Investment platforms face hangover after pandemic party

LONDON, June 13 (Reuters) – The trillion-dollar retail investment express is losing steam, dampening the fortunes of British trading platforms that boomed during lockdowns on the back of a meme stocks frenzy.

Many stock-pickers are steering clear of a turbulent market as living costs rise and the economy teeters, squeezing the business of consumer investment platforms that are facing falling fees and thinning margins.

Even the biggest fish, such as FTSE-listed Hargreaves Lansdown (HRGV.L) and AJ Bell (AJBA.L) and those owned or recently acquired by major banks and asset managers, are struggling with wilting flows of new customers and money.

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Britain’s biggest bank Lloyds (LLOY.L) told Reuters in an interview last month that inflows to its retail investment platforms – which boast 19.5 billion pounds ($24.2 billion) of customer funds – slowed in the first quarter of 2022 versus a year before, and more clients were selling than buying stocks.

The “sugar rush” of the social media frenzy that propelled stocks like GameStop last year has worn off for investment platforms, said Mike Barrett, director at financial services consultancy the Lang Cat.

“Publicly, these businesses say they’re more comfortable that their customers are doing sensible trades rather than going after some meme stock. But unfortunately, that has had a negative impact on their revenues,” he added.

The market is more daunting for the smaller investment platforms, with around half of them – seven out of 13 reviewed by Reuters – posting losses in their most recently filed annual accounts, according to a review of documents at UK Companies House.

Although accounting periods varied, the seven loss-makers included OpenMoney and PensionBee (PBEE.L), who posted numbers for the year ending December 2021.

OpenMoney’s managing director Hayley Millhouse said the company’s founders were taking a “long-term view to achieve profitability”, partly by diversifying its services.

Romi Savova, CEO…

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