Hargreaves Lansdown Falls 10% as Operating Margin Slips

Feb. 5 (Bloomberg) -- Hargreaves Lansdown Plc declined the most in two-and-a-half years, as the U.K’s largest retail broker said its operating margin, a profitability measure, fell.

The stock lost 152 pence, or 10 percent, to 1,345 pence in London, its biggest drop since August 2011. Operating margin fell to 65.2 percent for the six months to Dec. 31 from 65.6 percent a year earlier, the Bristol, England-based company said in a statement today.

Firms including Hargreaves are introducing fees on their platforms, which enable consumers to invest directly in funds, to replace commission income and comply with the U.K.’s Retail Distribution Review. The rules banned financial advisers from taking commission from fund providers in its first step.

“We estimate 80 percent of our clients will be better off or no worse off from the RDR tariff changes we have made and with the lower cost funds we have negotiated many more will have the potential to be better off,” the firm said in the statement.

Hargreaves’s new structure charges its clients a 0.45 percent fee on the first 250,000 pounds ($407,000) of a fund, 0.25 percent for the next 750,000 pounds and 0.1 percent for values over 1 million pounds to 2 million pounds.

The firm today scrapped a separate fee for investment trusts, which will now be charged in the same pool as shares, the company wrote in an e-mail to clients seen by Bloomberg news and confirmed by the company.

Fidelity Worldwide Investment last month announced a fee structure for retail clients that it said undercuts competitors including Hargreaves Lansdown.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net