Hargreaves Lansdown clients have been switching their investments to cash, the broker stated in its most recent quarterly trading update.
Client cash balances at the firm rose to £12.7 billion during the three months to the end of September, up from £12.4 billion at the end of the first quarter of the financial year.
- Hargreaves Lansdown customers can receive some of the best interest on cash through HL Actives Savings product.
The £300 million shift towards cash was driven by net selling of investments by clients in September, amid fears that the upcoming Budget could include a tax raid by the government.
In line with this, the share dealing volumes of Hargreaves Lansdown clients averaged 738,000 per month in the quarter, up just over 100,000 from 634,000. Overseas deal volumes representing 20.2% of total transactions.
The group’s chief executive Dan Olley said: “We are particularly mindful of tomorrow’s Budget, and will be on hand to support and guide our clients following any potential changes that are made.
“With millions of households without enough saved to enjoy a comfortable lifestyle in later life, it has never been more important for the UK to save and invest for their financial futures, and as the UK’s largest platform for retail investors HL is well placed to help them do so.”
Hargreaves Lansdown clients are concerned that the Budget to be announced on Wednesday 30 October, as chancellor of the exchequer Rachel Reeves has signalled significant tax hikes.
Among the measures predicated by commentators is a mooted increase of up to £20bn in employers’ national insurance contributions, as well as a freeze on personal tax thresholds.
The FTSE 100 UK blue chip benchmark fell 0.8% on Tuesday, while the mid-cap FTSE 250 fell 1%.
Hargreaves Lansdown clients rise by 18,000
In the trading update, Hargreaves Lansdown also revealed its client numbers grew by 18,000 in the second financial quarter, up from 8,000 in Q1.
The growth was attributed to new clients setting up SIPP, ISA and Active Savings accounts.
The firm’s client retention rate reached 92% and its asset retention rate fell modestly to 88.6% from 89% over the same period. It said both metrics were “below our medium to longer term ambitions”.
Hargreaves Lansdown’s revenue rose to £196.5 million in Q2 from £183.8 million in the prior quarter, driven by increased dealing volumes and higher assets under administration levels.
This more than offset a decline in income from interest revenue from the cash held on its platform.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
