Vanguard: New Minimum Monthly Account charge

equitydealer

eskbanker said:

equitydealer said:

Hoenir said:

equitydealer 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. 

Swipe

zagfles said:

Swipe said:

They are now splitting the free across accounts and will no longer just take it from a General Account. So I now need to either set up a direct debit for fees or keep cash in my SIPP, ISA and GIA.

You don't need to keep cash, they'll just sell investments if there's not enough cash.  

That's why I keep some cash in my GIA as I don't want them to sell any investments

eskbanker

Alexland said:

eskbanker said:
some of its customers won't be happy (especially smaller ones) and will take their business elsewhere

Some of its customers will probably fail to take their business elsewhere and their modest account valuations will be destroyed by fees over several years.

Indeed, but that goes back to the point being made by @Hoenir, i.e. that it costs a certain amount of money to run an account and for anyone with such a tiny holding that it would be 'destroyed' by a fee increase of up to £48, charging them a mere 0.15% of that balance was presumably not felt to be sustainable (although some other platforms still take a different view).

eskbanker

equitydealer said:

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. 

It wouldn't be particularly wise to regard Reddit as a meaningful barometer of investor sentiment, any more than X, etc, as talk is cheap, but time will tell!  I don't recall them saying anything out of the ordinary when they launched - any provider will try to puff themselves up and promote themselves as being better than their competitors, but was there anything specific or actionable, in terms of guarantees about pricing or the like?

Rawrzy

Not impressed really. Will probably find another provider. It's a shame really as what I'm investing is planned for long term and will no doubt grow as I'm investing regularly but they don't seem to care about that with this move.

I've seen people mentioning transferring to iWeb before so that could be an option to move my current stuff, but not sure who I'd use to purchase in the future as the £5 charge isn't ideal for how I currently invest. I have it currently set up to invest some money every month from my paycheck with occasional bigger deposits from my maturing regular savers.

I saw on reddit people are mentioning 212, but they don't seem to have the Global All Cap fund, so you'd have to mess about buying again after transferring. I guess I could just move my current stuff over to iweb and purchase anything new on 212.

zagfles

equitydealer said:

eskbanker said:

equitydealer said:

Hoenir said:

equitydealer 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. 

Who from though? Genuine small investors, or those with large amounts gaming the system by using zero transaction fee platforms like Vanguard to build a balance to transfer to platforms which have transaction fees but lower/zero platform fees? 

IvanOpinion

Sometimes a free market works in your favour other times it doesn't.

honeststeveo

I've read a few news storys and this thread but the point I havent seen mentioned is that not only are VG now considerably more expensive for those with 10K pots that AJBELL or HL, they SHOULD be cheaper because they only offer their own funds. This cuts costs for them and makes it a lesser offering to the investor which therefore should under market forces be cheaper. They are going to loose market share big time and they fully deserve to.

@Alexland does this ninja method of avoiding investment fees offset the fact that you are then tied to VG funds or you'll incur more transaction costs and buy sell spread. I wonder how much the real saving is an whether its worth the bother.

equitydealer

eskbanker said:

equitydealer said:

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. 

It wouldn't be particularly wise to regard Reddit as a meaningful barometer of investor sentiment, any more than X, etc, as talk is cheap, but time will tell!  I don't recall them saying anything out of the ordinary when they launched - any provider will try to puff themselves up and promote themselves as being better than their competitors, but was there anything specific or actionable, in terms of guarantees about pricing or the like?

No guarantees on fees of course but if you read this they talk about lower fees and cutting fees which gives the impression that this is the platform to use for low cost investing. They’ve got a pic of the great John Bogle, not sure he would be smiling at this news though as it goes against everything he fought for. https://www.vanguardinvestor.co.uk/why-vanguard/our-history

equitydealer

zagfles said:

equitydealer said:

eskbanker said:

equitydealer said:

Hoenir said:

equitydealer 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. 

Who from though? Genuine small investors, or those with large amounts gaming the system by using zero transaction fee platforms like Vanguard to build a balance to transfer to platforms which have transaction fees but lower/zero platform fees? 

Be brave to game the system, their back office transfers are awfully slow and require so much chasing it’s a waste of time