Vanguard: New Minimum Monthly Account charge

InvesterJones

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

Not up in arms, but very disappointed for the effect it has on a new saver I know who's just getting started on financial learnings - on a 7k investment it's a huge change and the low barrier to entry was essential. Now they have to make the call whether to swap and it's suddenly exactly the kind of hassle that put them off getting started.

zagfles

InvesterJones said:

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

Not up in arms, but very disappointed for the effect it has on a new saver I know who's just getting started on financial learnings - on a 7k investment it's a huge change and the low barrier to entry was essential. Now they have to make the call whether to swap and it's suddenly exactly the kind of hassle that put them off getting started.

When I first started investing a 5% initial charge with 1.5% annual was typical. That was a real "barrier to entry". On £7k, £350 taken off you before you even started. And stuff like endowments which were hugely popular where typically the first 2 years premiums went in charges! Didn't seem to stop millions of people using them. So a couple of £ extra a month, despite the wailing and gnashing of a few uber-MSE'ers, is unlikely to have any effect on the vast majority. 

Hoenir

Up until recently used to get Bloomberg emails for free. Now behind a paywall. After the initial low cost period. Fees will be £29.99 a month or £235 in advance annually.  Ouch........

Over many years of investing. Less and less quality data is still free. Increasingly data has become monetised. What is free. Is paid for promotion. Resulting in their being a bias towards positivity. 

AlanP_2

equitydealer said:

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. 

Exactly, if you don't like the charge don't buy from them and go elsewhere.

I must have missed something when did BlackRock become the most unethical company in the world and what did they do to gain that position?

MeteredOut

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

It's making a lot of noise on social media investment content creators, especially amongst the younger generation who are drip feeding into ISAs as an introduction to investing.  But, maybe that was VG's desired outcome, to have these people move elsewhere.

jbrassy

So I put in a request earlier in the week to transfer my Vanguard SIPP over to Invest Engine. Filled in the form on their website and got a pop-up message saying they had received the request. However, I have not received any emails or anything confirming that they have received it or when it's going to happen by. Has anyone else requested a SIPP transfer to Invest Engine and had a similar experience?

MeteredOut

jbrassy said:

So I put in a request earlier in the week to transfer my Vanguard SIPP over to Invest Engine. Filled in the form on their website and got a pop-up message saying they had received the request. However, I have not received any emails or anything confirming that they have received it or when it's going to happen by. Has anyone else requested a SIPP transfer to Invest Engine and had a similar experience?

Helped a family member do the same on 16/12. Didn't get any email confirmation after submitting the form, but they did get an email yesterday evening:

We've received your SIPP transfer request

Hi xxx, thank you for initiating your pension transfer. We’ll contact Vanguard shortly to request the transfer, and we'll send you a confirmation email once that’s done.  Once the request is with Vanguard, they’ll handle the processing on their end. We have a direct relationship with Vanguard and we’ll monitor their progress closely and follow up as needed to ensure everything goes smoothly. I suspect both InvestEngine and T212 will be pretty busy.

Albermarle

MeteredOut said:

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

It's making a lot of noise on social media investment content creators, especially amongst the younger generation who are drip feeding into ISAs as an introduction to investing.  But, maybe that was VG's desired outcome, to have these people move elsewhere.

I presume their plan was 
1) Calculate the minimum cost to operate an account without losing money.
2) Implement a fixed minimum cost to cover the above.
3) Accept that a % of small customers will move out, but most will not.

End result - a few less small customers and some more profit. So probably a good business decision. 

MeteredOut

Albermarle said:

MeteredOut said:

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

It's making a lot of noise on social media investment content creators, especially amongst the younger generation who are drip feeding into ISAs as an introduction to investing.  But, maybe that was VG's desired outcome, to have these people move elsewhere.

I presume their plan was 
1) Calculate the minimum cost to operate an account without losing money.
2) Implement a fixed minimum cost to cover the above.
3) Accept that a % of small customers will move out, but most will not.

End result - a few less small customers and some more profit. So probably a good business decision. 

I'd hope they also took into account:

4) Customers who currently have low value pots, but could have larger pots in future
5) Customers who will no longer refer their friends/families who may have more profitable pots
6) Low maintenance customers who have a "fire-and-forget" low value pot but whose ongoing cost to the business is very low (ie. no regular need to consume business resources )

zagfles

MeteredOut said:

zagfles said:

equitydealer 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.

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 £1.50 extra a month to someone with a year's ISA allowance invested. The idea that that sort of price increase is some fundamental betrayal of core principles is laughable. Especially as those the most up in arms about it seem to be those who have far more than £32k in investments. 

Really, hardly anyone will care. Except the "ninjas". And Vanguard are probably glad about that. 

It's making a lot of noise on social media investment content creators, especially amongst the younger generation who are drip feeding into ISAs as an introduction to investing.  But, maybe that was VG's desired outcome, to have these people move elsewhere.

A lot of stuff makes noise on social media, this thread is 21 pages already! Mostly people being outraged on behalf of others. But they'll soon be outraged about something else far more significant. I suspect no more than a tiny minority will actually do something about it, like move to the competition.