Vanguard: New Minimum Monthly Account charge

Stargunner

madlyn said:

I have a LS 60% S&S ISA with just over £700 in and a SIPP with just over 1k, both opened in Nov 2021. I did plan on making regular contributuions to both, but a change in cash flow and personal circumstances put a stop to that and I've done nothing with either for about 2 years.
I really have no clue what to do with these accounts, but I am in a position to start paying into one of them again.

Paying £4 per month in platform fees will equate to around 3% of your total pot.
if it was me, I would move them to someone where I would be paying  much less in fees.

madlyn

Stargunner said:

Paying £4 per month in platform fees will equate to around 3% of your total pot.
if it was me, I would move them to someone where I would be paying  much less in fees.

Thank you, I did suspect that. I'll start doing some research on where to move them to.

OldScientist

Albermarle said:

OldScientist said:

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.

I think this only applies for ISA's. Iweb have extra charges for a SIPP, that Vanguard does not have.

You're quite right - iweb charge £22.50 per quarter for a SIPP of less than £50k plus quite a few other charges (https://www.iweb-sharedealing.co.uk/our-accounts/self-invested-personal-pension/sipp-charges.html).

MeteredOut

madlyn said:

Stargunner said:

Paying £4 per month in platform fees will equate to around 3% of your total pot.
if it was me, I would move them to someone where I would be paying  much less in fees.

Thank you, I did suspect that. I'll start doing some research on where to move them to.

InvestEngine and Trading 212 seem to be the low-cost (and can be free) alternatives many are transferring their ISAs and SIPPs to, especially where the new VG fees are an relatively significant % of their value (I'd include your 3% of pot value in that).

However, you may have to choose alternative funds (if you already have the VG LifeStrategy ones) but there are alternatives (similar fund mix) on both platforms.

If you know someone already there, get them to refer you and you'll both receive a bonus.

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

Aidanmc

MeteredOut said:

madlyn said:

Stargunner said:

Paying £4 per month in platform fees will equate to around 3% of your total pot.
if it was me, I would move them to someone where I would be paying  much less in fees.

Thank you, I did suspect that. I'll start doing some research on where to move them to.

InvestEngine and Trading 212 seem to be the low-cost (and can be free) alternatives many are transferring their ISAs and SIPPs to, especially where the new VG fees are an relatively significant % of their value (I'd include your 3% of pot value in that).

However, you may have to choose alternative funds (if you already have the VG LifeStrategy ones) but there are alternatives (similar fund mix) on both platforms.

If you know someone already there, get them to refer you and you'll both receive a bonus.

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

Are there ETF options similar to VLS on Invest Engine?

MeteredOut

Aidanmc said:

MeteredOut said:

madlyn said:

Stargunner said:

Paying £4 per month in platform fees will equate to around 3% of your total pot.
if it was me, I would move them to someone where I would be paying  much less in fees.

Thank you, I did suspect that. I'll start doing some research on where to move them to.

InvestEngine and Trading 212 seem to be the low-cost (and can be free) alternatives many are transferring their ISAs and SIPPs to, especially where the new VG fees are an relatively significant % of their value (I'd include your 3% of pot value in that).

However, you may have to choose alternative funds (if you already have the VG LifeStrategy ones) but there are alternatives (similar fund mix) on both platforms.

If you know someone already there, get them to refer you and you'll both receive a bonus.

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

Are there ETF options similar to VLS on Invest Engine?

Yes, but those are the non-free (0.25%) investments called LifePlan.

https://investengine.com/etfs/lifeplans/

madlyn

MeteredOut said

InvestEngine and Trading 212 seem to be the low-cost (and can be free) alternatives many are transferring their ISAs and SIPPs to, especially where the new VG fees are an relatively significant % of their value (I'd include your 3% of pot value in that).

However, you may have to choose alternative funds (if you already have the VG LifeStrategy ones) but there are alternatives (similar fund mix) on both platforms.

If you know someone already there, get them to refer you and you'll both receive a bonus.

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

Thank you, I'll take a look at investEngine and Trading 212. Ideally I would like something similar to a LS ISA rather than having to choose my own investments, but if nothing is available then so be it.

MeteredOut

madlyn said:

MeteredOut said

InvestEngine and Trading 212 seem to be the low-cost (and can be free) alternatives many are transferring their ISAs and SIPPs to, especially where the new VG fees are an relatively significant % of their value (I'd include your 3% of pot value in that).

However, you may have to choose alternative funds (if you already have the VG LifeStrategy ones) but there are alternatives (similar fund mix) on both platforms.

If you know someone already there, get them to refer you and you'll both receive a bonus.

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

Thank you, I'll take a look at investEngine and Trading 212. Ideally I would like something similar to a LS ISA rather than having to choose my own investments, but if nothing is available then so be it.

Have a look at the options on this page

https://investengine.com/portfolios/

The Do It Yourself section covers the free investment option but still has ETFs that can, for example, follow an index, so are low maintenance. The LifePlans are similar to the VG LS ETFs, and the Manage For You option is where they manage the investments for you. The latter 2 have a 0.25% fee structure.

InvesterJones

MeteredOut said:

Dodl is another I've seen mentioned here, but not so much outside these boards (possibly because they don't have a fee-free structure and their referral offer is not as good).

They do have several VLS funds and the fee is the same as vanguard used to be, so actually quite a good replacement.

honeststeveo

Alexland said:

I don't know how the Vanguard SIPP rules were drafted at the time. Their advertising material probably said age 55 but that may not have been reflected in the rules drafting. I would expect rules from a modern scheme would simply make reference to the government minimum access age rather than hard-code an age as there would have been an awareness that it might change and the drafters would not want to create a conflict. It's the older schemes that might have specified an age because a long time ago there may not have even been a government minimum age to reference.

But yes it's ultimately down to the trustees to determine if they want to allow access at that earlier age even if it's within their legal power which in the case of the Vanguard SIPP it may or may not be depending on the drafting at the time.

I guess it depends how much more this new minimum charge is above the % fees you were already paying (or will pay as the account grows, or the fee you might pay elsewhere) and the number of years you might pay it as to if the extra cost of keeping this possibility open for you is going to be worthwhile.

 So i've spent a bit more time looking into the whole minimum age business again.

Previously I got bogged down with whether the VG scheme has an "unqualified right". I think it does. I've reread the scheme wording. Sadly though this unqualified right is to take benefits at NMPA not at age 55 explicitly. This was the subtlety I overlooked and it seems the gov clarified this point.

The scheme wording states "normal minimum pension age" so the interpretation seems to be that that’s a floating figure with the legislation changes.

It is annoying that when I opened the account NMPA would have meant 55 to anyone (excluding those with even lower ages). It's not as if the wording says "the NMPA which applies at the time of drawdown" so the meaning morphing over time feels somewhat underhanded.

While i suppose theres an incredibly small chance with case law or what-have-you finding that the age that applied when the member opened their account stands but given that VG and the gov have taken the opposed stance it doesn't seem worth entertaining.

So in conclusion vanguard pension is no good as a vehicle to take your pension at 55.

Anyway, thanks Alexland for helping me understand this point and I'm glad you managed to get on board the fidelity train with your kids!