Shares in Hargreaves Lansdown fell almost 3% today after RBS downgraded the business from 'hold' to 'sell'.
The distribution business' shares dropped 12.9p to 433.4p, a fall of 2.89%, following the downgrade.
The broker note from RBS said: "[With] revenue margins facing potential downward pressure and competition from a number of new entrants - both of which are our longer-term concerns - likely to have a more significant impact on the stock's outlook ... In that context, we downgrade our rating."
Hargreaves announced in December it plans to charge investors who hold certain tracker funds on its Vantage platform a flat fee of up to £2 per month, compared to the current annual rate of 0.5%. The flat fees were introduced from 31 December.
Some investors have complained the switch will make certain index tracker funds more expensive than costlier managed funds.
Danny Cox, head of advice at Hargreaves, said the changes were necessary to increase the range of funds the firm offers and keep its charges competitive.
He said: "This fee will only apply to a minority of funds - it will remain free to hold over 2,400 funds - 97.3% of the funds our clients hold - in the Vantage Service."
However, RBS said mid-cap fund manager F&C was best placed to benefit from regulatory changes, prompting an upgrade from 'hold' to 'buy', and sending the stock up 4.2% to the top of the FTSE 250.
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