Angry Hargreaves Lansdown Investors Fuel £3 Billion Boom at Interactive Investor

Investors disillusioned with Hargreaves Lansdown following recent fee changes have propelled a significant £3 billion surge at rival platform Interactive Investor. Hargreaves, the largest retail stockbroker in Britain, has faced considerable backlash from its clients after unveiling a revised charging structure earlier this year. This overhaul, implemented last month, has resulted in increased costs for certain users, prompting many to seek alternatives.

The latest figures demonstrate a remarkable 88 per cent year-on-year rise in net inflows at Interactive Investor, reaching a record £3 billion for the quarter ending in March. This surge provides a boost for Aberdeen Group, the FTSE 250 fund management company that owns Interactive, particularly as it grapples with substantial client withdrawals in other areas of its business.

Jason Windsor, chief executive of Aberdeen, described the past quarter as “spectacular” for Interactive, noting that the influx of new clients leaving Hargreaves has markedly increased. The company’s proactive marketing strategy has targeted dissatisfied Hargreaves users, showcasing ads on the London Underground that express gratitude to their competitor for the fee adjustments.

Despite this impressive growth, the gains at Interactive have not fully compensated for significant outflows within Aberdeen’s core fund management division, where net withdrawals amounted to £5.4 billion during the same period. Additionally, the £78.6 billion platform utilized by financial advisers also experienced a £600 million net outflow, contributing to Aberdeen’s total net outflow of £2.9 billion for the quarter.

Market fluctuations, exacerbated by geopolitical unrest in the Middle East, have further impacted Aberdeen’s asset management. A recent decision to divest its financial planning business also saw the company lose an additional £3.6 billion in assets. Consequently, the total assets under Aberdeen’s management have declined from £556 billion at the end of December to £547.7 billion.

Windsor, who took the reins at Aberdeen in 2024, continues to face challenges in reversing the company’s fortunes. His previous position as finance chief has not set any imminent targets for returning to net inflows, highlighting the unpredictable nature of the investment landscape. The merger with Standard Life in 2017 has yet to yield the desired results regarding client retention, given the fierce competition from lower-cost passive investment options.

Despite setbacks, Windsor’s strategic acquisition of the thriving Interactive platform for £1.5 billion has shifted Aberdeen’s focus towards wealth management and has proven invaluable. The shares of Aberdeen saw a modest increase, closing up by 3p, or 1.4 per cent, at 213¾p.