Vanguard: New Minimum Monthly Account charge

eskbanker

equitydealer said:

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

But that article is all about their history as a fund manager, and pushing fund costs down, rather than anything to do with their platform charging model?  There is a passing bland reference to "we've successfully brought low-cost investing to the UK" but their funds launched in the UK long before the platform....

Hal17

My daughter has a SIPP with Vanguard which I contribute to only. Currently about £9K and on-going charges of £13.00 a year. Now with the pending changes any thoughts where we should move it too?

equitydealer

eskbanker said:

equitydealer said:

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

But that article is all about their history as a fund manager, and pushing fund costs down, rather than anything to do with their platform charging model?  There is a passing bland reference to "we've successfully brought low-cost investing to the UK" but their funds launched in the UK long before the platform....

Each to their own as how you read it, but as a massive fan of Vanguard who has been to their London HQ to help with a product launch this is disappointing for smaller investors, higher fees = lower returns, simple as that. I’m voting with my feet as I’m sure lots of others will be doing. 

Kaizen917

It doesnt affect me personally but Im still finding it a problem for two main reasons.

First, the overall market trend has been towards lower fees where one would think that Vanguard will be actually leading the charge. Second, I like how established Vanguard is but its site feels clunky, the app was overdue and is rather basic and, all in all, they could do with some quality of life improvements even if lowering fees isnt on their mind. So, if anything from them hitting my email as descripting of upcoming changes, it should have been something more nuanced with positive changes being announced as well.

boingy

Here's the thing. Lots of people who say they are going to move to a different provider will not do so, especially those with pensions. And Reddit is right up there with X, Facebook and Trustpilot for people just spouting off. Some of those people will not even have Vanguard accounts.

Hard to say what triggered the change but this very forum has posts that promote using Vanguard for regular (free) investing then transferring to places like iWeb to avoid the iWeb transaction fees. Vanguard is also listed as a good place to send very low value Direct Debits to satisfy various account switching criteria. I'm not saying these things are a significant factor but I imagine they don't help.

If the change starts to hurt Vanguard we'll see a very quick U-turn but I think that's very unlikely.

GeoffTF

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. 

Vanguard is "not for profit". It is owned by its US investors.

Swipe

Someone has got to pay for their new app 

MX5huggy

Swipe said:

Someone has got to pay for their new app 

Hardly, it’s not an app, just a website accessed through an icon. With less functionality than the main site. 

Hoenir

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. 

Don't think that you understand the economics of running a business. £48 wouldn't even cover the full costs of employing a customer services operative for 2 hours. 

 Vanguard was launched in a very different era. Where 0.45% was still a sizable fee. Despite being cheaper than the competition. Limited product range at the outset. Built to achieve scale and therefore be profitable through AUM. Bogle died a wealthy man despite leaving the business in 1999. Prior to Vanguard , Bogle started off by running an investment boutique. The concept of index tracked funds was copied. Not an original idea. 

AlanP_2

I'll be affected on both my and my wife's SIPPs but can't say I'm surprised. 

Less than £48 a year to administer a SIPP is what they call a loss leader I believe.

They've tried it and it hasn't worked so now the pricing becomes a bit more realistic but still pretty good value overall.