Vanguard: New Minimum Monthly Account charge

poppy10_2

This is a really short sighted move. Won't affect me personally as I have more than 32k invested with vanguard, but I have put friends and family onto Vanguard at the start of their investing journey - I can't now recommend them to new investors, and even the ones I have helped to sign up with Vanguard should now move away as their fees are so high relative to the amount they have invested. Where will their future customers come from

Hoenir

poppy10_2 said:

This is a really short sighted move. Won't affect me personally as I have more than 32k invested with vanguard, but I have put friends and family onto Vanguard at the start of their investing journey - I can't now recommend them to new investors, and even the ones I have helped to sign up with Vanguard should now move away as their fees are so high relative to the amount they have invested. Where will their future customers come from

In the US it's a move into wealth management. Basic retail accounts with small AUM's simply aren't profitable. The transaction side of investing has gone from being highly expensive to extremely cheap over the past 40 years. As markets mature then players in the sector start being more selective in their target customer base. 

incus432

Best thing I've read on this. It's a serious own goal for VG I feel - still no good for the sophisticated investor and now dumping the small guys and starters.

https://monevator.com/vanguard-price-rise/

Kaizen917

Its worth putting things into perspective to acknowledge that Vanguard UK has shown only a glimpse of the core principles that Vanguard US has been having over the course of decades. In other words, a lot of us praise them for a solid reputation that they didnt build in Britain and therefore its quite valid to feel very disappointed, even if not affected by the fee changes. Some even go as far as to say that we, as their UK customer base, are actually subsidizing the US one.I can see this as valid given how much lower their US fees are and having had an app over there (and much earlier!) did not raise them. But Im going off on a tangent - my point being is that the UK entity hasnt turned out to be more than a startup that has the Vanguard brand imprinted on it.

These fees make it clear that they dont wish to deal with smaller investors. Fine, I suppose they have that right to decide on a business level but personally, as a >32k investor, Im pondering on my options as well because Im not seeing how they want to deal with me either. Other platforms offer either no fees on accounts or have fee ceilings that are significantly lower, without considering that they might offer better sites, apps and/or support. I struggle to see the market niche that Vanguard tries to occupy.

GeoffTF

"This isn't John Bogle's Vanguard anymore."

John Bogle's Vanguard has been priced out of existence. Simple index funds are free or almost free in the US. Vanguard's competitors manage that by subsidising their simple index funds from more profitable managed funds and advice. Vanguard has a simple choice. Either go out of business, or go into the business of which John Bogle disapproved.

Vanguard's main business has been managing funds. Their UK brokerage operation has been a mess. Their IT platform was delivered way behind schedule. It is not very intuitive and, even at this stage, it is full of bugs. Compare it with AJ Bell, for example. There were successful models for Vanguard to copy, but they did not do that. The knock on effect of this is higher support costs than their competitors.

Vanguard's funds are mostly bought through advisors or other platforms. Vanguard seems to have decided that they would prefer their platform to be a small business that pays its way, rather than a large business that makes a big loss.

Albermarle

GeoffTF said:

"This isn't John Bogle's Vanguard anymore."

John Bogle's Vanguard has been priced out of existence. Simple index funds are free or almost free in the US. Vanguard's competitors manage that by subsidising their simple index funds from more profitable managed funds and advice. Vanguard has a simple choice. Either go out of business, or go into the business of which John Bogle disapproved.

Vanguard's main business has been managing funds. Their UK brokerage operation has been a mess. Their IT platform was delivered way behind schedule. It is not very intuitive and, even at this stage, it is full of bugs. Compare it with AJ Bell, for example. There were successful models for Vanguard to copy, but they did not do that. The knock on effect of this is higher support costs than their competitors.

Vanguard's funds are mostly bought through advisors or other platforms. Vanguard seems to have decided that they would prefer their platform to be a small business that pays its way, rather than a large business that makes a big loss.

From regular comments you see on the forum, their customer service, speed of organising transfers etc also leaves much to be desired.

incus432

Their IT platform was delivered way behind schedule. It is not very intuitive and, even at this stage, it is full of bugs.

Absolutely. It drove me mad every time I logged in or tried to do a simple trade.

From regular comments you see on the forum, their customer service, speed of organising transfers etc also leaves much to be desired

Indeed. I found them slapdash and poor. 

GeoffTF

Albermarle said:

GeoffTF said:

"This isn't John Bogle's Vanguard anymore."

John Bogle's Vanguard has been priced out of existence. Simple index funds are free or almost free in the US. Vanguard's competitors manage that by subsidising their simple index funds from more profitable managed funds and advice. Vanguard has a simple choice. Either go out of business, or go into the business of which John Bogle disapproved.

Vanguard's main business has been managing funds. Their UK brokerage operation has been a mess. Their IT platform was delivered way behind schedule. It is not very intuitive and, even at this stage, it is full of bugs. Compare it with AJ Bell, for example. There were successful models for Vanguard to copy, but they did not do that. The knock on effect of this is higher support costs than their competitors.

Vanguard's funds are mostly bought through advisors or other platforms. Vanguard seems to have decided that they would prefer their platform to be a small business that pays its way, rather than a large business that makes a big loss.

From regular comments you see on the forum, their customer service, speed of organising transfers etc also leaves much to be desired.

Yes, indeed. They cannot do it for the money. If it had been run by someone like Andy Bell, whose own money was at stake, it might have been different. The average account size works out to about £30K IIRC, which is much less than Interactive Investor, for example. It is not generating a large amount of AUM for their funds, or improving their reputation.

Beddie

poppy10_2 said:

This is a really short sighted move. Won't affect me personally as I have more than 32k invested with vanguard, but I have put friends and family onto Vanguard at the start of their investing journey - I can't now recommend them to new investors, and even the ones I have helped to sign up with Vanguard should now move away as their fees are so high relative to the amount they have invested. Where will their future customers come from

Agreed - it's a shame they have taken this decision. It goes against their former principles and also reflects badly on them, as they advertised on TV recently to get new investors on board. Only to hit them with higher charges. Not a huge amount each month, but in % terms it's too high for smaller savers.

Hoenir

GeoffTF said:

"This isn't John Bogle's Vanguard anymore."

John Bogle left in 1999 after a disagreement with the then management over the direction of the company.  

That was 25 years ago !