The rise of do-it-yourself investing has helped boost Hargreaves Lansdown’s assets under administration to record levels, as the retail broker hailed the start of a longer-term trend.

“We’ve got more and more people [doing] self-directed investing. We’ve got an increased need for people to save and invest for their own future,” said Ian Gorham, chief executive.

Net inflows reached £1.8bn in the three months to March 31 – a quarterly record for Hargreaves – pushing up assets under administration 35 per cent from last year to £35.1bn.

Mr Gorham said the drive towards DIY investing had been partly triggered by regulation that has forced financial advisers to take fees upfront from clients, rather than earning commission from companies whose products they sell.

The first phase of the Retail Distribution Review, which came into effect at the start of this year, had led to fewer people being able to get advice, Mr Gorham said.

“A lot of [client] transfers we’re getting are from people who used to have financial advisers and now they’re looking after their money themselves. We’re at the start of a trend here, not near the end,” he said.

The regulation was drawn up to reduce the risk of commission payments acting as an incentive for mis-selling.

Hargreaves said it was too early to “fully quantify the potential effects of reduced access to financial advice for the UK public as a result of RDR1”.

The retail investment broker also credited improved investor confidence and the attraction of investing in equities at a time when interest rates are low, for a £4.7bn increase in its assets under administration in the quarter.

Mr Gorham said it was still unclear how the second phase of the regulation would affect client and fund inflows. “That’s the great unknown,” he said. RDR2 is set to target platforms.

However, Mr Gorham said Hargreaves’ margins would be likely to reduce over time.

“As our scale increases I think prices will come down, but hopefully the effect of that increased efficiency should more than outweigh the effect of reducing margins,” he said.

He warned that a “substantial negative event resulting in a sharp downturn in stock markets would affect revenues in the short term”.

James Hamilton, an analyst at Numis, said Hargreaves was well placed to continue to benefit from structural growth in DIY investing, but its margins would gradually shift towards “mainstream margins” and yields on its assets under administration would fall.

“The impact of RDR1 and RDR2 will manifest themselves very slowly and gradually over a number of years,” Mr Hamilton said.

Hargreaves’ revenue in the quarter increased 23 per cent year on year to £76.3m, pushing up its revenue in the past nine months to £216.6m.

Shares in Hargreaves rose 5.5 per cent on Wednesday to close at 949p.

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