Moving to Vanguard from HL for Lower Fees and Cheaper Investment Advice

pdab

Hello,

I have an HL ISA (£25k)  and an HL Sipp (£140k) and I have £500k from the sale of a house to invest.

I am mostly invested in Vanguard fuds within HL. I like the simplicity and the low ongoing fees and cheaper investment advice than HL. I have no interest is investing in individual shares etc. I like the idea of the using the target retirement funds. My understanding is that the asset allocation is automatically changed as you get closer to retirement to reduce risk appropriately.

I am thinking I should transfer my SIPP and ISA to Vanguard.

There don't seem to be any exit fees on HL.

The Charges on the funds are a good bit lower if investing direct with Vanguard. The platform fee appears to be lower too £375 v 0.25 % for HL. I would be transferring my SIPP into the Vanguard Personal Pension (assuming that is allowed?)

Is my logic sound? Any pitfalls I should consider?

Thanks for any feedback / advice.

Paul

k_man

pdab said:

Hello,

I have an HL ISA (£25k)  and an HL Sipp (£140k) and I have £500k from the sale of a house to invest.

I am mostly invested in Vanguard fuds within HL. I like the simplicity and the low ongoing fees and cheaper investment advice than HL. I have no interest is investing in individual shares etc. I like the idea of the using the target retirement funds. My understanding is that the asset allocation is automatically changed as you get closer to retirement to reduce risk appropriately.

I am thinking I should transfer my SIPP and ISA to Vanguard.

There don't seem to be any exit fees on HL.

The Charges on the funds are a good bit lower if investing direct with Vanguard. The platform fee appears to be lower too £375 v 0.25 % for HL. I would be transferring my SIPP into the Vanguard Personal Pension (assuming that is allowed?)

Is my logic sound? Any pitfalls I should consider?

Thanks for any feedback / advice.

Paul

What do you mean by cheaper investment advice?

Investment advice is not included in platform fees, but is a specific regulated add-on, paid for, service.

pdab

Hi k_man,

I was thinking about this https://www.vanguardinvestor.co.uk/financial-advice

Although I now see it is 0.5% - much lower than HL 👍

Paul

k_man

Thanks, was just making sure you knew advice was a specific thing.

Platform charges are much easier to compare (they all do similar things...ish).

0.25% is low for HL though, as normally this is 0.45% upto a certain portfolio size.

Comparing advice is harder, as depends how good the advice is.

ermine

I am thinking I should transfer my SIPP and ISA to Vanguard.

There don't seem to be any exit fees on HL.

The Charges on the funds are a good bit lower if investing direct with Vanguard. The platform fee appears to be lower too £375 v 0.25 % for HL. I would be transferring my SIPP into the Vanguard Personal Pension (assuming that is allowed?)

Is my logic sound? Any pitfalls I should consider?

Eh? Vanguard is a low-cost percentage fee platform. HL is a higher cost percentage fee platform. In and of itself your logic is sound, BUT

HL cap fees on shares and ETFs  at £45 a year

Your action on the ISA seems obvious. Get out of funds and use ETFs. I have just moved in specie my ISA from Vanguard to HL for this very reason. I then asked Vanguard to reopen the ISA, and will start again this year, because Vanguard are cheap to buy their ETFs. And in a bear market like we are entering you want to buy regularly, because nobody rings a bell at the low-water mark.

Dunno about SIPPS, although this would indicate the cap is £200 on HL

Vanguard's platform fee is 0.15% and HL is 0.35%. The difference is 0.2%, but if you can cap this, you will be better off with HL. I would estimate this is £45/0.2% or a total value of £22.5k where HL is better. For a SIPP that is £100k, assuming the differnce in platform charges is the same, which I haven't checked.

Can't argue with Vanguard being cheaper for purchases. So, long story short, if your ISA is > £22500, leave it with HL and open an ISA with Vanguard. Buy only ETFs. After the 6th April 2023 transfer in specie to HL. Leave residual cash in Vanguard. Add you new ISAfunds to Vanguard Rinse, repeat.

Obviously if you trade like a nutter then other factors come into play, but otherwise use each platform for what it does well.

the really, really, long version of this is on Monevator's broker comparison table

ColdIron

pdab said:

The platform fee appears to be lower too £375 v 0.25 % for HL.

ermine said:

Vanguard's platform fee is 0.15% and HL is 0.35%.

