Hargreaves Lansdown plc

Good morning, everyone, and welcome to Hargreaves Lansdown 2022 Full Year Results. Thank you for joining us.

I am Chris Hill, Chief Executive. I'm joined today by Amy Stirling, Chief Financial Officer; and Birger Thorburn, Chief Digital and Information Officer.

We shared our strategy at the Capital Markets Day in February. And since then, we've been absolutely focused on delivery, doing as we said we would do.

We've grown significantly since I became CEO. We've more than doubled our number of clients.

We've been through elections, referendums and plenty of market volatility, but more important is what we've learned about clients. The long-term demographic changes that we've seen as everyone recognizes the increasing imperative to manage their financial health and resilience, and the seismic shift to digital and online engagement.

We had 290 million digital visits over this year. That compares to 106 million when I started in 2016.

So we understand what clients want. And we're clear about what we will do to transform the experience that clients have when they manage their money, combining the best of human expertise underpinned by the brilliance of our colleagues and augmenting it with the supercharged use of data and technology -- deliver a uniquely personalized service that will make managing wealth, financial health, and resilience easier and more intuitive.

In our investment across five strategic pillars, and we provide a broad and best-in-class offering, all of which I'm going to come to you later. But in short, we're delivering against what we said we would.

So when I look at our results, in FY 2022, I think about it this way. Short-term, there's been an unexpected series of macro events, the Ukraine was invaded just two days after our Capital Markets Day, inflation has hit 40-year record highs, causing a cost of living crisis for money.

And in the last six months, all major indices were down. Consumer confidence is now at its lowest level since the financial crisis, and our measure on investor confidence is at its lowest since 2018.

But while these are challenging market conditions to navigate, our assessment of the medium-term has not changed. We see opportunities to make an impact in the broader wealth management market, a market that we expect to be worth £4 trillion and still growing by 2026.

The underlying drivers of that market, the secular trends of people living longer, low yields and volatility and uncertainty amidst a complex savings environment where people have to take control for themselves they all remain unchanged. Our strategy is designed to address these trends.

And our long-term view remains the same. Clients want and expect outstanding service and will build and grow assets over time.

And in delivering our strategy, we will extend our market leadership, both into a broader market and also into the quality of experience that they have and this will drive strong growth and returns to shareholders. So what you will hear today is that whilst we cannot control these unexpected market conditions, we are focused on what we can control.

And I'm proud that in spite of these short-term headwinds, this year, we've delivered an in-line set of results. We've added £5.5 billion of net flows, 92,000 clients, resulting in a record 1.7 million active clients.

Retention at 92.1% has slightly improved. Active savings has had record flows in Q4.

And with that, I shall now hand over to Amy to talk you through the financials.

Thanks, Chris. Good morning, everyone.

I joined HL in February as part of the new leadership team to implement the strategy and deliver the transformation set out at the Capital Markets Day. In the five months, I've been with the business, where the listening calls on the help desk, working with finance to build new processes to support the investment program or challenging my colleagues on cost control, I found what I'd hope to find on joining, a really impressive business that's completely focused on getting it right for clients, that firmly believes in the strategic direction of travel and is getting on with execution and delivery.

Markets though, have not been in such great shape. In the six months to June, we saw the S&P 500 down 20.6%, NASDAQ down 29.5% and the FTSE All Share down 6.3% and the MSCI world down 21.4%.

Consumer confidence is at an all-time low and investor confidence as measured amongst our clients has fallen to its lowest level since 2018, impacted by record inflation and the cost of living crisis that we're all experiencing. It's definitely an interesting time to join HL and it's definitely an interesting and somewhat challenging time for our clients, but helping them through the cycle by providing practical, easy-to-access insight and help, combined with access to a broad range of relevant investments is what we do.

And we've been doing it at HL for 40 years. So whilst it is pretty grim out there right now, there are plenty of reasons to be pretty optimistic as we look forward.

Given the size of our client base, we have real insight into client behaviors and how behaviors and investing preferences have changed over the course of the last few years and how that impacts AUA, and we've particularly seen that over the last six months. The chart shows the movement on asset mix, split between fund and equities since 2014.

Within Funds AUA, the pre-RDR dominance of UK income and small and mid-cap has been replaced with a prominence towards global funds and the consideration of factors other than pure return are evident in our client base. In 2014, around 44% of all funds held on the platform for UK has gone down to 24%, with global funds increasing to 28% at the end of June and responsible funds now comprising 5% of total funds AUA on the platform.

Within equities, whilst UK stocks still prevail, overseas, predominantly US, make up 19% of AUA. And we've seen a meaningful increase in investment costs, which are free to hold in a fund and share account on the platform and now represents 28% of total equities held.

Scottish mortgage, Witan and RIT Capital are among the most popular investment trusts held on the platform, all with a global mandate. This shift away from the UK across both asset classes means the negative impact of global market movements and the US, in particular, has had a significant impact on our AUA with £20.6 billion negative market movement in the second half of FY 2022.

But despite the impact of markets, actually, business performance has been pretty resilient in the year. We started the year with £135.5 billion of AUA, peaking at £141.2 million at the half year.

But with the negative market movement I've just covered, we closed the year at £123.8 million. AUA is the biggest driver of our revenue.

Despite that second half full, funds revenue was up year-on-year. In terms of clients asset allocation, we've seen a not unexpected move towards cash, with just under £15 billion held by clients at the end of the year, representing 12% of AUA, up from 9% in FY 2021, and we've also seen a step change in recent growth from active savings.

The extreme trading volumes experienced in 2020 and 2021 through the pandemic, we've seen a more normalized level of activity in both UK and overseas dealing volumes throughout FY 2022, albeit volumes remain consistently higher than pre-pandemic levels. We've seen peaks in client trading in November and March this year at around 41,000, down to low in June this year of 26,000, with overseas volumes making up between 18% and 25% of client trading throughout the year.

Net new business was £5.5 billion for the full year, with a similar H1 trajectory to 2019. However, you can see from the chart, as broader macro uncertainty started building at the beginning of calendar 2022, we saw a much slower and a much more concentrated tax year-end.

More clients invested in tax wrappers this year than ever before, and were more likely to purchase a fund as their first investment with the funds versus share split returning to more pre-pandemic levels. So what does this mean for our financial performance for FY 2022?

Well, given the atypical trading volume driven by the pandemic in the previous couple of years, revenues were lower in the year as expected at £583 million, albeit the asset mix shifted through the course of the year, which I'll talk more about later. Underlying costs at £284.7 million were up 7% in the year versus the 13% [ph] we had in February, reflecting both lower client-driven activity in H2 and a focus on cost control across the business.

Total cost of £28.3 million of strategic spend and more on that shortly, generating £269.2 million of statutory PBT. Statutory EPS was £0.456 and total dividend for the year at £0.397 is in line with our 3% growth guidance given in February.

Moving on to look at revenue in a little bit more detail. Revenue margin for the full year came in at 43 basis points.

42 in the first half, increasing to 44 in the second half, reflecting the diversified revenue profile of the business. Funds revenue at £254.5 million increased 9% year-on-year.

