The former chief executive and co-founder of the Bristol-based business, who won an OBE in 2013, will remain employed with the business, which has a significant Financial Planning arm.
Peter Hargreaves said: "I believe this is the right time for me to step down from the board.
"The group continues to perform strongly and I have every confidence in the strong management team and the well diversified board to look after my interests in the group. I will continue to work in the business, but will spend more time with my family and pursuing outside interests.
"I will, of course, remain in close touch as a major shareholder."
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He was made a CBE for services to business innovation, financial services and to the city of Bristol in the New Year's Honours list announced in December 2013.
Mike Evans, chairman, said: "Having founded this business with Stephen Lansdown in 1981, Peter has been instrumental to the success of the group and has personally overseen its development into a financially secure, profitable, client focused, FTSE100 business.
"I am sure we will continue to benefit from his experience and insight as both an employee and a major shareholder. On behalf of the board and indeed the whole group, I would like to express my gratitude to Peter for his immense contribution to the group to date."