Hargreaves Lansdown (LSE: HL) looks to me to be one of the best FTSE 100 shares to buy now. There are a couple of reasons I like this online stockbroker as an investment for the next five to 10 years.
Hargreaves Lansdown’s top qualities
First of all, it has carved out an established niche in the market. Even though the online trading market is incredibly competitive, and there are companies that offer a better level of service for a lower cost, Hargreaves is still drawing a huge amount of business, thanks to its size and footprint across the country.
Indeed, many investors do not want to put their money in a smaller, unproven broker when they can choose a large blue-chip stock like Hargreaves.
The company has to report its financial position to the market twice a year. Any investors can view this report, and analyse its financial strength. That is not possible with all brokers, especially some of the smaller start-ups that have emerged in recent years.
The FTSE 100 group also invests heavily in developing its product offering. Several surveys have shown that investors are willing to pay more for a user-friendly service. As someone who is familiar with the Hargreaves platform, I know it is quite easy to use. Compared to some other brokers, the difference is like chalk and cheese.
The one downside of using the platform is its high cost. There is a 0.45% annual management charge for holding funds on the platform as well as dealing fees. Some brokers do not charge holding fees and dealing fees are a fraction of those charged by Hargreaves.
The challenge posed by these lower-cost brokers is probably the biggest issue the group will have to overcome going forward. It has been able to pull ahead by investing heavily in marketing and the platform, but this edge could disappear quickly if the firm starts to take its market share for granted.
Still, for the time being, consumers seem to love its offer. It added 23,000 new clients in the quarter to the end of September. These customers bought with them £1.3bn of new business.
FTSE 100 growth stock
I think consumers will continue to flock to the company as its presence in the financial services market grows. There has also been a general increase in the number of consumers investing over the past two years. Hargreaves has benefited from this trend and I think it will continue to do so.
Consumers may have started their stock market journey on a trading platform, but they may choose to shift to a broker like Hargreaves as they start taking a more long-term approach.
If interest rates continue to languish at current levels, the company may also benefit from a customer influx as investors look for ways to make their money work harder in an inflationary environment.
These are the reasons why I think the company is one of the best FTSE 100 shares to buy in 2022. I would be happy to add the stock to my portfolio today.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.