Page last updated at 06:16 GMT, Wednesday, 2 September 2009 07:16 UK

Bristol brokers battle downturn

By Dave Harvey
Business Correspondent, BBC West

Peter Hargreaves
Peter Hargreaves' firm has seen a rise in profits despite the downturn

They started in a spare bedroom in Bristol, twenty eight years ago.

Now, Peter Hargreaves and Steve Lansdown's firm of investment advisers is valued at over £1bn on the London Stock Exchange.

And after the worst year on the FTSE in decades, Hargreaves Lansdown has reported a profit of £73.1m in the year to June, up from £60.9m in the previous 12-month period.

So how have they defied financial gravity?

"We have our clients to thank," Peter Hargreaves says in his typically bluff manner.

"They've stuck with us through a difficult year, and told their friends about us too."

It is true that an additional £2bn has been invested this year, taking total investments to just shy of £12bn.

But the Bristol firm has also, to some extent, bucked the recent massive falls in the market, protecting both their clients' money and their own profits.

Investments falling

Malcolm Davies is a probably a typical investor. At 65 he is still working, in an advertising agency.

Malcolm Davies
Mr Davies has seen the value of his investments fall

"My biggest pension is only worth about 40% of what I expected, so I'm still out there earning", he says.

Hargreaves Lansdown are looking after the investments that will make up the shortfall, and for him the past year has been frightening.

"You watch these massive financial stories on the news and you just worry if you'll have anything to retire with," he says.

"I'm no worse off than most people, and some people have no pension at all which is awful."

Over the twelve months to June 2009, Mr Davies' investments dropped 9.7%.

Over the same period, the FTSE 100 fell 20.9%.

Private vs public

Along with financial success, Hargreaves Lansdown has become steadily more well-known in Bristol.

Steve Lansdown is Chairman of Bristol City FC, and though he tries hard to keep the club out of the office, the atmosphere is always cheerier when City have won, as they did at the weekend.

Peter Hargreaves has earned a reputation as a straight talker, and when I met him he was as straight as ever.

"There's a two-speed Britain," he tells me.

"People in the public sector are getting pay rises and bonuses, and having job security and marvellous pensions, and the private sector are having to pay for those, and they're not in the same situation.

"I think unless things change, there will be a lot of unrest by people who are paying taxes when they look at how money is being spent by the public sector."

Next year, the firm will move into new offices on the rebuilt Harbourside in a building which itself exemplifies the bizarre world of the credit crunch.

When the £40m building was first touted round the City, investors queued up. But then the bottom fell out of commercial property.

Ironically, the only backer found who could still pay for the building was a Danish Local Government Pension Fund.

And so the dinner ladies of Copenhagen are building a new HQ for the Bristol brokers who complain they are the ones subsidising the public sector.

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