We’ll take customers off Hargreaves Lansdown, vows Saxo UK boss after fee shake-up

The boss of Saxo UK has said he will bring the fight to Hargreaves Lansdown as it positions itself as the natural home for savvy investors.

The retail investor platform was originally designed for individual traders and now services institutional investors. It has since launched a new simplified platform to capture a new portion of the market.

Now its UK boss Andrew Bresler tells This Is Money that he thinks it has what it takes to challenge Hargreaves Lansdown – one of the country’s most popular platforms – after a fee shake-up that has seen unhappy customers leave in their droves.

Saxo’s bid for DIY investors

While Saxo was an early pioneer of online trading for institutional clients, it failed to make as much of a splash in the retail market like its peers AJ Bell and Hargreaves.

The pandemic changed everything, bringing new, fresher players to the market. 

Freetrade, Trading212 and eToro all soared in popularity as younger investors looked for cheaper options to cash in on market volatility.

‘The barriers to entry now, beyond licensing requirements, are really really low,’ says Bresler, who’s worked in the industry for over two decades. 

‘You can take [something] to market in a short amount of time… and have the full gambit of capital markets available to you.’

He added: ‘Adoption has largely been demand-driven rather than supply. Even though the industry has evolved, I still think it is seeing a rapidly changing demand side [and] that’s a growth trajectory that will continue.’

Saxo finally moved into the space eighteen months ago with the launch of a simplified, cheaper version of its trader platform.

Its fees start at 0.08 per cent commission from stock and ETF trading, and 0.2 per cent for government and corporate bonds.

‘We can take customers off Hargreaves’

Even with more prospective investors, competition is harder than ever, says Bresler.

‘I can’t think of a market outside of the US where the competition dynamic is as fierce as in the UK. 

‘Competing for end clients is an incredibly difficult challenge for me and any of my counterparts at any of the other brokers.’

But legacy players are starting to lose their shine. Hargreaves Lansdown, a pioneer in retail investment, has angered a small portion of its customers by charging more in fees.

Bresler says it’s ‘a symptom of a bigger, underlying problem with the perception of clients at Hargreaves, which hasn’t materially invested in either the price nor platform in a period of time.’

He adds: ‘We know Hargreaves has a decent amount of churn within their client books. 

‘They have north of two million clients, and they’re churning around 10 per cent of those, that’s a significant portion of people looking for a new home.’

But Saxo is up against the more established AJ Bell and Interactive Investor, which have already reported an influx of ex-Hargreaves customers joining their platforms.

Has Saxo had the same? Bresler admits there’s ‘not been a flood’ and admits they might be some way off.

‘Our legacy has been a lot more about the professional traders, those who understand financial markets… we’ve tried to evolve that message and I think we still have a bit more to do within the UK in terms of telling a story.’

What may work in Saxo’s favour is that its typical customers are more similar to Hargreaves – financially savvy and affluent.

Saxo’s pitch is that it can give investors access to more stocks and other asset classes, including options and FX, which should maximise returns for investors.

‘If we’re good enough for some of the institutional players, then we’re equally as good to our direct customers…. 

‘The product suite we offer allows you to maximise your returns at a much lower price point than Hargreaves.’

One of its major plans in the coming months is to ‘reward’ investors for consolidating their wealth with Saxo. 

Bresler argues that competitors make it more expensive to hold Isas, Sipps and general investment accounts with one broker.

‘Our desire is to make it more cost-effective to consolidate with us because you can stay with Saxo for life.’

If you don’t own your tech you’ll lose out

Bresler faces stiff competition from more established platforms and plucky upstarts like Trading212, which has a broader appeal among younger investors.

While Saxo eyes affluent 40-somethings and hopes they’ll stick with the platform, 212 can capture them even earlier.

It means Saxo faces an uphill struggle, but Bresler believes it will ultimately come down to how each platform uses its technology.

‘There’s a potential amount of risk in terms of what AI is bringing to the market,’ says Bresler. 

‘The winners and losers will be defined by the quality of the technology they’ve built.’

The platforms that ‘work off the back of someone else’s tech, rather than developing their own, as Saxo has, could soon be moved out of the market.

He adds: ‘The speed at which we’re changing is so rapid. If you’re unable to keep pace with that speed, you can become obsolete quite quickly.’