WE meet in the bar of One Aldwych, a seriously fashionable hotel off London’s
Strand. Stephen Lansdown looks anxious, as always. “Peter’s just upstairs,”
he says. “We’re taking turns waiting for you. Fancy a drink?”
Lansdown, 54, short, shy and rumpled, is freshly scrubbed in a smart, grey
suit, like a farmer up to town on market day. Hargreaves appears a moment
later, 60 years old, medium-height, portly and loud, and with a jowly face
that looks like it enjoys a pint. He’s bristling with wicked humour.
“Oh, sorry to interrupt,” he needles in his broad Lancastrian accent. “Try the
Budvar, it’s good,” he says, grabbing a beer. His business partner shakes
his head morosely. Hargreaves breezes on. It’s only 5pm but it looks like
the two of them are settling in nicely.
Hargreaves and Lansdown are one of the great double acts of the money
business. Trained as accountants, based in Bristol, they have built their
financial-advice firm into an investment brokerage leviathan, avoiding
London’s bright lights for more than two decades while developing their
nononsense approach to putting investors’ money away.
Now that’s all changing, hence the smart London watering hole. The two had
just finished explaining their plans to the City in advance of floating part
of their business in a fortnight. And what a business. Hargreaves Lansdown
now employs 655 staff, has 350,000 active clients and controls more than £8
billion of assets on behalf of private investors – little wonder some say
its founders are feared and respected in equal measure. Their approval can
make or break many investment funds.
Yet, in the flesh, they are likably plain. That’s how they prefer it – no
surprises that The Hobbit is a favourite book. They have been down a hole
slowly building up a fortune for longer than many can remember. The float
brings them blinking into the light. Clitheroe-born Hargreaves and
Gloucester-shire lad Lansdown will pocket £70m each from selling part of
their 80% stake, valued at £570m. More beers all round, I think.
Will going public alter their style? Too late for that. Hargreaves, the
marketing brains who has driven the company, will continue to lead with
Lancastrian bluntness.
Lansdown, the organiser – who also chairs Bristol City football club – will
get on with executing Hargreaves’s ideas properly. After the float,
Hargreaves is nominally chief executive, and Lansdown chairman. But don’t
expect them to stick to job definitions.
“I don’t want to be typecast because I am far from being an administrator,”
says Lansdown.
“Not even that,” says Hargreaves, winking.
Lansdown: “Yeah, well, I am a better salesman than he is.”
Hargreaves: “And Steve does all the legal agreements and dealing with lawyers
and accountants . . . mind you, he has probably got the whole company now.”
Lansdown: “You’ll find out soon.”
Hargreaves: “In fact, have I got a contract of employment?”
They laugh. At times, it’s like sitting in a Creature Comforts sketch. Yet
beneath the digs – “affection by abuse” – you can sense the competitive
respect that comes from growing a business together. Both married, with
families and substantial interests outside the firm, they still score points
off each other like schoolboys.
Colleagues say that bantering permeates the firm’s culture. “There’s no ego,
they are brilliant at dejargonising and they understand what the customer
wants,” says Mark Dampier, head of research at Hargreaves Lansdown, who has
worked with them for nine years. “It’s about straight-talking: if you don’t
like something, say it.”
Hargreaves and Lansdown started with a typewriter and a secondhand desk in
1981, after meeting at a rival firm. They claim never to have had a business
plan, just an eye for opportunity. Their smartest move was moving into
brokerage, and in realising that customer retention would be more profitable
in the long run than making easy sales.
Hence consumers buying into an investment fund through them will often find
much of the fund manager’s fees repaid. Hargreaves Lansdown makes its money
by taking a tiny sliver each year, which bulks up into a substantial sum
through the amount of business it transacts. It also offers a range of other
services.
“They have moved from just providing advice to providing a platform for
customers to hold their investments,” says Edward Bon-ham Carter, joint
chief executive of Jupiter Asset Management. “And as a business we think
they are in the sweet spot of the structural changes taking place in the
market.”
Those changes include greater freedom for consumers to choose how they run
their pension, and more diversity of financial products. And the Hargreaves
Lansdown approach – minimal paperwork, easy-to-understand recommendations,
the possibility of wrapping all investments into one package – has won them
loyal followers from all income brackets.
“It went fantastic from day one,” says Hargreaves. “We were sending out
newsletters and ideas to people, and others just didn’t want to do it. And I
hate doing forms, so that’s been an advantage, because it means ours have
been the easiest in the sector.”
Such aggressive brio can ruffle feathers. Hargreaves recently described many
financial advisers as “incompetent” and angered the fund manager New Star by
refusing to endorse its new property fund, saying investors were being sold
too much property.
He also likes a fight. When the Financial Services Authority fined the firm
£300,000 three years ago for giving clients inadequate information on the
risks of split-capital investment trusts in 2001-2, he was “perplexed” that
at that time the regulator had also deemed these products to be low risk on
its consumer website. Colleagues told him to take the hit.
