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Vanguard set to compete with Hargreaves on D2C

Vanguard John James

Vanguard, one of the world’s largest fund groups, has its sights on the likes of Hargreaves Lansdown and Nutmeg as it prepares to launch a direct-to-consumer offering.

Separately, the fund group known for its low-cost passives is also looking to expand its active investments with the launch of a global fund range next year.

Speaking to Money Marketing, Vanguard Europe managing director John James says the service is part of a “10-year plus strategy” and will be available to direct clients in the next six months.

He says: “We’ll be competing with Hargreaves and Nutmeg where people can come direct. The great thing about advisers is that 10 years ago they would say this is competition, today this is just making the pie bigger. We know advisers are serving a certain segment of the UK population.”

The direct offering will be limited to Vanguard products, reflecting its US business model.

James says the minimum investment amount will be “reasonably accessible”, but did not disclose at what level this will be set.

He says: “History tells us there’ll be a segment of the population that will want to do investments on their own.

“Our offer will serve another segment of the UK population and it could very well be that once people get to a certain asset size with us they’ll also seek advice.”

The company says more than a third of UK advisers have assets with Vanguard.

The firm is planning to launch its global actively managed funds next year, diversified into equities and fixed income.

James says: “The timing is right. We’ve been in the UK for seven years and we feel we’ve built a good line up of core building blocks in the passive space, in the Life Strategy series and target-dated funds. We want to make sure we also help advisers on the active side. It’s a natural extension and evolution.”

Yellowtail Financial Planning managing director Dennis Hall says: “Vanguard is replicating its US model in the UK with a simplified robo-advice solution and that is to be expected. I don’t think it is of any threat to advisers.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. New passive provider for us then 7th October 2016 at 1:06 pm

    We’ve been a keen supporter of Vanguard since they entered the UK market and forced prices down on other retail offerings.

    Don’t think we will be offering these passives in future to help promote their retail brand.

    • Not being rude but how can you say that if it one of the best options for your customers? I think the article is right, there are plenty of consumers and plenty of room for offering like this along side good advice- vanguard will not be the only provider going this way as they have to find ways of getting shares in the market now commission has stopped?

      • Like you I am quite pleased with this, I always said if Hargreaves allowed a consuemr to appoint their own adviser and let them have on-line access to support OUR clients we’d have no need to move.
        As Tim page says, this is more of a risk for the unprofitable wraps and platforms and profitable ones like Transact will just adapt I suspect. Moneyinfo from Sammedia or using back office like Prestwood/Truth nearly do what a WRAP does too, but the WRAP providers (good ones) still have a place at present.

  2. Interesting response. Happy to recommend as best for the client, until Vanguard offers clients (who do not seek advice) a lower cost of ownership.

    No conflict there then.

  3. It’s actually the platforms that will loose out on this. A 30-40bps platform price already looks expensive next to 24bps for a Vanguard Lifestrategy fund.

    My understanding is that Vanguard will allow access to common D2C data. All you then need is a data aggregation service like MoneyHub or My MoneyInfo and advisers have got (in theory) a reasonable entry level client proposition.

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