Much of Hargreaves’ profits come from retaining trail commission of its fund sales, which are expected to be banned as a direct result of RDR.The firm’s Vantage platform will have to become a paid-for business as a result, which many commentators – including Citigroup – believe could hit its revenue stream.
Hargreaves has until the end of the first quarter next year to gear up for these changes.
However Nimmo, who holds Hargreaves Lansdown in the top-10 of his Standard Life UK Smaller Companies fund, is confident the Bristol-based financial services company will weather the storm, and has no plans to sell it.
"Yes, it does concern me when wealth managers are constantly saying the company is heading for a fall," he said. "However, for platform providers, D-day isn’t until 2013. They have a full 12 months to prepare."
"Hargreaves has dealt with the torturous regulatory changes better than anybody and I think they’ll use their muscle to put even more pressure on their competitors."
Nimmo goes one step further, saying that new regulations will actually make Hargreaves’ business stronger.
"To be honest, I think RDR will help Hargreaves – I think 2013 could be a very good year for them. RDR will hit many financial advisers who are either going to have to refuse customers or pack up altogether."
"You’re going to get a lot of investors left without any guidance and who will use something like the Vantage platform as a result."
The manager has had to cut back on some of his best stock picks in recent years because they have become too big, but when asked if he had plans to sell out of Hargreaves – now a FTSE 100 company – he said: "No, I’m not prepared to let go of this one just yet."
He has a 4.1 per cent position in the firm in his £1bn UK Smaller Companies fund, making Hargreaves his fourth-biggest holding. Only five other funds in the IMA unit trust and OEIC universe hold it in their top-10, including FE Alpha Manager Nick Train’s CF Lindsell Train UK Equity portfolio.
Danny Cox (pictured left), head of advice at Hargreaves Lansdown, says the firm is waiting on the regulator to be more clear about the future of rebates.
"We’re all in limbo at the moment," he commented. "The RDR platform paper was scheduled to be filed at the end of December last year, but as we understand it we won’t find out until the end of the first quarter of this year."
"There are still issues surrounding tax issues on rebates. Only once we have the rules can we decide exactly what to do."
When pressed on what contingency plans were being put in place, Cox said: "If unbundled share classes are the way forward, we will look to offer both unbundled and bundled options to our clients. We already have platform fees on certain tracker funds."
"There’s a lot going on behind the scenes, which I can’t talk about at this point."
"What I would say is that we are a large, financially sound, secure business, and a lot is going on behind the scenes. I think we are well-placed to capitalise on the tailwinds created by RDR on DIY investing."