It's neither

HL have a tiered charging structure for funds dependant upon the sums involved

• On the first £250,000 0.45%
• On the value between £250,000 - £1m - 0.25%
• On the value between £1m - £2m - 0.1%

https://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges

MX5huggy

Be careful with the VG Target Retirement Funds, they don’t simply move to “safe” assets by the target date but reflect that you will stay invested for 30 plus years post retirement so the risk is lowered past retirement date. This is not a problem but understand what they are doing it’s not the same a traditional lifestyle funds which have set target date to get to in the expectation you buy an Annuity on that date and your fixed for life. 

Albermarle

The Charges on the funds are a good bit lower if investing direct with Vanguard.

The fund charges are exactly the same regardless of which platform you use . Unless the platform offers a special discount on certain funds.

The main drawback with Vanguard is that they only offer Vanguard investments, which can be bit restrictive.

You could maintain a wider choice of funds, but  at lower cost than HL, with Fidelity, AJ Bell or Interactive Investor ( as examples)

dunstonh

I am mostly invested in Vanguard fuds within HL. I like the simplicity and the low ongoing fees and cheaper investment advice than HL.

My understanding and someone can correct if I am wrong, is that the HL advice service is a full advice service but limited to HL platform/funds.     And that the Vanguard advice service is more heavily restricted and mainly focused on risk profiling.   

The Vanguard ongoing advice charge is 0.50% which is the most frequent charge made by IFAs.

I have no interest is investing in individual shares etc. I like the idea of the using the target retirement funds. My understanding is that the asset allocation is automatically changed as you get closer to retirement to reduce risk appropriately.

If you are self selecting, then it is hard to see what the Vanguard advice service would give you.
It is also difficult to see where HL's advice service would provide.  (and if you are not needing advice services, then an IFA wouldn't offer much for you either)

sebtomato

ermine said:

I am thinking I should transfer my SIPP and ISA to Vanguard.

There don't seem to be any exit fees on HL.

The Charges on the funds are a good bit lower if investing direct with Vanguard. The platform fee appears to be lower too £375 v 0.25 % for HL. I would be transferring my SIPP into the Vanguard Personal Pension (assuming that is allowed?)

Is my logic sound? Any pitfalls I should consider?

Eh? Vanguard is a low-cost percentage fee platform. HL is a higher cost percentage fee platform. In and of itself your logic is sound, BUT

HL cap fees on shares and ETFs  at £45 a year

Your action on the ISA seems obvious. Get out of funds and use ETFs. I have just moved in specie my ISA from Vanguard to HL for this very reason. I then asked Vanguard to reopen the ISA, and will start again this year, because Vanguard are cheap to buy their ETFs. And in a bear market like we are entering you want to buy regularly, because nobody rings a bell at the low-water mark.

Dunno about SIPPS, although this would indicate the cap is £200 on HL

Vanguard's platform fee is 0.15% and HL is 0.35%. The difference is 0.2%, but if you can cap this, you will be better off with HL. I would estimate this is £45/0.2% or a total value of £22.5k where HL is better. For a SIPP that is £100k, assuming the differnce in platform charges is the same, which I haven't checked.

Can't argue with Vanguard being cheaper for purchases. So, long story short, if your ISA is > £22500, leave it with HL and open an ISA with Vanguard. Buy only ETFs. After the 6th April 2023 transfer in specie to HL. Leave residual cash in Vanguard. Add you new ISAfunds to Vanguard Rinse, repeat.

Obviously if you trade like a nutter then other factors come into play, but otherwise use each platform for what it does well.

the really, really, long version of this is on Monevator's broker comparison table

You are forgetting transaction fees with HL every time you buy or sell ETFs, vs. no fee with Vanguard (if you use the bulk service, available twice a day).

Vanguard's platform fee is also capped to £375 a year.

I used to be with HL until recently, and I have moved all my investments with Vanguard now (ISA, Pensions, General Investment).

Between the platform fee, and ETF/fund fees, I believe I have a 0.16% fee in total, including unlimited purchases and selling of ETFs.

ermine

sebtomato said:

You are forgetting transaction fees with HL every time you buy or sell ETFs, vs. no fee with Vanguard (if you use the bulk service, available twice a day).

I am not forgetting transaction fees. The point is to buy in Vanguard, then transfer at the start of the next year the old year's accumulated ETF stash to HL in specie. Do not buy in HL. or sell, assuming you are a good passive investor, etc etc. I did put the rider that if you trade like a nutter then you need to think again.

Continue to buy in Vanguard.

Last year's Vanguard purchases of ETFs are now with HL, shifted in specie. I have started again in Vanguard. The whole point is to get the best of both worlds.

> Vanguard's platform fee is also capped to £375 a year.

Yup. They equate this to Capped at £375 per year for accounts over £250,000

£375 p.a. is still more than £45 p.a.

Chart 4 of this government report tells us that £250,000 in an ISA is not a problem that too many people have