After the latest results released a few weeks back, Hargreaves Lansdown (LSE:HL) shares slumped. In fact, over a one month period, shares are down over 20%. Despite some points of concern that were flagged up, we think that the pivot and future growth prospects for the retail investing platform are positive. Here’s why we think that.

Strong grip on the market

In the latest half year report (through to the end of 2021), the business did see revenue fall by 3%. However, it saw total assets under management grow by 17%. this means the pile that Hargreaves are sitting on stands at £141.2bn.  Part of this growing asset pool reflects the market share that the business has. By its own metrics, it has a 43.3% share of the retail market.

Even though it was disappointing to see profit before tax fall by 20%, this figure was being compared to a very strong 2020 figure, when retail interest in markets due to volatility was exceptionally high. For longer-term investors, the AUM base is a key metric to look forward with confidence. The strong grip on the market that the company has established should allow it to grow revenue lines again in the future. This should support the Hargreaves Lansdown share price moving higher.

Pivot to wealth management

An interesting point noted in the results was the move to offer advisory services (both digital and human) to clients. This push makes sense, given the target client data that it already has. The ability to cross sell existing clients should provide some low hanging fruit for the business, where it can look to boost profitability by charging for advice. Not only this, but the business is also commitment to investing heavily in data and tech to provide analytics to help clients. This should make the operation ultimately more efficient and streamlined.

Clearly, this will require high investment to begin with, and a smart strategy to implement what it wants to achieve. This is a risk we do see going forward. With such a large pivot away from existing operations, investors will be keeping a close eye on progress. There will only be so long that can be tolerated before results need to be shown to the market.

Upside for Hargreaves Lansdown shares?

On the basis of the above, we think that there’s good upside to be had for long-term investors. At 1,000p, it’s at levels not seen for almost a decade, so we feel the risk/reward also is appealing. A material break and hold below 1,000p in coming weeks would cause us to rethink our trade.

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