Vanguard iWeb Switcheroo

dmc88

I want to park ISA at iWeb for free holding and build pot in Vanguard, every year or so repeating exercise.

iWeb currently has 100% cashback on opening new account so seems to be perfect time to perform this operation, anyone that has done / does this confirm it went OK / are there any special instructions I have to give / do I need to wait until March/April to avoid fouling tax year cut offs?

Many thanks

MK62

If you are careful with timing and which accounts you open and fund, and which Vanguard funds you transfer each year, you may be able to pull this off, but it seems a lot of hassle to go to in order to save maybe £20-30 per year......

PParka

I do exactly what you are suggesting...
I use Vanguard to invest monthly with no transaction fees. This saves the £60 that iWeb would charge.
Every year I transfer the last year of ISA contributions from Vanguard to iWeb. This saves the ongoing 0.15% that Vanguard charge.

Works perfectly.

Another advantage is that the Vanguard ISA is flexible.

grumiofoundation

MK62 said:

If you are careful with timing and which accounts you open and fund, and which Vanguard funds you transfer each year, you may be able to pull this off, but it seems a lot of hassle to go to in order to save maybe £20-30 per year......

Its not 20-30 a year its 20-30 for every year been invested.
So after 5 years would save ~£150 in the year, after ten years £300.

So over ten years would be ~£1500. 

(Obviously assumes iWeb charging stays the same).

pjread

Does iweb accept in specie transfers in?

Alistair31

pjread said:

Does iweb accept in specie transfers in?

Yes, they do.

eskbanker

dmc88 said:

do I need to wait until March/April to avoid fouling tax year cut offs?

It depends on how often you're funding Vanguard during the year - the rule is that all current year money must be in the same place, so once you've made any transfer from Vanguard to IWeb, if that includes your current year money then you'd need to avoid paying into Vanguard until the next tax year (but could pay into IWeb).  If you wait until the start of each tax year before doing each transfer then they'd always be prior year contributions being moved so that wouldn't be an issue....

Albermarle

Also transfers generally tend to be slower around the end and start of tax years, due to higher workload. Although seems to be a bit slow with some providers all the time at the moment,

MK62

grumiofoundation said:

MK62 said:

If you are careful with timing and which accounts you open and fund, and which Vanguard funds you transfer each year, you may be able to pull this off, but it seems a lot of hassle to go to in order to save maybe £20-30 per year......

Its not 20-30 a year its 20-30 for every year been invested.
So after 5 years would save ~£150 in the year, after ten years £300.

So over ten years would be ~£1500. 

(Obviously assumes iWeb charging stays the same).

If you forgot Vanguard and simply saved into iWeb every month, it'd cost £60pa........if you invested each quarter instead of monthly, it'd be £20pa, bi-monthly, £30pa........assuming you use a single investment fund for each "deposit". If you invested quarterly or perhaps even bi-monthly, you might earn enough interest to pay the transaction fees anyway - and wouldn't be restricted to Vanguard funds.

Fair enough, if you want to use multiple Vanguard funds and want to invest into each one every month, or perhaps are saving a modest amount each month (which makes fees much more significant, relatively speaking) then you might save more by doing this.......

Snapdragon

Having used Vanguard and built up a few years ISA contributions, the %base charging was nearing £100 a year, so I opened an account with IWeb to do exactly as OP proposes, save costs on the holding of historic ISAs.

Albermarle is correct it can be chaotic at the start of the new tax year!

I did try to initiate a move Vanguard to IWeb April 2021 but after months of hearing nothing IWeb eventually said there had been issues with the paperwork and I'd have to start again! I decided I couldn't be bothered so continued with Vanguard for another year.
Tried again this year, but to avoid the new tax year mayhem decided I'd wait. To avoid any potential complications, I paused new money going into Vanguard and did an in-specie transfer to IWeb of the historic ISAs in September. All remarkably straight-forward, done online, no posting paperwork like the previous attempt, started on the 2nd, Vanguard acknowledged receipt of request from IWeb immediately, and all confirmed completed on the 13th. Possibly didn't need to wait until September but I was in no hurry to get new money into Vanguard and was much happier with the process on the 2nd attempt. 

cloud_dog

When I have used Vanguard (monthly) and iWeb, I have simply used the Vanguard GIA, periodically sell, withdraw the cash, allow the monthly transactions to continue, deposit the cash, and make a single purchase.

Whilst I appreciate am out of the market for a short period, it is just simpler, more transparent, and under my control.  No wondering where the process is, who is waiting on whom, etc.