And given the significant trading volumes experienced during the pandemic, revenue from equities at £194.9 million was down 24%, in line with expectations, albeit remaining at much higher levels than pre-pandemic. HL Funds revenue, broadly flat year-on-year, with the benefit of average AUA up 5% year-on-year at £8.8 billion, being offset by price cuts implemented at the beginning of the financial year.

Revenue and cash was also flat year-on-year, with high levels of cash held, particularly in the second half, being offset by the negative lag effect of historic low rates still coming through in the first half. In the second half of the year, we started to see the benefit of the full rate rises coming through in our deposit pricing.

Other revenue primarily comprised advice fees and active savings with the year-on-year reduction being driven by the removal of paper-based charges. Just before I go on to costs, I wanted to give a little bit more visibility on active savings.

This was a product launched in 2018 as a way for clients to be able to manage their cash savings across multiple providers to achieve better rates with more choice and one log-in, but it was rather ahead of its time, given the low interest rate experience that we've had over the last few years. It has so grown steadily over the last few years, generating around £1 billion of annual net new business.

Since the base rate rise in 2021 in December, we've been able to offer more attractive rates, regularly offering market-leading rates that I've got to in the market at the moment and have started marketing beyond our existing client base for the first time this quarter. We now have 114,000 clients with active savings accounts and saw £0.7 billion net flow in the calendar quarter, of which 25% is being transferred by existing clients from their fund and share account, 61% is new money coming on to the platform from existing clients and 14% is from new clients joining HL in order to take advantage of our active savings offer.

Active Savings is low margin at the moment. However, it is a great client experience, one of our most recommended client journeys.

And in the current market environment means we keep and grow client assets on the platform, which may well otherwise be transferred elsewhere, and it's driving cost-effective new client acquisition. As part of our investment program, we're launching new payment methods to increase ways in which clients can add cash to the platform, driving both growth and cost efficiency, and we expect to add further partner banks during the course of the year.

So on to costs. Costs at HL have been growing in line with client growth for the last few years as the business has invested in both support function capability and in operational resource in order to manage client growth, particularly through the pandemic.

This has been particularly evident with costs growing 19%, 20% and 24% in the last three years. Breaking this cycle and returning to positive operating leverage is a key tenet of our strategic investment program.

The chart shows that underlying spend at £285 million was up 7% year-on-year, with both average FTE and staff costs, up 15%. Marketing and distribution costs were down as we spent less on transfer incentives in the first three quarters of the year and on lower client acquisition in the second half.

Activity related costs primarily dealing and payment costs were down £11 million to £24.6 million, particularly in H2, reflecting lower client trading volumes. Technology spend is up and will continue to increase as we move the model to more license-based spend as part of the digital backbone strategic work.

And we've seen the first tranche of strategic investment spend this year through the P&L with £21.1 million of investment cost OpEx and £7.2 million of dual running in the year. Our investment program supports the five pillars of the strategy that Chris covered upfront, and he'll talk more about how we're doing on delivery shortly.

We're investing £175 million to enable the business to scale efficiently and grow profitably, and just to recap on what the spend comprises across three areas. Firstly, investment cost of £175 million.

This funds delivery against the strategic pillars of growth, service and efficiency, the digital backbone and our foundations. Also included within investment cost is the cost of setup, mobilization and support of the investment program.

This is front loaded in the spend, leading to a higher OpEx, lower CapEx profile in FY 2022 that we expect overall. Our spend this year was lower than guided in February as we've tightly managed spend where we build out the new processes, controls, data capture and reporting to enable us to execute and manage cross functional change across the transformation program for the business.

However, we do expect to catch up in FY 2023 as we build momentum and expect investment costs to be between £65 million and £75 million in the year ahead. We're expecting dual tech running costs of around £50 million over the course of the program.

In order to provide service assurance for our clients as we go through the transformation, we will be parallel running all our new and legacy tech for a period. And in FY 2022, these costs primarily represent the implementation and setup costs of the cloud platform that will host incoming strategic solutions.

And for FY 2023, we expect dual running costs of around £20 million in the year, as previously guided. More importantly though, we expect the program to deliver annualized cost savings of £55 million from FY 2026, and we will see the benefit of these savings in our run rate of underlying costs reflected in our forward guidance with around £15 million of savings expected in FY 2023, which Chris will cover in a bit more detail.

Our net cash at the end of the year was £508 million, maintaining a healthy liquidity position, and the business continues to generate strong operating cash flow. We have the balance sheet strength and liquidity to support our investment program through the next few years and to continue to grow the ordinary dividend.

At the close of FY 2022, shareholder funds in the business was £575 million, a modest reduction year-on-year, reflecting the payment of the FY 2021 final and special and the FY 2022 interim dividend against a lower profit in the year, given our investment program is now underway. The IFPR came into effect on the 1st of January 2022.

So we're now operating under the new ICARA process for Red Cap [ph], replacing ICAP and altering the calculation methodology. On this revised basis, our capital surplus remains healthy at £185 million as at the end of June.

And at the CMD, we set our approach to dividend over the next few years, while we undertake our strategic investment program. And in line with this approach, our full year dividend has grown at 3%.

The HL business model on a forward-look basis is a compelling one, significant market share growth that will be driven by innovation and structural tailwinds, and with the planned investment spend, cost growth will moderate to allow the benefits of that top line growth to drop through to the bottom line. In the near-term, we're giving specific guidance for FY 2023, when we expect to see an uplift in our overall revenue margin to 44 to 47 basis points with the benefit of increasing base rates coming through in NIM.

We expect to see funds margin broadly flat at 38 basis points to 39 basis points. We expect HLFM funds margins come down to 55 basis points to 60 basis points as we launch new funds with lower AMCs and migrate certain existing multi-manager funds to the new funds and the new pricing.

Shares margin at 35 basis points to 40 basis points reflects an expectation that the lower levels of trading we've seen more recently may well continue through much of the year ahead. And on cash, while we're expecting FY 2023 to be a good year for Active Savings.

we're expecting to see a small uplift in revenue margin and expect to see a similar level of cash migration from the platform interactive savings as clients who are seeking to generate more return on their cash take advantage of the great rates on offer. In terms of cash on the platform, we placed deposits across a limited range of deposit takers, prioritizing security and liquidity for our clients, ahead of yield.

We are though starting to see the benefit of recent base rate rises being passed through, particularly, as the term deposit placed at much lower rates expire to be replaced with the latest market pricing. In terms of pass-through, we consider the client need characteristics and behaviors by wrapper and the flexibility and limitations by wrapper when determining and reviewing pass-through.

This means pass-through is higher for SIPP and drawdown than for fund and share for example where clients can easily access Active Savings to generate greater return if that's their objective. So we expect to see margin on cash of 90 basis points to 110 basis points based on current base rates.

As we did through FY 2022, we will refresh our guidance as the trajectory on both rates and pass-through evolves through the course of the year. On underlying costs, we guided to an increase of 8% to 9.5% from FY 2023 to FY 2025 at the Capital Markets Day.

As underlying costs have come in lower for FY 2022 than guided, we now expect to see cost growth at 9.5% to 11.5% just in the year ahead taking into account the impact of wage inflation, expecting underlying costs in absolute terms to be lower than previously guided. As covered earlier we expect total strategic spend in FY 2023 to comprise £65 million to £75 million of investment costs catching up on the managed start in FY 2022 and dual tech running costs of around £20 million in the year.

