Bristol-based financial services provider Hargreaves Lansdown has extended its domination among D2C investment platforms across the UK, new research from Platforum reveals.
Platforum’s latest report, UK D2C Guide: Market Size and Structure, finds Hargreaves Lansdown has increased its market share for the fourth consecutive year, now accounting for 38% of the direct platform market.
The next largest direct platform is Barclays Stockbrokers at 9% but it will be leapfrogged by the combined market share of Interactive Investor and TD Direct Investing – currently at 11% – once the acquisition completes during Q1 2017.
The gap in market share between Hargreaves Lansdown and Barclays Stockbrokers has widened from 14 percentage points in 2010 to 29 this year.
New wave of competition
Despite steady growth, Hargreaves Lansdown is facing increasing competition from propositions which are more cost competitive are growing more quickly.
Fixed price platforms Interactive Investor and The Share Centre grew faster than Hargreaves Lansdown in the last twelve months to September 2016. Similarly, AJ Bell Youinvest and Charles Stanley Direct have done well charging ad valorum at a lower level than most competitors.
Meanwhile, Barclays has launched Barclays Smart Investor, a fully integrated online banking and investing service at a competitive price point which Platforum expects to be popular.
“Barclays is well placed to target a broader profile of investor including first time investors, and has millions of warm leads in the form of retail banking customers,” according to Platforum.
Jeremy Fawcett, head of Direct at Platforum, said: “We know from our consumer research that ’competitive price’ is now the top consideration among investors when choosing a platform service and that twice the number of people prefer fixed price compared to percentage based charging model. With the acquisition of TD Direct Investing, Interactive Investor will be the first large platform to offer fixed pricing and we will be looking to see if it can maintain its impressive recent growth rate at scale.
“In addition, market leader Hargreaves Lansdown will be facing competition from Barclays’ recently launched DIY proposition Barclays Smart Investor which combines banking and investing under the same login at a competitive price point. The challenge for Barclays will be to acquire customers from outside its existing customer base. But Hargreaves Lansdown is also integrating cash saving into its investment platform proposition with the launch of HL Savings, expected later this year.”