Broker snap: FSA proposals a worry to Hargreaves Lansdown

28th Apr 2010 13:07

It is time to take profits at wealth management firm Hargreaves Lansdown, according to FinnCap, as the share price has looked frothy for a while."Proposals from the Financial Services Authority to prevent platforms paying rebates to consumers could undermine the business model of discount brokers, such as Hargreaves Lansdown," stockbroker FinnCap speculates. "Not being able to offer discounts undermines the model because it depends on their client getting the investments cheaper than if they went to the manager direct, so quite how that will pan out under the Retail Distribution Review (RDR) is uncertain. Although the RDR and platform proposals do not yet apply to discount brokers there is still a chance the FSA changes its mind or that execution-only services come under pressure to follow the example of the advisory sector," the broker continues."The HL price has looked generous for a while, so this issue could encourage some froth to be blown off. Take profits," is the FinnCap advice.