And the guidance we gave on expecting to maintain ordinary dividend growth at 3% is unchanged. I'll now hand back to Chris to update on our progress against the strategy.

Thank you, Amy. So firstly our clear and unambiguous purpose, our culture, our values they all help us to face into the short-term challenges and the long-term opportunity with confidence.

Today, we're already targeting a £3 trillion addressable market in the UK savings and investments, which we know will increase to £4 trillion by 2026 and it will keep growing from there. Fundamentally, the safe less shifts that we've discussed before are relentless and pushing encouraging and driving more people to take control of their savings and investments.

This has not changed despite this backdrop. It means that the market is growing and the opportunity is even bigger.

Remember, we've been around for 40 years. We take a long-term view of the opportunities ahead, just as our clients are focused on the long-term outcomes for their financial health and security.

Client expectations, accelerated by the pandemic, will continue to change regardless of market moves. Our clients no longer compare us to wealth managers or other financial services companies, but it's to the customer experiences offered by Amazon, by Netflix and interaction via digital channels will only continue to evolve.

And this year has been about laying foundations. The team has done that exceptionally well and we are now delivering our strategy through five pillars.

We will accelerate growth via our integrated proposition, create a step change in client service and efficiency, develop our digital backbone, enable our people strengthening our culture and scale our foundations. And through these, we will continue to enhance the breadth and depth of services that we offer and set HL up for sustainable growth into the future, driving growth through our leading digital experience, reinforcing our position as the UK's number one for investor experience through use of the latest technology to build personalization and resilience as we scale; maintaining absolute focus on client service standards, creating easier ways to clients -- for clients to use our service from more efficient payment methods to quicker processing to smoother transfers; and developing an extensive and comprehensive proposition through the addition of new funds and investment solutions, our augmented advice proposition and an enhanced Active Savings proposition.

We've made a good start. We have got clear plans for continued delivery in 2023.

So I'm going to take you through what we've done this year and our focus for next year. But I know what you're thinking about now: the short-term turbulence.

So let's go there first, so I can remind everyone about the resilience of our business and the important role that we now play in the UK savings and investments market. So when you look at all the boxes on the page, it is quite a trip down memory lane, but there is a key point here.

We have been through periods of market turbulence and fluctuating investor confidence many times before and we've always maintained our strong organic growth record. We are the market leader.

We have industry-leading margins, strong cash flows and a strong balance sheet. And this is all because we come out of these macro events stronger and our commitment to servicing our clients in these periods only increases their loyalty to us.

And we are confident in our ability to support clients through current conditions, because we are confident in our purpose, confident in our proposition, our service and the ever-expanding tools that we provide to manage their finances. There's absolutely no doubt that 2022 is a year of uncertainty.

We recently launched the second edition of our Savings and Resilience Barometer, because we recognize that learning how to build financial resilience has never mattered more. And the July addition shows real disposable income has fallen will remain stagnant.

41% of households right now are dipping into reserves or debt to tread water. Lockdown resilience gains are wiped out in a high inflation higher interest rate scenario in the year ahead.

And finally, inequality will continue to rise. The resilience hit on the poorest 40% is three times greater than that of the richest 20%.

So everyone recognizes the need to build financial resilience, but the cost of living crisis will sadly compound that inequality in financial resilience. Importantly then, what does it mean for our clients?

Well, we need to help them to be as smart as possible with their money, wherever they are in their financial journey. They need an ever more personalized service, so we provide nudges, targeted relevant communications.

They need to do the right thing with their cash, liquidity, investments and income, using our diversified platform to actively manage both their cash savings to get market-leading rates and using our tools and insights to manage their diversified fund and share investments, taking full advantage of their tax-efficient saving options with this year, more clients than ever using our tax wrappers over tax year-end and investing for the long term to get the financial outcomes that are right for them. And we need to continue to offer the best digital service with tools, calculators and our mobile app, with 119 million client log-ins during the year, against about 70 million back in 2019.

We're building our clients' ability to invest and save with confidence. We're doing it by providing them with the right information and guidance at the right time.

And we do that through the powerful combination of our trusted brands with its broad savings and investment offering, our leading digital service, coupled with our renowned high-quality client support and an extensive range of research, insights, guides and tools. And we make it as easy as possible for them to act.

So I'm going to take you through that in a bit more detail because this is how we've been doing just that in 2022. We invest in the brand and reputation, because awareness and trust are important for both new and existing clients.

They stimulate attention and engagement. Our latest Switch Your Money On campaign has seen us outrank the competition on first choice, brand consideration, usage and awareness all based on our Kantar metrics.

And we invest in our digital capability because that's how our clients want to interact with us. We had 100,000 listens to our Switch Your Money On podcast.

We've sent nudges to 590,000 clients on diversification, cash levels and risk. And clients want to know more.

So we've expanded what we offer. We had a 98% increase in visits to our HL Learn web page for educational insights: 260,000 guides have been downloaded.

It's building people's knowledge, engagement and confidence. And we're delighted that this investment in new digital services is paying off.

We were rated number one by Platforum for investor digital experience. And we have the broadest offering in the UK.

There are more than 10,000 funds and shares available to invest in. We have a full product offering with all of the wrappers.

Our cash services Active Savings, which was somewhat prescient for us to introduce in 2018, it's now been offering market-leading rates for over 80% of the year. And we use our scale to enable discounts for clients on funds.

We handled 1.3 million calls to the help desk responded to 410,000 e-mails and sent over 1,300 articles to clients giving them insight and knowledge on investment. And we're especially proud that our clients recognize our focus on client service.

Our Trustpilot scores are excellent; Boring Money have recognized us for customer service Best Buy ISA, Best Buy SIPP; and The Times' Money Mentor with gold for customer experience. Our retention levels have improved.

And we've done all of this with almost another 0.5 million clients compared to pre the pandemic. So as I said earlier on, we shared our strategy at the Capital Markets Day in February.

Since then, we've been absolutely focused on delivery. We are firmly in delivery mode.

I'm going to take you through the delivery in 2022, focus for 2023 across each pillar. I'm only going to focus on 2022 and 2023 for each pillar.

Clearly, our strategy goes into the medium term. You can see the overall plan we have in the investor deck from the Capital Markets Day.

Okay. So I know the market right now not currently focused on growth, but I want to talk about growth because we are going to deliver growth and that is a given beyond this short-term market turbulence as we execute the strategy.

Our initiatives here are to drive flows, assets, clients and retention by developing investment solutions for a broad range of clients, by providing a simple solution for clients to manage cash savings and combining the best of digital and human engagement to enhance the client experience as they manage their money. So the three areas to update you on are firstly investment solutions.

In 2022, we launched the HL Growth fund as the default multi-asset fund for the SIPP. It's now integrated into the workplace journeys.

We've seen encouraging levels of engagement from clients with higher-than-expected opt-ins and £102 million of flows. We've also added to our ETF and ESG research capabilities.

This momentum is rolling into 2023 with a US fund launch in the second half of the year. Next, in Augmented Advice, we're making progress in the scoping, designing and building of key features.

We've done over 4,000 hours of design work. We'll launch a pilot at the end of the first half.