Lansdown sighs. “How can I put this? Pete is an impact player. Sometimes the
idea is right but the actual approach . . . well, you get used to it. It’s
always been like that.”
Hargreaves grins. “I take after my mother.”
Both men, while different, like to get their own way. Hargreaves was born an
only child to a baker and his wife. Lansdown, son of a carpenter, was born
“almost an only child – my sister was born 14 years after”.
They met in 1981 when they both applied to work for the same financial adviser
in Bristol. “Steve was the only guy who would go for a beer with me after
work,” laughs Hargreaves, who by then had already done a stint as a computer
salesman.
It was a case of opposites attract. “I have always worked on the basis that
Pete has pulled me along and made me be more adventurous,” says Lansdown,
“but also I have told him, don’t get too carried away.
And if we both don’t want to do something, we don’t do it.”
Whether that tight-knit approach can survive the scrutiny of working in a
public company is moot. If anything goes wrong, shareholders will question
just how close the chairman and chief executive are, and who controls whom.
So why are they floating? Is Hargreaves retiring soon? “Rubbish,” he says. Nor
is it about the money – it’s about sorting out succession a few years down
the line.
“If we’d done it five years on, I’d have been too old,” says Hargreaves. “But
it’ll be like Star Trek, going from Kirk and Spock to Jean-Luc Picard and .
. .” Lansdown rolls his eyes. Others suggest that it’s the Bristol City
chairman who may bow out first. The cash-strapped football club is on the
verge of promotion to the Championship, and may need more of his attention
in future, as he tries to marry on-pitch success with financial prudence.
“Yeah, isn’t Sam Allardyce available now?” ribs Hargreaves.
Lansdown groans. Has he put a lot into the club already? “You can ask, but I’m
not going to tell you.” Hargreaves creases up. Work-mates say he used to
tease his friend: “How does it feel to chair a loss-making company?”
Ouch. It’s not a jibe he will want to make in future.
PETER HARGREAVES’S WORKING DAY
THE Hargreaves Lansdown chief executive wakes at his home outside Bristol at
6.30am, then drops his daughter at school before coming into work at 8am.
Peter Hargreaves always visits the mailroom first. “I like to see the number
of reply-paid responses. I always get a good feel then for the rest of the
day.” Much of his time is spent walking round. “I don’t do meetings. My son
thinks my work is just strolling with a can of Coke.”
He keeps a desk near his business partner Stephen Lansdown in the firm’s main
open-plan office. He also walks to the firm’s three other sites.
At lunchtime Hargreaves visits a local gym to burn off the calories. He can
frequently be found chatting in the steam room. He returns to work and stays
until 5pm, then usually adjourns to a nearby pub for a beer with colleagues.
“Sometimes we talk business, sometimes we don’t,” he says. Lansdown will
work later, until 7pm.
STEPHEN LANSDOWN’S DOWNTIME
BY the time you read this, the Hargreaves Lansdown chairman will either be
over the moon or nervously biting his nails. The football club that Stephen
Lansdown chairs, Bristol City, had to beat relegated Rotherham yesterday to
guarantee promotion to the Championship. Otherwise it’s the playoffs.
Falling at the final hurdle has been a Bristol City trait.
“I’ve always been a sports fan, and being chairman is something I enjoy. It’s
either business or the club,” says Lansdown.
Outside football, he tries to relax by flying to his holiday home in the south
of France. He has a part-share in a private jet. His business partner, Peter
Hargreaves, uses the jet to follow his racehorses. Hargreaves has three
horses, and outside work relaxes by planning his ambitious garden.
Lansdown has yet to coax Hargreaves to a Bristol City game. Has he offered a
free seat? “I think he should buy a ticket,” says Lansdown.
VITAL STATISTICS
PETER HARGREAVES
Born: October 5, 1946
Marital status: married, with two children
School: Clitheroe Royal Grammar School, Lancashire
First job: articled clerk
Salary package: £375,000 plus bonus
Home: Bristol
Car: blue Range Rover
Favourite book:The Valley of Horses, by Jean M Auel
Favourite music: Del Shannon’s Runaway
Favourite film: High Noon
Favourite gadget: “I hate gadgets”
Last holiday: Canaries
STEPHEN LANSDOWN
Born: August 30, 1952
Marital status: married, with two children
School: Thornbury Grammar School, Gloucestershire
First job: articled clerk
Salary package: £275,000 plus bonus
Homes: Bristol and Provence
Car: red Lexus SC430
Favourite book: The Hobbit
Favourite music: Beatles, Supertramp, U2
Favourite film: Witness
Favourite gadget: TV remote control
Last holiday: South Africa
This is a great firm . They have given excellent service to me although I am a small investor.
The facility for dealing online is straightforward and inexpensive. This firm still has a long way to go if they maintain their present approach to clients.
Vernon Cooper, Yeovil, UK
I think your reporter should turn up on time to do his interviews by the sound of it; Landsdown has a succesful football club to run
oj, bristol,
Have you not forgotten Mr Hargreaves ferret in this condescending article?
Mr Lawrie, Bury, England