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Business booms at Hargreaves Lansdown amid Online trading frenzy

Online trading frenzy sees Hargreaves Lansdown win record levels of new business

Hargreaves Lansdown won record levels of new business over the first four months of the year as investors rushed to take advantage of the online trading frenzy.

The shares and funds platform saw 126,000 savers start using its services between January and April, taking its total customer numbers to 1.6m.

And they piled in £4.6billion into their accounts over that time to invest in the stock market.

Trading frenzy: Hargreaves saw 126,000 savers start using its services between January and April, taking its total customer numbers to 1.6m

But shares fell 4.6 per cent after the firm warned trading volumes had started to ease since lockdown restrictions were lifted.

Younger savers were especially drawn to Hargreaves early this year, with a 150 per cent increase in the number of customers logging into their online accounts, particularly via the mobile app. 

The firm said the average age of its clients was now 36, down from 37 last year and 45 in 2012.

Several trading and investment platforms have reported a boom in the number of young people starting to take an interest in the stock market, following the popularity of stocks such as Gamestop which were heavily hyped on social media.

And households have built up savings during the pandemic, thought to be worth around £200bn, as opportunities to spend have been squashed by successive lockdowns.

With interest rates at rock bottom, those accidental savers are now looking for places to invest. 

Wealth manager Brewin Dolphin also saw its assets under management rise by 10.5 per cent in the six months to March to £47.6billion, as chief executive Robin Beer said the firm had reached out ‘clients who have been able to accumulate higher levels of savings over the last year’.

The boom at Hargreaves lifted its revenues for the first four months of 2021 to £233.2million, from £190.2million the same time a year earlier. 

But the firm is still facing legal action over its promotion of Neil Woodford’s doomed Equity Income fund, which it backed right up until the fund’s suspension in 2019.

Hargreaves’ chief executive Chris Hill said trading was driven by the bizarre Gamestop phenomenon which emerged this year.

Gamestop, a little-known and relatively unsuccessful company in the US, saw its share price soar after young people on social media encouraged each other to pile in – purely to deal a blow to the hedge funds which were betting against it.

The anarchist attitude spread to some other stocks, and piqued the interest of savers who began buying the shares in the hope of making a quick profit.

Earlier this week, the City watchdog’s chief executive Nikhil Rathi cautioned that investors could lose their money on speculative trades such as crypto-currencies and Gamestop-style stocks.