And in Active Savings, Amy's highlighted the flow momentum. We added two partner banks.

And now in FY 2023, we are focused on marketing our powerful offer and on flipping the proposition with payment functionality. Service and efficiency.

There are two key outcomes we're focused on. As I've shown you, HL is known for its high-quality client service and support.

We are maintaining and evolving this to get better in delivering the right outcome to the client fast, either swift automated self-service or immediate contact with the right colleague who's got the right knowledge and expertise to help. And this service must be underpinned by scalable and cost-efficient processes.

In 2022, we partnered with some key players. First, with Amazon Web Services with whom we are developing a cloud-based service platform that enables us to simplify how we work using data automation and routing client contact to the right areas of expertise first time and at speed.

As we continuously evolve this beyond 2023, we'll demonstrate to our clients, we know a little bit more about them in every interaction, unlocking the power of data and delivering actionable insights. You know me, you know all about me and will enable an even greater experience by focusing on my individual needs and we'll meet those needs in the most hyper-personalized way.

Next we've partnered with Ecospend to enable us in 2023 to roll out open banking capability, initially by improving payment functionality across key journeys. And we launched a new retail offer service, which enables retail investor to access IPOs and secondary fundraisings, key area where retail investors previously lacked the tools to engage.

The first corporate action was for an infrastructure investment trust; 25% of the shareholders participated. This continues to broaden the service that we offer our clients providing greater functionality and increasing client satisfaction.

As Amy underlined, this investment is designed to take cost out of how we deliver our service. We're going to deliver £8 million of cost out from efficiencies in the year through automation, productivity improvements and vendor management enhancements.

Digital backbone. So at the Capital Markets Day, we were clear to talk about the importance of building and developing a digital backbone to support and deliver the strategy.

The outcomes that we're focused on are firstly to use the cloud to accelerate our ability to innovate and scale. Secondly, to deploy buy rather than build technology that enables us to maximize the immediate power of data for clients and colleagues across the platform.

And thirdly, to develop an organization and a culture that enables us to constantly deliver and develop an end-to-end client experience at pace. That means setting up the digital foundations of frameworks and ways of working across all of HL that support constant data-driven delivery and leveraging technology.

So in 2022, we've set out foundations for our cloud migration, signing contracts with industry leaders, ForgeRock and Kong to support our development of enhanced identity and authentication solutions and building our ability to scale. And in 2023, we'll further centralize how we manage and establish digital identity in order to create that personalized experience.

We are focused on data enrichment to build the foundations that enable a smoother transition to the cloud and to power augmented solutions. This year, we partnered with Precisely.

And in 2023, we'll work with them to prepare our data for that future and enable us to manage and govern across that data life cycle, identifying cataloging data assets as well as improving data quality through rules and workflows that then power AI-driven guidance. We've also begun to apply cloud-based solutions through partnerships including AWS, who I just mentioned and they're supporting the delivery of our new cloud and data platforms, building increased personalization and efficiency into our service.

And in doing this we'll deliver £7 million of cost savings. So the delivery of the strategy is obviously only possible with the right people, the right capabilities and the right culture that underpin it.

And HL's success is due to our brilliant colleagues and their continued efforts to go that extra mile, to innovate and to deliver for clients. But the execution of our strategy in some areas is reliant on introducing key new capabilities and we must ensure that the combination of those makes us even stronger.

So we are focused on building the right environment to develop and enhance our colleagues' performance, retain and attract the right talent and make HL a great place to work. Engagement and diversity are all key points of focus.

And over the year we've added significant capability to the teams, with a focus on key areas for delivery of our strategic priorities including fund management and technology. We also have significant hires joining us later in the year including in advice, where shortly we'll welcome a new advice Director, Richard Caldicott, joining from M&G Wealth, where he was Deputy CEO.

Richard is going to play a critical role in the transformation of HL's approach to advice over the next few years and the implementation of our Augmented Advice solution. We also will welcome Rohini Mehra in August as our Omnichannel Director.

So Rohini is going to play a key role in the execution of our service and efficiency program, incorporating the latest technology to deliver cost savings and service improvements. She joined us from Bromford, where she was Chief Customer Officer and after 10 years working at Three mobile on channel strategy and customer experience transformation.

In 2022, we've introduced a hybrid working path. It's colleague-led.

We're adapting our offices for more flexible and agile working patterns. We've also been very mindful of the very real impact of higher inflation on the cost of living.

So in May, we provided a breathing space payment for colleagues to help them cope with these financial pressures and we continue to look at solutions to provide colleagues with support during what is a very difficult and challenging time. We're investing in our data team, building on capabilities with AI and machine learning.

We're focused on developing our ability to work with digital technology and data in end-to-end groups across HL. The outcome that we want is that fast and iterative delivery.

And another critical element of any successful business is the enabling functions that support the delivery and execution of the strategy. In 2022, we welcomed new capability across key teams including significant increase in risk and compliance.

We also delivered key resilience and scalability improvements to key systems, including our drawdown payments and commercial banking systems. In '23, we'll continue to enhance these underlying foundations, ensuring that we've got the systems and people to develop our strategy and meet regulatory expectations, such as complying with the new consumer duty, to help ensure the right outcomes for clients.

So these five pillars are at the heart of how we measure progress. In '22, we've started to make progress against all of the outcomes that I called out.

All of them interlink and we've got a clear set of measures that we're using to ensure disciplined investment and both measure and demonstrate our progress. So in summary, we're all aware of the uncertain geopolitical landscape in the markets that we face.

This challenging environment has impacted three key business drivers, which are outside of our control. Market movement.

Amy has already detailed this. All major indices have fallen in the last six months, which in turn by definition has impacted asset values.

And finally, consumer confidence, which is at its lowest levels, since the financial crisis and has had a known impact on investor confidence, and our internal tracking shows that this is now at one of the lowest levels that we've seen in several years. However, this is a huge opportunity for HL.

We are the market leader and we know having navigated previous such conditions, that number one, things will improve; and number two, that we've supported clients through similar events and uncertain periods for many years and each time, we've come through stronger. This time will be no different.

Nothing has changed that impacts the strategy that we announced in February, as we are a long-term business. And whilst we must be mindful and nimble around short-term headwinds, as we have been with costs, the execution of this strategy must not falter because this strategy will deliver outstanding client service, strong growth and returns and continued market leadership for HL.

The only thing that has changed as a direct consequence of this environment is that, our visibility on whether the timing of delivery of our targets has been impacted and that will be influenced by when we have greater visibility on normalization in markets and related investor confidence, as we outlined at the time of the Capital Markets Day. In the meantime, we are focusing on factors that we can control, which include the execution that we've set out and the time frame for which we have the best visibility.

And with the theme of focusing on what we can control, I'm going to pick up on two areas that I know that we're focused on, our £20 billion net new business guidance and positive jaws. We know that this strategy can deliver the £20 billion number, because the net new business ambitions that we outlined in February were based on some fundamental growth drivers, which have not changed.

And we continue to execute on what we can control. So when markets return, we are strongly positioned to capitalize on our investment.

And if I briefly touch on these drivers, firstly, we had assumed normal growth in the core business. Clearly, in current markets, we're not seeing normal.

