Jim Armitage: Did promoter Hargreaves Lansdown cross the line with fund star mailshot?Comments Off on Jim Armitage: Did promoter Hargreaves Lansdown cross the line with fund star mailshot?
A letter pops through your door from a very wealthy man, one of the richest in the country. He made his money in the finance game, setting up the UK’s most successful personal investment platform.
So when, in his message he tells you about a genius fund manager he knows, and says he’s invested his own personal cash with the guy, you’d be forgiven for thinking he was advising you to do the same.
The letter was a mailshot a few years back received by an Evening Standard reader from Peter Hargreaves in his role as founder and boss of Hargreaves Lansdown. The fund manager was Neil Woodford.
HL’s platform is allowed to “promote” financial products but not to “advise” them. It’s an important distinction. Advisers have to be qualified and can be held to account by the Financial Conduct Authority. Promoters don’t.
So, was the letter advice, or just a promotion? Hargreaves says the latter. “Our financial promotions are marketing, not advice.” The ES reader, an IFA no less, thought not.
HL is accused of sailing close to the wind on such distinctions. Not just in promotions, but in its Best Buy lists which led to so many retail investors now being stuck in the Woodford Equity Income Fund.
HL says funds are selected after rigorous analysis, but some asset managers claim those offering the biggest discounts to HL get preferred status. HL says: “The claim that cost is the definitive factor in our Wealth 50 process is categorically incorrect.” Not “the” factor, but “a” factor, maybe?
The FCA reviewed how best buy tables are compiled but in March opted to do nothing. In the wake of the Woodford saga, it says it will have another look. Perhaps more rigour might be appropriate this time.