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Tips from an amiable curmudgeon

Cover of In for a Penny by Peter Hargreaves Tips from an amiable curmudgeon
By Jonathan Guthrie

Peter Hargreaves, co-founder of the wealth manager Hargreaves Lansdown, recently threatened to quit the UK in protest at the 50 per cent tax rate proposed by the chancellor. His outburst is, however, undermined by his new biography In for a Penny, in which he says: ?I couldn?t contemplate having an overseas property.? Just as well. The UK, too often gripped by a spirit of nervous consensus, needs amiable curmudgeons such as Mr Hargreaves.

Fortunately, he has backtracked on his threat. So he will continue as a fixture of retail financial services for a while longer, riling his enemies and entertaining his fans

It was, in any event, hard to imagine Mr Hargreaves, who retains his Lancashire accent 30 years after he left that county, swanning round Monaco in a white suit and reflective shades. ?I?m always wary of people who are flash with their money,? he says. His wealth was estimated at £310m ($506m) by one recent rich list but his favourite pastime is growing vegetables. ?Sometimes my hands are so cold it hurts,? he writes, ?but nothing beats washing the vegetables and laying them out on the kitchen work surface.?

Hargreaves Lansdown, a Bristol business focused on execution-only dealing in shares and collective investment funds, is now worth just under £1bn. But it might not exist if Peat Marwick Mitchell, the accountancy firm that became KPMG, had not fired Mr Hargreaves in the early 1970s. Then, working for the business that became Unisys, Mr Hargreaves twigged that computers could be a potent sales tool if used to create mass mailings.

After he set up the business in 1981 with his professional ?other half?, Stephen Lansdown, they spent £7,000 on a word processor, an unimaginable self-indulgence for most start-ups at the time. But they could produce the pithy investment newsletter that became the backbone of their fast-growth business, along with personalised letters to potential unit trust buyers.

Mr Hargreaves?s business style reflects boyhood experiences of working part-time for his father, a baker. This gave him a gritty appreciation of human frailties. For example, his philosophy on recruitment is ?only to recruit when the existing staff are so overworked that they will accept anyone new?.

Hargreaves Lansdown grew rapidly through the unit trust boom of the 1980s. Fraudster Peter Clowes was among the investment managers who sought to sell products via the firm, but Mr Hargreaves turned him down. Having once been ripped off by a huckster in New York, he took the view that any offer that looked too good to be true probably was.

The firm avoided a potentially disastrous merger in the lean times after the 1987 stock market crash, bouncing back thanks to the fashion for investment trusts. By the second half of the 1990s, Hargreaves Lansdown was suffering serious competitive pressure from brokers that refunded initial commissions on sales of personal equity plans to customers. Hargreaves Lansdown eventually became a discount broker itself, launching the Vantage plan management service that is now at the heart of its operations.

As business books go, this is pretty good. There are no boxes with fatuous advice or ?inspirational? takeaways. Instead there are plenty of practical smarts, many of them concerning marketing. For example, expect to lose 5 per cent of your prospects for every question you add to an application form. Another tip is that customers may only feel ready to invest six months after receiving direct mail.

Mr Hargreaves hates meetings, which he regards as managerial frippery as egregious as personal assistants. His strategies for shortening them include limiting the supply of chairs to discourage time-wasting discussion. He also schedules formal get-togethers for 30 minutes before the end of the working day.

Like many successful entrepreneurs, he is clearly good at working out what makes other people tick.

His prose is clear and unfussy. A book on vegetable growing should be his next project. That would distract him from thoughts of fleeing the UK.
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