There is an impact on flows, trading activity and investor confidence. We expect to see a return to our typical 8% of opening AUA, when confidence returns and that will be supported by the launch of new HL funds and continued client service enhancements in our digital proposition.

Secondly, another driver of our net new business ambitions is the launch of our Augmented Advice offering. The pilot is on track for the end of the calendar year.

We continue to expect to grow to around £5 billion of flow through this new service, for both new and existing clients over time. And I'm looking forward to sharing more about that proposition at our interims.

And thirdly, from Active Savings, an existing proposition is coming into its own now that base rates are rising. As Amy shared, we've already seen a step-up in flow in the last quarter and we expect to see that growth continue, as we evolve the proposition.

We are confident that our work so far and in FY 2023 will give us the infrastructure and the offering to achieve our net new business goal when markets normalize. Similarly, with our target of positive operating jaws, Amy has given very clear guidance for FY 2023 on costs and revenue margins.

On costs, we have said that we expect underlying costs now to be lower in FY 2023 than we had implied at the Capital Markets Day in February, albeit with a modestly higher growth rate because of the lower FY 2022 starting point. We are controlling what we can to position us to deliver positive jaws.

But on the revenue side of the equation, it's clear that it's impacted by the three macro factors that I mentioned. That's partly offset by our revenue margin guidance, which has increased as a result of higher interest rates.

You can see our confidence in our strategy has not been impacted. I, my executive team and all of my colleagues are absolutely focused on what we can control, so that we are strongly positioned to deliver the metrics we set out as markets normalize.

So in summary, a year of good progress and execution. We have disciplined investment into 2023 and our eyes are firmly on the medium and the long-term prize, whilst we manage that short-term turbulence appropriately.

So with that should we open up to questions?

[Operator Instructions].

Hello good morning. Thank you so much for particularly now digging into the three pillars of that potential 2026 number.

I suppose the thing is, the world has changed significantly right in terms of the economics for a lot of your customers. Could you perhaps give us just a little bit more granularity about the 10 that you hope for from the existing business and five from Augmented Advice and potentially the five from Active Savings?

And I suppose I'm particularly interested in the existing business and how you think you might get that return to the sort of 8% growth rate that you've seen for such a long period of time?

Okay. Thanks Ben.

And look the point that I'm making is, there's a bunch of factors that we cannot control and that's inherent in, what you're asking about because market movement all indices being down Amy has gone through the detail of that. That's impacted asset values.

And then you've got the impact of consumer confidence which is at all-time lows has an impact on investor confidence which as you know is a measure that we look at. So, we can't control those.

But what we can control is what we've outlined in the strategy and as far as new business is concerned, we are talking about launching new funds. We launched one.

I told you there's another one coming. We've given insight into further ones coming after that.

That we can control we are delivering on. We've got GBP 100 million now in that default fund.

[Audio Gap] Like that is because engagement is really key and that's what we focus on. Second thing, Augmented Advice.

So, we're going to talk more about that. At the interims we said the pilot is on its way, that is really focused on engagement.

And then the third thing which is, Active Savings which I look at 2018 and say you know what we were ahead of the curve because we thought about one of this as the scenarios and that is enabling us to capture flows bring clients into Active Savings. What's going on in markets right now is short term.

We know it will evolve when it moves. And that's why I'm emphasizing the long-term trends, the secular trends the move from defined benefit to defined contribution, the impact of auto enrollment low interest rates.

By long-term standards they are low interest rates. It's a very complex savings environment.

We saw through the pandemic more people get to grips with this. It's being push, push, push.

The demand comes through digital engagement that's how you get out there and you really make an impact across the market, that's why we're investing in the brand and awareness because these are the things that are really important to clients. So, what we're doing is we are positioning the business and enhancing the service that we provide, so when these market conditions evolve.

we can all talk about when we think they've evolved and I'd be keen to hear your thoughts. But we all know and agree we'll get through those so we'll get back to normal.

When we get back to normal those fundamental drivers are the ones that will push and grow. This is a £3 trillion market.

It's going to grow to £4 trillion by 2026 and it's going to grow from there. That's how we are focused on what we're delivering.

We can't control this stuff in the short term. We can control how we execute on the market and that -- to execute on the strategy and that's what we're doing.

Andrew?

Thanks. It's Andrew Sinclair from Bank of America.

Three for me, if that's okay. Could do them one at a time if you want.

Firstly, was just what's assumed in the base -- for base rates in the cash margin guidance? And if your assumptions for that holds true would we expect that margin to go higher still in FY '24?

I'll stick on Active Savings -- sorry stick on cash, but this time Active Savings. I think flows were definitely strong and seem to be going in the right direction but how are margins evolving on Active Savings?

What's your outlook there? And thirdly was just on the other revenues bucket that's been maybe ticking down a little bit.

It seems to be a chunk lower again in the last six-month period. Just if you can give us some color on what's going on there?

Sure. Thanks Andrew.

So on base rate guidance clearly it's tricky doing your results the day after the Bank of England make their announcement. Hence our 90 to 110 range being quite broad and that anticipated that we would probably come in somewhere between 25 and 50.

So given yesterday's news that pressures us closer towards the top end of that range and we'd expect to get there sort of as we progress through the first quarter of the year. Clearly, as we look forward understand the expectations in the market of further rate rises, and we will see some benefit from that.

But clearly, as base rates continue to move up, we have a tiering strategy, and we will pass an increasing percentage of that through to clients. We don't specify that.

Obviously it depends on a number of factors. We – after each rate rise we do a review.

We make sure that we're doing the right thing for our clients. We're looking at a number of different factors.

And based on that then we'll make a decision on what the next level of pass-through is. But as we did in the last quarter, as we understand the trajectory, if there is different guidance to give then we'll give that as we update as we go through the course of the year.

Active Savings?

Yeah. So second question on Active Savings, we've talked about the fact that, it is relatively low margin.

We're not making any heroic assumptions on that changing materially going forward. We really like the product because of what it does for us and what it does for our clients in terms of retention.

So seeing flows coming on to the platform and going into Active Savings makes a lot of sense. That's clients feeling perhaps nervous about going into the market, but wanting to have the cash available earning a return, whilst they cross their fingers and hope that we see markets start to perform better.

So, not making major margin assumptions, but we think for us it's a great retention tool and we're starting to see the benefit of that also bringing new clients to the platform. And then your last question Andrew on other revenue.

So I mentioned briefly we no longer bill for paper billing charges and that's sort of order of magnitude £4 million of revenue in the prior year. So that explains the year-on-year step down.

James?

Thank you. I'd like to stick with Active Savings, if possible.

I think you mentioned in your presentation that 14% of the inflows there were coming from external new clients to the group. Just wondering as you start your marketing campaign, what are you sort of thinking and hoping for in terms of the share of the flows that are coming from external clients?

And leading on from that, do you see any scope to upsell the higher margin core product to these clients? Do you think the vast majority of those clients are likely to be sort of cash only and therefore not interested in the core product?

So, on your first question regarding share of flow, and where we're hoping to get to, and it's pretty early days. So we've only been marketing in the last quarter.

It's a little early to be giving you guidance on what we're expecting. But we're pretty optimistic that given the direction of travel with rate rises and given the level of brand awareness that HL has out there in the market that we should expect to continue to attract new investors to the platform and their first move being cash.

