Peter Hargreaves steps down from wealth manager

Few people can match the impact on British wealth management of Peter Hargreaves, who on Tuesday announced that he would step down from Hargreaves Lansdown, the firm he helped establish in a spare bedroom in Bristol in 1981.

From that humble beginning, the firm has risen - without recourse either to acquisitions or to debt - to become a member of the FTSE 100. The company now has an estimated 32 per cent share of the UK retail financial services market and more than £49bn under management.

Stephen Lansdown, the other co-founder, stepped down as a non-executive in 2012 with relatively little fanfare. But news that Mr Hargreaves, the son of a Lancashire baker, is to step down from the board triggered a wave of tributes - and a 2 per cent dip in the company's share price.

"Peter understood the consumer better than anyone else," said Mark Dampier, the head of research whom Hargreaves recruited in 1998. "At that time, finance was held back by complexity, poor service and a lack of respect for the customer."

Mr Hargreaves was always the public face of the business, especially after it floated in 2007. It is his image that frequently graces the company's website or the "Investment Times", a marketing periodical. A willingness to supply colourful quotes - he has described investment trust directors as "titled wallies" and has frequently lambasted regulators - endeared him to journalists.

He recognised early on that in an industry based on face-to-face meetings with advisers, direct marketing offered the potential to grow much faster. Over the years, the company built up a vast leads database, allowing it to recruit new clients quickly and cheaply.

"Probably every higher-rate taxpayer in Britain has had a mailshot or an email from HL over the past year," said Andy Bell, founder of pensions specialist AJ Bell.

Good service helped retain clients. At Mr Hargreaves' insistence, long, complicated forms were pared back to single pages and telephones were answered by real people.

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Technology was another factor. In his autobiography, Mr Hargreaves recalls how the acquisition of a dot-matrix printer in the early 1980s radically increased productivity. The company still runs all its own IT in an industry where outsourcing is the norm.

"They were the first of the 'fintech' companies," said Martin Gilbert, chief executive of Aberdeen Asset Management. "We're all talking about investing in fintech now, but he's been doing it for 20 or 30 years. They have very good systems."

Peers are unsurprised by his decision to leave the boardroom. Several thought it would be a precursor to him selling some of his stake in the company, as Mr Lansdown has done. Others point out that running an established and quoted financial services company is very different prospect from running a privately-held challenger, especially given the growth in compliance-related workload in recent years.

Unlike Mr Lansdown, he plans to remain an employee of the company, most likely in a marketing or communications capacity. "My wife says she'll divorce me if I give up work," he said in 2012.

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