We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Vanguard: New Minimum Monthly Account charge

Options
1171820222334

Comments

  • eskbanker
    eskbanker Posts: 36,966 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Hoenir said:
    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 !
    And returning to the important distinction between its mould-breaking fund management and the UK platform (which is the subject of the thread), the latter was launched 18 years after he left!
  • 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.
    I agree, this goes against all the principles that Bogle founded Vanguard on. For those who say that Bogle left Vanguard ages ago and that the UK company was set up recently….yes that’s true but Vanguard UK are still happy to show his picture on their website and quote from some of his speeches. The company has lost the faith of many investors and not just smaller holders. It’s not just about £4 a month, it’s the lost of trust and that will have long lasting implications. 
  • Hoenir
    Hoenir Posts: 7,687 Forumite
    1,000 Posts First Anniversary Name Dropper
    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.
    I agree, this goes against all the principles that Bogle founded Vanguard on. For those who say that Bogle left Vanguard ages ago and that the UK company was set up recently….yes that’s true but Vanguard UK are still happy to show his picture on their website and quote from some of his speeches. The company has lost the faith of many investors and not just smaller holders. It’s not just about £4 a month, it’s the lost of trust and that will have long lasting implications. 
    It's not £4 a month though. As there's already  fee charged.  As has been pointed out earlier. When the next market correction comes along. A couple of quid is going to pale into insignificance. 
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 18 December 2024 at 5:08PM
    Hoenir said:
    When the next market correction comes along. A couple of quid is going to pale into insignificance. 
    Although a crash or correction is likely to be a far greater scale, for the sensible long term investor, it's not a cost to their portfolio. For those still accumulating it's an opportunity where regular contributions or dividend reinvestments buy more units. It's also an opportunity for the multi asset investors to get some advantage from rebalancing (or even over-rebalancing) while unit prices are a bit skewed.

    An increase in ongoing platform charges is always a cost to the portfolio and it's one of the few areas that an investor can take action with some certainty it will make an improvement to the long term performance. On the smaller portfolios this increase in fees can be seriously detrimental so people are right to be concerned and review their options.
  • Alexland said:
    Hoenir said:
    When the next market correction comes along. A couple of quid is going to pale into insignificance. 
    Although a crash or correction is likely to be a far greater scale, for the sensible long term investor, it's not a cost to their portfolio. For those still accumulating it's an opportunity where regular contributions or dividend reinvestments buy more units. It's also an opportunity for the multi asset investors to get some advantage from rebalancing (or even over-rebalancing) while unit prices are a bit skewed.

    An increase in ongoing platform charges is always a cost to the portfolio and it's one of the few areas that an investor can take action with some certainty it will make an improvement to the long term performance. On the smaller portfolios this increase in fees can be seriously detrimental so people are right to be concerned and review their options.
    Spot on, we can only go by the factors we can control such as fees and look elsewhere as many are now doing. It doesn’t help that Vanguard’s new CEO is from Blackrock, the most unethical company in the world. No surprise that he’s overseen fee increases in the US and UK. 
  • Hoenir
    Hoenir Posts: 7,687 Forumite
    1,000 Posts First Anniversary Name Dropper
    Eco_Miser said:
    GeoffTF said:
    eskbanker said:
    Hoenir said:
    Funny, for a company that used to champion lower fees they are going in the wrong direction  
    Why should larger accounts subsidise smaller ones. The base cost of an operational account is the same across the board. Both Employers National Insurance and increased National Minimum Wage costs for example need to be recouped. 
    Don’t think you quite understand. Vanguard was established to bring savings to the masses, read about Bogle who founded the company. I’m in the process of moving my six figure ISA and SIPP away regardless of this announcement as there are cheaper fixed rate providers, as are others I know. Now they will start losing customers with smaller holdings too. After today’s announcement I’m moving my wife’s ISA out too. Remember today’s smaller investors are likely to be tomorrow’s larger investors. They have shot themselves in the foot. 
    If anything Vanguard was established to bring investing to the masses, but that's really the fund manager you're referring to, rather than the much later introduction of the UK platform.

    They've only shot themselves in the foot if they haven't modelled the impact of such a decision - any large organisation making such changes will do so in the full knowledge that some of its customers won't be happy (especially smaller ones) and will take their business elsewhere, so they will have crunched the numbers rather than this being some sort of surprise to them.
    Looking around at other sites such as Reddit there’s a huge backlash to this fee change, as it goes against the principles that Vangaurd was founded on. I know they are a business and need to make profits but they marketed themselves as something a bit different to the other platforms. I’m sure they have crunched the numbers but they may have underestimated the upcoming loss in customers. They will also be in hot water with transfers out, their back office is terrible in processing these and given that the fees kick in end of January lots of people will be caught out even if they start transfers today. Disappointing. 
    Vanguard is "not for profit". It is owned by its US investors.
    They still need to at least break even and preferably produce a small surplus.

    Without profit there's nothing left to reinvest back into the business. Nor do they disclose how much the senior management or investment team earn. Shrouded in secrecy. In the US there's no shortage of people within organisations looking after themselves. 
  • Hoenir
    Hoenir Posts: 7,687 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 18 December 2024 at 5:54PM
    Alexland said:
    Hoenir said:
    When the next market correction comes along. A couple of quid is going to pale into insignificance. 
    Although a crash or correction is likely to be a far greater scale, for the sensible long term investor, it's not a cost to their portfolio. For those still accumulating it's an opportunity where regular contributions or dividend reinvestments buy more units. It's also an opportunity for the multi asset investors to get some advantage from rebalancing (or even over-rebalancing) while unit prices are a bit skewed.


    How many investors are genuinely long term ?  Very few I'd say. Those with self managed portfolio's may well be exposed to more risk than they realise. As there's certainly no shortage of assumption, miscomprehension circulating on social media. That gets reinforced by parrot like quoting. 
  • B0bbyEwing
    B0bbyEwing Posts: 1,559 Forumite
    1,000 Posts Second Anniversary Name Dropper
    jimjames said:
    Only just discovered this today. Glad I did. Had a lowly amount S&S ISA with Vanguard. Really should've moved it elsewhere but as it wasn't really costing anything I just never bothered to get round to it.
    If that's the case then I'd check your email address as they have emailed out to all customers last week. If you didnt receive it they may have the wrong email or it's in spam.
    BTW it was already costing you, just a bit less than the new charges if it's under £32k you have
    They will have emailed me.

    Unfortunately since most of the mail from these companies is just junk to me, I have the bad habit of just skimming the lot of it & not reading any of it. 

    My fault entirely, I know.
  • boingy
    boingy Posts: 1,905 Forumite
    1,000 Posts Second Anniversary Name Dropper
    Hoenir said:
    It's not £4 a month though. As there's already  fee charged.  
    ^^^^ This ^^^^
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.8K Banking & Borrowing
  • 253K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.8K Work, Benefits & Business
  • 598.6K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 257.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.