The upsell.

Absolutely. So having captured these new clients very much our intention to make sure that, they're fully aware of the range of products and services that they can take advantage of with us.

We've got a great digital marketing business. We think we get comms with our existing clients and potential new clients, right.

So we think that gives us a good avenue of opportunity to convert those early cash savers into investors as market confidence starts to come back.

Thank you.

Sticking with the recurring theme of Active Savings, I think we all agree that's going to be really important for fund flows this year given the market environment. I'm sorry to ask.

but what actually is the margin on Active Savings right now? I'm not sure that, I know what that is.

And the £0.7 billion of flow you saw in Active Savings in Q4 certainly – my interpretation is you're very confident that we'll grow from that level. So I just wanted to confirm that was the case?

And then to change the topic to ask instead about costs. The 9.5% to 11.5% cost growth that you put in underlying for this year and the guidance.

I think if you take the cost savings into account that's maybe about 5% benefit. So am I right in thinking of it that way?

And could you maybe give us some idea of how much of that perhaps 15% to 17% growth is actually wage inflation so we could think about longer term as well?

Quite a lot of questions there. So I'll see, if I've covered all of them and you'll tell me, if I haven't, Haley.

So margins on Active Savings high single digit at the moment, hence not breaking out that revenue line separately yet. But obviously, as the product evolves and as the scale of that business evolves then we'll give you a little bit more granularity on the revenue margin that it's generated.

Are we expecting it to continue to grow from here? As I said, it's early days.

We have only just started marketing the product. So we're pretty optimistic about what Active Savings will do through the course of the year ahead.

On costs, yes, your interpretation of the year-on-year underlying growth is the right one. From a wage inflation point of view, we're just at the beginning of our new cycle internally.

So it reflects the pay award that, we've made in the organization, where actually we've made a 5% pay award, but we've structured it, so that it's very much weighted towards the – those of our colleagues who are at the lower end of our pay scale. So we have taken that into account and it takes into account the fact that, we've been adding FTE through the course of the last year.

And so we've got some cost annualization that we're expecting to see in the course of the year ahead.

Andrew.

A couple of questions. On HL Funds margin, which is coming down clearly the guidance for 2023 is a movement from the old to the new.

Where do you think the HL Funds charging structure will be once you've got the new funds fully in and reprice some of the old funds? Secondly, given that Active Savings is such an important part of the £20 billion net flows, would you say where in your mind the top end of the charging is?

I think when you first introduced it you thought that maybe 25 basis points was the most you were going to charge. It'd be good to get a sense of that, because that's going to be quite a critical revenue driver.

And then thirdly, on the costs what you basically said is that your costs were lower in 2023 too, but because you're growing faster -- but there's a bit more growth in 2023. The growth rate is increasing from your guidance in February, but you're still going to have lower costs than you would guide to in 2023.

Is the basis of that purely, because trading costs have come down, or have you actually been paring away at the underlying cost base?

So if I take the HLFM margin question, when we talked at the Capital Markets Day, we said that we expected the direction of travel on HLFM margin to get to around 40 basis points. Obviously, there's a real mix of products in what we have currently and the new funds that would be launched and it really depends on the take-up mix that we see from clients.

So, there'll be a low-cost core product in there, which will have very low margin indeed versus the multi-manager funds with a more complex range and a higher return aspiration where we'll see higher range. So 40 basis points is sort of the order of magnitude direction of travel that we've given.

Active Savings, so yes, Andrew, right, we talked about 25 basis points. And given what Amy has just said, we've still got some way to go to get towards that.

I'm not going to call a ceiling. I think we would expect to see it grow from where it's at currently.

It has been growing. It has grown given rates have increased.

There's been some flow through into that. What I've always said about Active Savings is to get it in growth mode and get the assets in.

And we've got £4.9 billion in there. I regard that as being a good start.

What we did say at the Capital Markets Day was we've managed to do that since 2018 in a falling interest rate environment. Now we've got a rising interest rate environment, and the service works really well.

So we'll start pushing it out. Clearly, we've been doing that for a quarter and it's worked really well.

The thing about Active Savings I think is we are learning about it all of the time. The margin that we make depends upon our assessment of how we sit between clients and between the banks and we recognize that the value that we bring to both sides, and therefore, there's plenty for us to learn as we progress.

So we are -- where we are at the minute is not where I think where we will remain. So I'm obviously expecting to see an increase, but I'm not going to be any more specific than that.

And I guess just to be clear on Active Savings, we don't charge clients. So it's implied in the rate.

Yes. And then Andrew your cost question.

So, clearly, there is an element of -- as I've set out in the presentation, there's an element of variability in our cost base, which does follow activity, but given the market backdrop and given the growth that we've seen in costs in the business over the course of the last few years, I am very focused on cost control and the underlying cost of the business. Have been and will continue to be.

[indiscernible]

No.

No.

Question on the front there.

Thanks. Rhea Shah, Deutsche Bank.

Two questions. So, going back to your investor confidence survey, what is it showing for July?

And is there any -- are you able to tell us about the timing between what customers are feeling and how they're reacting with putting in flows or taking out flows? And then back to Active Savings again.

That 14% of new money that's coming from new clients, what proportion of those clients have invested in your four products away from cash or Active Savings so far?

So I'll take the first one. So around investor confidence, investor confidence for us has always been an interesting measure, and you can see over time how it correlates to flows and confidence, which then leads to an understanding of direction of investment.

So Amy has talked about the insight that we have in terms of how and where clients invest. And she has talked about the move -- the shift in investment trust global US -- all of those impacts.

You've got the Investment Association peak RIM data that came out -- I think it was yesterday in terms of outflows UK; outflows overall. The areas of interest for clients are at the moment are not UK and they are global.

And you can see that in some of the longer-term trends that Amy has talked about. I think at the minute clients are behaving entirely logically, entirely as you would expect them.

I mean that £15 billion of cash that Amy put up there on the slide, that tells you, that clients are being cautious. They put cash onto the platform and they're waiting until their confidence improves.

And then we will see that cash start to move from -- as cash into investments, but that is not right now. And the behavior that we've seen through this year and the slide that Amy put up, in terms of activity very, very compressed around tax year-end.

This was the second best tax year end that we've ever had. So, clients want to use up their tax-efficient allowances.

That is completely logical. Clients like all of us can look at the external conditions and go, I'm not sure that I'm ready to actually invest that money yet, so it sits within cash.

So, we sit here and we look at that data. We look at the trends and we see where clients are investing and we're focused on engaging and talking to them.

What are they interested in right now? Inflation.

Any content that we put out around inflation now, it gets absolute engagement -- attention and then engagement from clients. But to see the shift in the behavior, well, this is my point.

We can't see exactly when that's coming. I don't think anyone can see, where it's coming.

We know that it's short term. So we are focused on what we can control and execute, which is why I talk about the strategy and Amy has referred to some of the funds that we are then launching because these are what clients wants to have when they are putting that investment to work.

That’s why we’re doing it. And then around this whole engagement piece, this is where the augmented element really comes into it.

That's what we're building through that. So, we've also got active savings.

