The head of Saxo UK has declared his intention to compete directly with Hargreaves Lansdown, aiming to establish Saxo as the preferred platform for astute investors.

Initially conceived as a platform for individual traders, Saxo has evolved to also cater to institutional investors. Now, with a newly launched, streamlined platform, Saxo is targeting an expanded segment of the market, hoping to attract a wider audience.

Andrew Bresler, Saxo UK’s leader, recently shared with This Is Money his belief that the company is well-positioned to challenge Hargreaves Lansdown, a leading player in the UK’s investment platform space. This comes in response to a recent overhaul of Hargreaves Lansdown’s fee structure, which has led to a significant number of dissatisfied customers seeking alternatives.

Saxo’s bid for DIY investors

Although Saxo was a trailblazer in online trading for institutional clients, it struggled to gain the same level of traction in the retail market as competitors like AJ Bell and Hargreaves Lansdown.

The onset of the pandemic reshaped the landscape, introducing a wave of new, dynamic competitors into the market.

Platforms such as Freetrade, Trading212, and eToro gained significant traction among younger investors, who were drawn to more cost-effective options amid the heightened market volatility of the time.

‘The barriers to entry now, beyond licensing requirements, are really really low,’ says Bresler, who’s worked in the industry for over two decades. 

‘You can take [something] to market in a short amount of time… and have the full gambit of capital markets available to you.’

Saxo UK boss says he can take customers from Hargreaves Lansdown after its fee shake-up

He added: ‘Adoption has largely been demand-driven rather than supply. Even though the industry has evolved, I still think it is seeing a rapidly changing demand side [and] that’s a growth trajectory that will continue.’

Saxo finally moved into the space eighteen months ago with the launch of a simplified, cheaper version of its trader platform.

Its fees start at 0.08 per cent commission from stock and ETF trading, and 0.2 per cent for government and corporate bonds.

‘We can take customers off Hargreaves’

Even with more prospective investors, competition is harder than ever, says Bresler.

‘I can’t think of a market outside of the US where the competition dynamic is as fierce as in the UK. 

‘Competing for end clients is an incredibly difficult challenge for me and any of my counterparts at any of the other brokers.’

But legacy players are starting to lose their shine. Hargreaves Lansdown, a pioneer in retail investment, has angered a small portion of its customers by charging more in fees.

Bresler says it’s ‘a symptom of a bigger, underlying problem with the perception of clients at Hargreaves, which hasn’t materially invested in either the price nor platform in a period of time.’

He adds: ‘We know Hargreaves has a decent amount of churn within their client books. 

‘They have north of two million clients, and they’re churning around 10 per cent of those, that’s a significant portion of people looking for a new home.’

But Saxo is up against the more established AJ Bell and Interactive Investor, which have already reported an influx of ex-Hargreaves customers joining their platforms.

Has Saxo had the same? Bresler admits there’s ‘not been a flood’ and admits they might be some way off.

‘Our legacy has been a lot more about the professional traders, those who understand financial markets… we’ve tried to evolve that message and I think we still have a bit more to do within the UK in terms of telling a story.’

What may work in Saxo’s favour is that its typical customers are more similar to Hargreaves – financially savvy and affluent.

Saxo’s pitch is that it can give investors access to more stocks and other asset classes, including options and FX, which should maximise returns for investors.

‘If we’re good enough for some of the institutional players, then we’re equally as good to our direct customers…. 

‘The product suite we offer allows you to maximise your returns at a much lower price point than Hargreaves.’

One of its major plans in the coming months is to ‘reward’ investors for consolidating their wealth with Saxo. 

Bresler argues that competitors make it more expensive to hold Isas, Sipps and general investment accounts with one broker.

‘Our desire is to make it more cost-effective to consolidate with us because you can stay with Saxo for life.’

If you don’t own your tech you’ll lose out

Bresler faces stiff competition from more established platforms and plucky upstarts like Trading212, which has a broader appeal among younger investors.

While Saxo eyes affluent 40-somethings and hopes they’ll stick with the platform, 212 can capture them even earlier.

It means Saxo faces an uphill struggle, but Bresler believes it will ultimately come down to how each platform uses its technology.

‘There’s a potential amount of risk in terms of what AI is bringing to the market,’ says Bresler. 

‘The winners and losers will be defined by the quality of the technology they’ve built.’

The platforms that ‘work off the back of someone else’s tech, rather than developing their own, as Saxo has, could soon be moved out of the market.

He adds: ‘The speed at which we’re changing is so rapid. If you’re unable to keep pace with that speed, you can become obsolete quite quickly.’

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