Advertisement

Peter Hargreaves: an upset for the world’s happiest billionaire

Peter Hargreaves created a FTSE 100 company from scratch without borrowing or acquisition – and without scandal – at least until the Woodford one blew up in its face. 

952-profile
Peter Hargreaves: a great boss is having his patience tested

Peter Hargreaves reinvented investment for the masses, banking £4bn in the process. But he also inherited the traits of his frugal father who ran a small bakery in Lancashire. "He hates ostentation, dislikes excessive borrowing, and won't even live abroad to avoid tax," observed The Guardian in 2011. Last year, Hargreaves these days a fanatical grower of dahlias and amateur Egyptologist described himself as "the happiest and most contented billionaire on the planet". Imagine, then, the hell of the past few weeks. Thanks to its close links with fund manager Neil Woodford, Hargreaves Lansdown (HL) the firm he co-founded with Stephen Lansdown in 1981 from his spare bedroom in Bristol is in the eye of one of the biggest storms to hit the investment world in years.

Woodford's cheerleader

HL stands accused of abusing its position as the country's largest investment-fund "supermarket" to promote a lossmaking Woodford fund in its favoured "Wealth 50" list. "The company was not Woodford's only cheerleader," says the Financial Times, "but its meteoric rise from a two-man operation to a pillar of the FTSE 100 Index meant it was the most influential." HL's customers "ploughed billions" into Woodford funds. Hargreaves quit as CEO in 2010 and no longer sits on the board. But he still owns nearly a third of the business, which, according to Forbes, has (or had) nearly $116bn under management. With shares down by a fifth in a fortnight, the founder who once chortled he was "as rich as Croesus" has taken quite a personal hit. But it is the besmirching of his baby that will hurt most. "I have wanted to run my own business since my time at Clitheroe grammar school," Hargreaves, 71, once remarked. "I remember thinking if I could get a penny from everyone in Britain, I would earn £208,000 a year From there it was a straight line to Hargreaves Lansdown." In fact, it took a while to get there. Hargreaves trained as an accountant in the 1970s ,"but hated it" and ended up "being fired by Peat Marwick" (now KPMG), says The Guardian. He calls it "the best thing that ever happened to him".

Advertisement - Article continues below

After stints with Unisys and Whitbread, he had the idea of using newspaper advertisements to market unit trusts to retail investors, and teamed up with Stephen Lansdown in 1981. They set out to conquer the unit-trust market deploying "innovative tactics" to attract customers, such as giving rebates on commission and succeeded beyond their wildest dreams, noted The Times in 2007, when HL floated with a £700m valuation. A decade and a technology revolution on, the firm's platform can be used to buy pretty much anything, bar property and cryptocurrencies.

"Very few people have created a FTSE 100 company from scratch, without borrowing or acquisition," said the Daily Mail last year when HL at the peak of its form had just paid its co-founder a £60m dividend. From the "discreet splendour" of his idyll in Somerset, Hargreaves could bask in the glory of building a financial firm that had "achieved the unimaginable success without scandal". With a promising second venture Blue Whale investment group already causing waves, surely a knighthood must be only a matter of time. Well, jinx. Hargreaves has always been renowned as a great boss, once observing that you have to praise staff when they do well "and refrain from castigating them when they make mistakes, because they will already be more upset than anyone else". Right now, that patience is being sorely tested.

Advertisement
Advertisement

Recommended

Woodford investor? Your first payment is coming soon
Neil Woodford

Woodford investor? Your first payment is coming soon

Private investors left stranded by the collapse of the Woodford Equity Income fund will soon be getting at least some of their money back. But they wi…
28 Jan 2020
Neil Woodford rides again
People

Neil Woodford rides again

Neil Woodford’s speedy descent made Icarus look like a slouch. Many thought he would now be spending more time with his horses. He’s actually plotting…
1 Jan 2020
Neil Woodford: no silver lining for his investors
Neil Woodford

Neil Woodford: no silver lining for his investors

Neil Woodford made every mistake it is possible to make as a money manager. And his investors have been stiffed. But however wrong it all went, Woodfo…
24 Oct 2019
Stuart Wheeler : the granddaddy of spread-betting
People

Stuart Wheeler : the granddaddy of spread-betting

A lifelong obsession with gambling helped make Stuart Wheeler his fortune. By using that to back the Brexit campaign, he changed the face of British p…
2 Aug 2020

Most Popular

Can the recent rally in sterling continue?
Sponsored

Can the recent rally in sterling continue?

A "double top"  – a very recognisable pattern – is forming in in the US dollar. Dominic Frisby explains what it is, and what it could tell us about st…
3 Aug 2020
UK banks have had a shocking week – so it’s probably a good time to buy
UK stockmarkets

UK banks have had a shocking week – so it’s probably a good time to buy

Lloyds Bank reported a £676m loss this week. And, with all of the UK's high street banks having a terrible time of things, bank stocks are detested ri…
31 Jul 2020
Gold bugs' dreams are coming true – but we could still see a V-shaped recovery
Gold

Gold bugs' dreams are coming true – but we could still see a V-shaped recovery

John and Merryn talk about how it's perfectly reasonable to expect a V-shaped recovery and to continue holding gold as well. Plus, inflation, staycati…
30 Jul 2020