We've plenty of things, plenty of discussions being about this morning. But those are the three things that we're looking at with growth, and they're there to support those long-term trends that I was talking to when Ben asked this question.

And Rhea, on your second question about the portion of new clients coming on for the Active Savings product, it's a little early to tell. I think is the way to answer your question.

So clearly, we've got a range of Tanna [ph] offers, so if clients coming on and putting -- going into a six-month savings offer, it's going to take a while for us to see what they choose to do when that offer expires. So, I think it's a little early to be giving you contextual data around the client performance.

Haley, back again.

Thank you. I thought I'd ask the question to Birger actually.

You’re reading my mind. I was thinking, somebody ask him a question.

So I appreciate it's very early days with augmented advice and the lags and everything else that you guys are working on, just occurred to me just now. So, with the changes to some of the iPhone privacy rules that Apple announced last year, which I think Matt [ph] has talked about recently, does that affect HL at all, or is all of your information internal that you're using Hargreaves Lansdown data you to rely on external sources, if that makes sense?

First of all, [Technical Difficulty] trust me with microphone. We -- for us, it's very, very critical trust and data from our clients.

And actually, we're extremely supportive of the privacy and it's sort of effects that we're putting into the organization. We do not rely on anything from the phones as such more than when we use it for things like biometrics authentication, et cetera, where it drives.

So all our engagement with our clients are driven by data they share directly with us and very rarely do we extend that with other information, unless it's a very neutral space like marketing, et cetera, that precedents. And therefore, our models, not just et cetera, for us is key to respect what clients want and how we engage.

So we don't see anything particularly affecting us in that space.

Sorry. Just one follow-up for me.

Just on the -- you were talking about the increased proportion from international. Just wondering if you could give us an idea for share trading, how that's been evolving over the last few months between UK versus international share trading?

We've seen a bit of variability through the course of the year, Andrew [ph], but pretty much holding constant. So that range I gave you of 18% to 25%.

We've seen in the 20s over the course of the last few months even though we've seen volumes slightly lower. So we're not seeing any distinct differences in trends through the course of the year on overseas trading

Hi, Chris, Amy, can you hear me okay. Hello, can you hear me?

Yes, we can.

Yes, we can.

Perfect. Cool.

Thank you for the presentation. I just wanted to come back to two things, UK control, which is cost and pricing.

So -- on costs, the fact I understand that the elevated cost growth in FY 2023 is a catch-up. But after the catch up, can I confirm that you're assuming cost growth from FY 2024 reverts to the guidance you gave at the CMD, or is there any effect from the setup inflation?

And then secondly, on pricing. Look, I don't want to overreact at a weak short-term trends but customer acquisition has slowed dramatically, which is primarily cyclical.

But nonetheless, it also appears your funds market share has fallen. And I guess also that, that data is slightly lagged and maybe there's a bad date that that market share data, therefore, overstated given the weak Q4.

In addition, you're number two for [indiscernible] has just announced another large round of pricing cuts. So just conceptually, how are you thinking about pricing when competition is accelerating and it does appear that your market share is starting to be impacted?

Thank you.

So Nick, on costs, you're right. The guidance that we gave absolutely holds the step-up that we're seeing in 2023, you should think about that in the context of just that year.

With lower number

Yeah.

Right. Pricing and market share.

So market share is linked to asset levels and Amy has talked through the drivers for that. So, from a market share perspective, if it's driven by asset impacts and not see too much of an impact there.

And then as far as pricing is concerned, and you mentioned competitive environment. Look, we've been in a competitive environment for a while, and we've seen consistent growth in our market share.

And obviously, this is an industry where clients can move if they choose to, and our client retention rate has improved and our asset retention rate has improved. And I think just on the – your client number points, maybe you might make this point more eloquently or articulately than I do.

But we have a cutoff for an active client at £100 – and the market falls that we saw, obviously, would produce a number of clients below that. So we would no longer count them as being active clients.

The flip side of that, obviously, is when markets rise we will see them come back through. And I think the impact of that was about 6,000 clients.

So I think when you think about that level of client growth, you need to think about it in that context.

So effect factor I think – thank you, thank for that. So just I guess to come back, it sounds like therefore.

You've seen no change in that for geo pricing in response to what your competitors are doing? Just to clarify that.

Well, I think pricing needs to be based upon the value of the proposition. We're very clear on the proposition.

We're very clear on the value that you can provide. And I went through all of that detail in terms of the direct feedback that we get around the quality of that.

As far as pricing is concerned, we think about that in terms of what the right thing to do is with clients. So we've demonstrated that we'll make changes where it made sense.

I mean, over the last few years, we've made changes on we've taken away a whole bunch of fees, which I'll call nuisance fees, they've gone. So we've got a very clear, transparent and easy to run understand pricing structure.

We're making changes to HL Funds pricing. We talked through that.

We remain extremely competitive as far as FX costs on trading are concerned. We've demonstrated we will make changes where we need to.

Those change in date of funds, economies of scale. We're passing that on.

So we do think about it carefully. We don't sit there and just ignore, but we're very clear about the value of the proposition.

And through the year, we've added 92,000 clients. We've got £5.5 billion of net flows, and all of that feedback about the quality of service that we've got.

So I think that's the context I would put around this.

Perfect. Thank you.

Yeah. Hi.

Thanks for taking my questions. My questions are mainly around client and asset retention rates and how we should think about customer growth from here?

So on the client retention rate, I think these are down now to 92.1%. End of April, it was 92.4%.

So that will imply that during the year, the financial year you have seen around 130,000 customers leaving the platform. So I believe that's the highest number you have already reported.

So that's on top of the around 110,000 clients at late last year. So can you give us any color as to what has driven this clients leaving if it's not pricing?

And then if I remember correctly, in FY 2021, asset retention rate was below client retention rate at around 91%. That implies that the clients leaving have larger portfolios on the average customer so what's the current asset acceleration rate if that has improved?

And is active savings, one of the tools you have to improve the retention rates? I think you reported that around 4% of the flows is from existing cash on the platform.

And then on the customer acquisition, I think net new customer growth was around 2,000 in the two months to June, which seems poor compared to peers. How shall we think of customer growth from here?

And maybe on the active savings as well, it's around two-third of the flows come from existing clients, bringing in new money. This is [indiscernible] part of the platform is [indiscernible], or are you confident that at some point, this would be switched into funds?

Okay. There's a lot of questions in there.

So we'll make our way through them. Just on client and asset -- client retention rate and asset retention rate.

I think I gave these. I think, we gave these numbers earlier on.

So we can -- we can go back to those. But the client retention rates around 92%, I said was slightly improved.

And also, this links to the point that I just made, which is active clients have to have more than £100. If you have a falling markets and it floats it goes below £100.

We don't count those being active clients. I said that number is 6,000.

So you need to include that with your overall assessment of the number of clients coming in terms of the client acquisition that we've had over the last couple of months. And the point that I have made is there are things here that we cannot control.

Talk about markets, we talk about asset levels. We talk about consumer confidence, talk about investor confidence.

We can't control those. We're focused on the actions that we can take that bring in clients and focus around engagement.

So when you come to active savings, within active savings, it's clear clients logical at the moment and they don't want to invest. So you get money that comes in, that goes to active savings.

