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Vanguard launches D2C investment platform

Vanguard launches D2C platform in the UK with fees at 0.15 per cent

Vanguard, one of the world’s largest fund groups, has launched its direct-to-consumer online platform for the UK mass-market investors.

In October, Money Marketing first revealed Vanguard’s plans to launch the service as part of a “10-year plus strategy”.

The new platform will charge 0.15 per cent in addition to the underlying ongoing fund charges and will have a minimum monthly contribution of £100 and/or a £500 lump sum.

Account fees will be waived above the first £250,000 invested, meaning the maximum account fee payable is £375 per year.

The online investment service will partly replicate Vanguard’s existing US offering, as it will limit the selection to its own funds.

These will include the popular LifeStrategy range, index funds, ETFs, Target Retirement funds and its four actively managed funds.

The funds are available via an ISA, Junior ISA or general account, while a Sipp will be added later.

Vanguard’s head of European business Sean Hagerty tells Money Marketing the firm doesn’t exclude the inclusion of other firms’ funds in the future depending on the demand, which will bring the UK offering in line with its US direct business.

In addition, Vanguard also says it is not ruling out the launch of an advice service in the UK to replicate the US model as well as to launch the D2C platform in other European countries but has no imminent plans for either of these.

Vanguard head of personal investing Ryan Barrows, will run the platform, reporting to Hagerty.

Hagerty tells Money Marketing: With a lot of humility in the UK, we know that we have a lot to learn and understand about how investors think and what the important aspects of an offer will be.
“We felt we were mature enough in the UK serving advisers and institutions. We tried to understand how UK investors think and we came to the conclusion that now is the right time [to launch the service].”

Vanguard says the low cost and simple approach of the D2C platform responds to the FCA call for asset managers to act in the best interest of investors to show how they deliver value for money. Barrows says the launch of the service will is “an educational opportunity” for investors and will be good for the entire industry.

On the impacts on the UK advisers, where a third of them holds assets with Vanguard, Hagerty says “a vast majority” of investors still need and want advice and that the new D2C will not be a threat to their business.

He says: “This offering is for folks who want to do their investments online in their own time.
The reason the advisory community will actually like what we are doing is because it is helping us to build the recognition of the brand of the company with the end investors.

“In the US, one of the reasons advisers like us is because their clients are comfortable with Vanguard in their portfolios because of the level of trust. Having the same offering in the UK will help us improve the brand recognition and demonstrate that trust.”

Type of charge / Investment Fees for annual ownership of Vanguard FTSE U.K. All Share Index Unit Trust
Fund Ongoing Charge Figure (OCF) 0.08%
Annual account fee 0.15%
Total cost of investing 0.23%
Investing £10,000 lump sum £23.00 per annum with Vanguard
£49.58 per annum average platform cost
Type of charge / Investment Fees for owning Vanguard LifeStrategy® 100% Equity Fund
Fund Ongoing Charge Figure (OCF) 0.22%
Annual account fee 0.15%
Total cost of investing 0.37%
Investing £10,000 lump sum £37.00 per annum with Vanguard
£63.58 per annum average platform cost

Source: Platforum data as at 31 March 2017

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Comments

  1. As one more thing which might shake up D2C customers into actually looking at the charges they pay, this can only be a good thing

  2. Pension Plowman 16th May 2017 at 4:12 pm

    This looks a game changer. It introduces the economics of workplace pensions to shorter term accounts; it is a punt on Vanguard’s customers’ persistency. Many ordinary people will like this simple approach.

  3. …but not actually a ‘Platform’

    • 0.15 for the choice of only using Vanguard funds with a 0.22% AMC (Does the platform allow both Flexi access drawdown, ISA, LISA etc) compared to a typical WRAP with a 0.30% charge and access to Vanguard at the same price i.e. 0.22%, plus thousands of different funds, abikity to move from tax wrapper to tax wrapper, Flexi access drawdown, Lisas, CGT reports etc. If price is the sole driver or you have a very small pot, then as a DC option, it looks fine, but if you have anything other than basic needs, then a full WRAP appears more appropriate.
      If you have significant funds, then WRAP platform fees can be very low 0.2 > £600k so very near to Vanguard’s 0.15% with much more functionaility and pretty much unlimited fund choice and as low as 0.075 in excess of £1.2 million (I have no clients on wraps with that much though), so Vanguard’s laucnh of this service is not competition for what we do and what most of ourclients need, but may put some pressure on wrap providers to continue to drop their minumum fees for smaller clients, which for those which are hardly profitable may prove a problem, but for those who are consistently reducing their charges (Transact for instance), I suspect it will simply mean they consider a white labelled DC option toofor advisers to consider making available for when a client doesn’t want passive or needs something else.

  4. Sounds interesting as we’ve used Vanguard Lifestrategy & SRI funds a fair bit anyway. For those consumers not cost effectiv for us to advise on an ongoing basis,this could be appropriate for a one of transactional piece of advice, especially if Vanguard allow the consumer to give us on-line access and appoint us as their agent so we can help where asked and stand back when not asked. A bit like how we use HMRC 64-8 forms for many of our clients whose only involvement with HMRCis when they need to input pension contributions and other investments on their tax returns and by having on-line authority, we can log in and make sure they have put the investments we are aware of in the correct box on their return before submission.
    A positive….. especially if platfrom pricescomedown to match inlcuding WRAPs, which as Dave Stone says, if it is only Vanguard funds, this in not a platform,let alone a WRAP.

  5. Bring it all to Bristol and avoid the devolution risk

  6. Clive R Steggel 19th May 2017 at 11:31 am

    This sounds detrimental to Parmenion who have a very good platform and are a good firm to deal with and this one which we use quite a lot. Our Clients also like their offering and the way they work. We will be watching this with interest and not necessary wait for the annual reviews we do on our platform choice if action has to be taken.

  7. David Roberts 19th May 2017 at 2:02 pm

    This is an interesting development. It’ll be a loss to professional advisers if Parmenion gets sacrificed by the dead hand of corporate decision making. Having worked with the guys at Parmenion, I would have to say that I hold them in high regard.

  8. I hope that Standard Life do not do what most Companies do when buying a smaller company with a great proposition – wait 6 months and then ‘Integrate’ them into the larger Company’s not so great proposition.

    Parmenion have a great online system, great transparency in their reports, are flexible with a really good Client Service Team. My advice to Std Life/Aberdeen is to leave Parmenion alone, “if it ain’t broke, don’t fix it”!

  9. It’s to be expected, but Parmenion is a good platform with a great team. I guess the Caerus / Old Mutual deal may lose Parmenion net assets over time but it would be a shame if it was consumed within the behemoth that Standard Life is fast becoming.

  10. Any company Standard Life 19th May 2017 at 5:16 pm

    If I was the guys at Parmenion I would look for a Private Equity deal and get the hell out of there

    The company has a good reputation and I am sure support would be forthcoming from the adviser group.
    Maybe PIMs team should look at departing after all they are the engine room and principal reason advisers use Parmenion.

  11. This does not bode well. I have an intrinsic distrust of Standard Life and have never seen the need to use them for any of my client business. So by default I [potentially] find myself at their mercy. Be careful what we wish for….. Sure when the guys sold their stake at Parmenion they never say this one coming….I’m feeling uncomfortable now….

  12. Parmenion is a superb company that are in danger of being life office’d out of existence. Their systems are superb and their SRI offering is market leading. Hope that in the very least they are kept as a wholly owned subsidary.

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