. It faced similar criticisms after Crispin Odey’s Opus and Liontrust Special Situations did not make it onto the list after refusing to budge on fees.

● Fidelity International has nabbed Salman Ahmed from Lombard Odier Investment Managers for a newly created asset allocation leadership role. Ahmed will head up the global macro and strategic asset allocation group when he joins Fidelity in August.

● Schroders Personal Wealth has appointed the former boss of Openwork, Mark Duckworth, (pictured) as its chief executive. Duckworth will join SPW in September. It comes after the firm’s CEO Peter Hetherington announced he was stepping down from the role after less than a year. Schroders head of UK distribution and Latin America James Rainbow became CEO on an interim basis.

● Newton chief executive Hanneke Smits has been promoted to head up BNY Mellon IM as existing boss Mitchell Harris prepares to retire. Smits will succeed Harris on 1 October.

● Gam Investment has announced Blackrock’s Jeremy Roberts as its global head of distribution, joining the firm on 1 September. He spent 20 years at Blackrock, latterly as co-head of EMEA retail sales and head of UK retail. Gam group head of sales and distribution Tim Rainsford has left the form to join Generali Investment Partners as global head of sales.. The appointment followed the departure of Gam’s head of UK distribution Douglas Branson.

● Former Brooks Macdonald founder and fund manager Jon Gumpel has joined Edinburgh-based boutique Aubrey Capital Management as a director and fund manager. He will not run a fund at the start of his tenure but will work on developing Aubrey’s investment services to IFAs and other intermediaries.