For sure, when clients decide that actually they want to get that invested. They've got the ability to then move that across.

In addition to that, which we've always said about active savings, you've got clients -- you've got this other asset that they actually want to have and manage it in the same place as their investments. That drives all sorts of synergistic benefit as far as we're concerned and is a retentive benefit as far as the client is concerned because there is nowhere else -- nowhere else, where you can manage execution only, share trading, funds trading, investments, investment solutions, insights mobile application, help desk, advisers, cash, liquidity income all in one place.

That is what clients value and that is it makes clients sticky. So coming to your point about, well, what is it that clients leave for?

Well, we've said this before. You have clients that -- clients and assets that leave the platform, there is a withdrawal rate.

We are – our long-term business, we have clients that get into that stage in life where they are going to decumulate. And the proportion of assets that are withdrawn from the platform as a percentage of AUA has been relatively constant.

So, we don't see a change in shift there. And it's entirely reasonable and we want to support clients to get to the stage where they're able to enjoy the fruits of that investment.

Second element would be clients that go somewhere else. And some of those will go elsewhere because they want advice, hence the reason that we are building up that capability.

And there are some clients that move for price, but let's be clear that there are many things that clients take into account. The things that clients, there are about six things that clients really value when they think about the value they get from the provider.

Clients think about feeling safe and supportive. Clients think about having access to expertise, clients think about being able to manage their finances with confidence, convenience, clients think about getting to a financial goal and being able to use their money as a consequence, clients think about being feeling in control, people want to have access to it.

They want to be able to talk to people about it. And clients, times think about aligning their appetite for risk along with their values, which is why all the insights are important, that's how we structure and deliver the service we provide -- that's why we have a very strong retention rates.

And I know that there were questions I've missed in that. But Amy, if you can help me, that would be great.

I think we've covered quite a lot actually. I mean, just to put it in context, the 6,000 clients that fell below the £100 threshold.

If we had counted them in our retention rate, then that would have gone up to 92.5%, but we don't and we're very transparent about that. So, I think we've touched on everything that was asked.

Yes. Just on the absolute number of customers living still highlight even if I adjust for the…

So, we've not seen any. Yes, as Chris said, we've not seen any difference in the trends on client loss over the course of the last few months broadly inline with what we've seen before as a percentage of AUA.

Thank you.

Thank you and good morning. Thank you for the presentation.

Just a couple of questions, and apologies if one has been asked, but the line was a bit disturbed. In the past, you mentioned that, a large portion of your flows basically are from recurring savings schemes basically.

So, customers that just deposit regularly every month on an automatic, recurring basis. Can you please tell us basically what happened to the -- sorry, one, you can remind what percentage of your flows is of these clients or recurring?

And to what happened to disclose because apart from active savings, clearly the flows in the Vantage platform were close to 100 million so very, very low? So that's my first question.

And Second question is related to actually your HL funds. So again, there was a bit of outflows you mentioned in the comments.

I just wanted to know, if you could give some color there why you're seeing gradual outflows from these products? And then another question I wanted to ask is on customer growth in general.

So I appreciate that we have this on threshold. But even if I include the 6,000 that left, still, it's a very low number compared to what historically you published and also to what some of the other players have published recently.

Why do you think this happen? What was the cause?

And is potentially marketing expense related to that because I noticed that your marketing costs were pretty much flat year-on-year, just a very small increase despite a very difficult macro environment. So we expect that the future, you might need to increase marketing to make sure that the customer growth remains healthy?

Thanks.

I don't think in comparison to what I've seen reported at now. I don't think we are seeing a difference.

Let see what Avanza reported. I see what Nordnet reported.

We've been very clear of what conditions are like out there. So I'm not sure I follow from that perspective.

We have been…

I think I was referring to AJ Bell, for example, that report. And appreciate it's a different time period because it's three months not just Q but in the…

That is precisely my point. But I'm looking at peers in comparison to time periods that are consistent with what we're reporting.

I don't see that. So -- and therefore, I don't see it connected to marketing spend.

I mean, we are very, very focused on how we manage that marketing engine and quite disciplined in terms of how we direct it and very confident in the return that we therefore get as a result of the that spend. And if you want to -- if you look at the marketing spend, and you want to have a read through from that, that tells you that there isn't a great deal of activity out there, which then mirrors with the point that I've made about investor confidence.

So that's how I think, I would -- that's how it leaked to that. James, we have before talked about the share between net new business that comes from existing clients and that becomes from new clients.

Is that in the data pack, because I can't dig it out. We can -- I think we can come back on that bit.

In terms of regular savings, and when you say regular savings, I interpret that as being clients who set up a direct debit. And of course, that experience is about to get even better because what we're going to do with online with open banking, but I think we have about 260,000 clients who are -- sorry, thanks, James, 300,000.

Well, that tells you that it's growing.

Is it possible to note that what is historically has been the proportion of flows coming from these 300,000 clients?

Yes, we don't disclose that.

Yes. Thanks.

Yes. Hey, sorry.

Hi, there. Good morning.

Just a few questions on my end. First with the -- it seems like cash rates across the platform industry haven't moved up that much in general, with the rate hikes.

I'm just wondering, if you think it's an area that the FCA, you could look at, at some point in the future, for example, on those like pension accounts. I think HL is paying 10 to 15 basis points on 10,000 to 50,000 balances and some of your peers are paying less and you can't move into active savings.

Just kind of wondering if there's any concern you’re hearing from the regulator on huge decline [ph] in cash? The second question would be, thanks to the disclosure on the asset mix and how that's changed on the platform over time.

Is it possible to get an update on the massive penetration on HL and how much of the equity assets in ETFs, for example? And then thirdly, the stock broking revenue divided by number of trades is about £15.

Is that kind of a level you're thinking of this remaining into? Is that from a level you're baking in into your share margin guidance, so actually now that's above the headline special equity fee due to the FX rates, that just still look like a good data?

Thanks.

So on cash rates and your question regarding the FCA. Clearly, we're very mindful of the consumer duty that's coming in next month and have been very thoughtful and done quite a lot of work internally about the way that we think about client cash in that regard.

So you heard me talk about stratified approach that we take, where we weight the return towards those clients, as you rightly point out, you don't have quite so much flexibility those in SIPP and drawdown versus clients who have cash in fund and share. So we are very thoughtful about that, very mindful about that.

And that's why we prioritize the security and the liquidity provided by those that we deposit with over yield. Your second question on asset mix.

We've actually included this time around -- there's some granularity in the data pack, which I appreciate you probably won't have had a chance to have a look at yet, but we're giving a little bit more visibility of how assets split on the platform. So, hopefully, that will answer your question.

If it doesn't, then James and I would be happy to pick that up with you later. And then on equity fees, what we've guided reflects effectively where we have been over the course of the last couple of months.

And as I said, not expecting really to see that much of a difference in terms of overall levels of activity. Clearly, if markets do starts to -- or if markets continue what we've seen in July, then we may see an uplift in activity, but we're not seeing that not coming.

Thank you.

In that case, thank you very much to everyone joining on the phone and thank you very much to everyone joining us here in person. I can say, you can all get out and enjoy the sunshine.

But if you got any further questions, obviously, James, and we're around all the rest of the day. So thank you.

Thanks very much, everybody.