Vanguard: New Minimum Monthly Account charge

zagfles

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. 

They might originally have made a business decision to subsidise small investors in the hope they become large investors in the future. Which works if that's what usually happens, but doesn't work if when they become large investors, they transfer out to platforms with fixed charges or no platform charges but transaction charges instead. 

Typical MSE behaviour like the "ninja" method discussed earlier for gaming the way charges work, probably results in getting a service for less than it costs to provide that service. Which is fine, I've played that game, 0% balance transfers, bank switching etc. But then to be outraged at firms changing the rules in response to such behaviour and denouncing it as some sort of betrayal of core principles is simply laughable, as well as hugely hypocritical. 

If genuine small investors are really upset about this, maybe it's not Vanguard they should be venting at. 

MeteredOut

zagfles 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.

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. 

Evidence I'm seeing is a lot of people with smaller ISA/SIPP pots are switching. But, as already discussed, that might be the very outcome VG are after. And, in relative terms, it will still likely might be a small %.

Anecdotal, but I personally know two people who have initiated the transfer to InvestEngine. It's a simple process (literally a few minutes) to kick it off.

Albermarle

zagfles said:

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. 

They might originally have made a business decision to subsidise small investors in the hope they become large investors in the future. Which works if that's what usually happens, but doesn't work if when they become large investors, they transfer out to platforms with fixed charges or no platform charges but transaction charges instead. 

Typical MSE behaviour like the "ninja" method discussed earlier for gaming the way charges work, probably results in getting a service for less than it costs to provide that service. Which is fine, I've played that game, 0% balance transfers, bank switching etc. But then to be outraged at firms changing the rules in response to such behaviour and denouncing it as some sort of betrayal of core principles is simply laughable, as well as hugely hypocritical. 

If genuine small investors are really upset about this, maybe it's not Vanguard they should be venting at. 

Or transfer out due to juicy cashback offers available.....

Also it was mentioned earlier in the thread that the UK platform is a very small part of the Vanguard global operation.
 They have $10,000,000,000,000 of assets under management , so probably they are not concerned about a few upset small customers in the UK, worrying about an extra £20 a year.

Alexland

zagfles said:

If genuine small investors are really upset about this, maybe it's not Vanguard they should be venting at. 

I doubt that many were using ninja methods as its a lot of bother and limits to Vanguard funds which while some are good there are often better options.

I expect this is simply Vanguard's UK platform business moving out of growth phase into BAU having gained as much market share as was likely. The free providers were always going to cause a reduction on the rate of signups so no point holding the low price point on unprofitable customers.

Maybe they intend to use the savings to launch in other less competitive countries etc who knows. They are a big company that specialises in this stuff so will know the market well enough to make sensible commercial decisions.

MeteredOut

zagfles said:

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. 

They might originally have made a business decision to subsidise small investors in the hope they become large investors in the future. Which works if that's what usually happens, but doesn't work if when they become large investors, they transfer out to platforms with fixed charges or no platform charges but transaction charges instead. 

Typical MSE behaviour like the "ninja" method discussed earlier for gaming the way charges work, probably results in getting a service for less than it costs to provide that service. Which is fine, I've played that game, 0% balance transfers, bank switching etc. But then to be outraged at firms changing the rules in response to such behaviour and denouncing it as some sort of betrayal of core principles is simply laughable, as well as hugely hypocritical. 

If genuine small investors are really upset about this, maybe it's not Vanguard they should be venting at. 

I've not seen much venting, but simply people asking where is a better place for smaller investment pots where the platform fee won't make up a significant percentage of the pot value (in relative terms).

Hoenir

MeteredOut said:

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 )

Faced with increased operational costs. In particular the increases in both employers nic and the minimum wage looming on the horizon (which ripples through the employees above that level as well).  Worth considering what £48 actually pays for. Less than two hours of an employees time, by the time their on costs are included . Reducing active accounts is a route to cutting headcount permanently. 

jbrassy

MeteredOut said:

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.

I emailed Invest Engine and they told me they couldn't find the form I submitted on their system (which is quite frustrating). They've offered to send me a pdf form to fill in and email back, so hopefully this gets sorted soon.

gt94sss2

zagfles 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.

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. 

I have no idea of relative customer numbers but according to the article below both InvestEngine and Trading 212 have seen a huge increase in transfer requests since Vanguard gave notice of these changes.

https://www.thisismoney.co.uk/money/diyinvesting/article-14210723/These-two-investing-platforms-surge-transfers-Vanguard-reveals-fee-hike.html

eskbanker

gt94sss2 said:

I have no idea of relative customer numbers but according to the article below both InvestEngine and Trading 212 have seen a huge increase in transfer requests since Vanguard gave notice of these changes.

https://www.thisismoney.co.uk/money/diyinvesting/article-14210723/These-two-investing-platforms-surge-transfers-Vanguard-reveals-fee-hike.html

That article suggests 1,200 transfers to InvestEngine within the last week, with the implication being that these are largely from Vanguard, which had 640,000 customers in the summer, according to:

https://www.fnlondon.com/articles/vanguards-uk-platform-assets-jump-50-on-boost-from-young-investors-46af383a

i.e. just under 0.2% of Vanguard's customers jumped ship to one of their main competitors (for those shopping on price) in the first week.

Given the claimed 4000% increase in transfers to InvestEngine, that would suggest normal volumes are less than 30 per week!

boingy

If anyone thinks Vanguard's customer service is bad, wait until you experience InvestEngine's customer service!
What a bunch of incompetents. They messed up my ISA and told me bare-faced lies in the process. I think they might have grown too quickly for their own good.