Vanguard: New Minimum Monthly Account charge

OldScientist

jbrassy said:

Hoenir said:

dgpur said:

Alexland said:

dgpur said:

The fund has been performing much better recently, and was one people advised to go for at the time. I accept that I first funded in late 2019, so I was willing to give it longer for obvious reasons. I’m essentially a lazy investor, and don’t want to be messing around with rethinking/guessing a different path. But the fee change has just put me right off. I can’t see the value.

Hmm you've got me wondering what it might be for something to perform poorly over that period. Did it have a heavy slug of bonds something like VLS40/60 or one of their Target Retirement funds that is coming up in the next few years perhaps? If so then a lot of investors who were in lower risk multi asset funds not just from Vanguard but with other fund managers were disappointed with returns during that period and it was a problem with the assets themselves unwinding valuations from a period of ultra low interest rates not the fund management.

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period. With my Vanguard fund still being sluggish. I’m aware that there can be a lot of reasons for that, but the extra cost in fees has made me feel like walking anyway. Feels like they want to slough off those who aren’t deep pocketed investors.

If you are concerned over £33 a year. Then stock market investments may not be for you. Reach the giddy heights of a £100k invested. Then your fund can be gyrating up or down by £1,000 or more in value within 24 hours. 

What you're talking about is irrelevant. If you have £100k invested, it will fluctuate that much in value irrespective of what investment platform you use. That is not what people are concerned about and it is not in their control.

Platform fees and fund fees are within the gift of investors. It's not about how much you pay in pounds and pence, it's about the compound losses these fees impose over the long run.

And comparing those fees is non-trivial since, to a large extent, it depends not only on the fee structure, but also on how you are using the account. For example,

Monthly contributions at iweb would each cost £5 (for a total of £60 per year). Whether this is a good deal compared to vanguard depends on the total amount invested (e.g., the breakeven would be at £40k, below this Vanguard would be better even with the new fee).

However, if only one transaction per year is made (i.e., a total of £5 per year), then iweb is much cheapere than vanguard (and most other platforms).

The non-trivial part arises because the platforms each have their own charging idiosyncrasies that need to be weighed up against how the accounts will be used, so individual circumstances have to be factored in.

However, this change to vanguard's fee structure definitely makes them less attractive for those with small amounts.

Aidanmc

Chloe_G said:

I've got a small SIPP with Vanguard with the intention of using it to drawdown within the next 10 years to bridge a few years until my DB pension.  Can you do this with Investengine or do you have to move it elsewhere when you want to draw your pension?

Ive been querying this with Invest engine a few days ago.

I received a bit of detail from them.

I asked them about the actual drawdown process and if any fees involved.

This was the response-

I can confirm that there are no specific fees for drawdown.
 
Please be aware that our app and interfaces may not display all the drawdown information you might expect, as the process also requires the completion of paper-based forms.
 
I will attach an example of the form so you can familiarize yourself with it.
 
If you have any other questions or need additional help, feel free to reach out.
 
Yours sincerely,

https://help.investengine.com/attachments/token/ghuZOjSAaJAM2jiInhDh8vuAG/?name=Pension_Benefits_Advice_Letter___Declaration_-Letter1IE.pdf

jimjames

Section62 said:

jimjames said:

Some people seem to be getting agitated about it without actually understanding that it isn't a new charge on top of the existing fees, it replaces them.

The only bit that would annoy me, if it applied to me, is them changing the fee collection so it is proportional across account types held.  Being able to specify the fees should come out of a GIA only is a useful feature, as the current T&C's note.

I found that strange as it's exactly how it works at the moment if your fees are paid from the account rather than by DD.

Alexland

dgpur said:
Thank you for your perspective here. It’s been genuinely helpful. My Nutmeg returns have been very good, set at 3/5 risk level. But it predated my Vanguard investment, so perhaps that’s how it held up better.

Unfortunately with the custom robo portfolios it's not possible to automatically compare performance to multi asset funds using industry standard tools. I know Boring Money used to do a comparison of performance by opening multiple accounts at the same time and setting the risk level to be the same - unsure if they still do that I guess they would need to make withdrawals to rebaseline every so often or just run a big spreadsheet. VLS would have been somewhat hobbled because of the UK bias in it's equities which is in strong value territory now.

Psychologically as investors we can be very sensitive to the account going into the red (ie worth less than we contributed) which is far more likely on a new account as it hasn't got an accumulated gains as a buffer yet. An account opened before the problems with bonds may still have suffered the same percentage decline during the period but it may have been less apparent or bothersome as you would still be seeing an overall gain or a lesser loss because of gains made earlier. Also if you were regular investing into some of the accounts during the period that would have made a difference.

ps I'm not particularly trying to promote Vanguard or VLS here (although VEVE is my biggest investment) as often there can be better choices but be careful to judge the fund manager or fund on recent performance as you can fall into the trap of buying high and selling low. When things have dropped they may be more attractive now and accumulate better as they are reinvesting distributions at lower prices.

block10

Im against the grain here, but i had £55k invested in VLS funds through HL. This news made me realise how high HL platform fees are relative to Vanguard.

Started the switch to VG this weekend.

Alexland

block10 said:

Im against the grain here, but i had £55k invested in VLS funds through HL. This news made me realise how high HL platform fees are relative to Vanguard.

Started the switch to VG this weekend.

I doubt Vanguard will be processing many transfers-ins a the moment.

You might have the attention of a whole team of transfer-in employees if they haven't already been redeployed.

They might get confused, assume you are leaving and send £55k of VLS to your HL account.

AmityNeon

How does delayed tax relief get transferred over when switching SIPPs between providers? Does it require manual monitoring/chasing, or is it seamlessly automatic?

ColdIron

It should follow automatically like dividends

zagfles

Alexland said:

block10 said:

Im against the grain here, but i had £55k invested in VLS funds through HL. This news made me realise how high HL platform fees are relative to Vanguard.

Started the switch to VG this weekend.

I doubt Vanguard will be processing many transfers-ins a the moment.

You might have the attention of a whole team of transfer-in employees if they haven't already been redeployed.

They might get confused, assume you are leaving and send £55k of VLS to your HL account.

Why not? Some "ninjas" on iweb might want to rebalance their portfolio without paying a few £ in transaction fees, so they transfer to Vanguard, rebalance, then transfer back. 

Alexland

zagfles said:

Why not? Some "ninjas" on iweb might want to rebalance their portfolio without paying a few £ in transaction fees, so they transfer to Vanguard, rebalance, then transfer back. 

Those are the super-ninjas Shhh we are not suppose to talk about that loophole!

However for a regular ninja with multiple investments they could just oddly weight their Vanguard account such that when the assets transfer the totality of assets now on iWeb are at the target rebalanced allocation. Unless there have been big market movements or they are an ancient ninja and have accumulated assets where the rebalancing requires movement of assets in excess of what they were able to contribute to Vanguard in which case they could perform the super-ninja move.

With the Vanguard fee changes the ninjas will become legendary remembered only by us few.