Vanguard launches cut price financial advice service
The service offers personalised retirement saving advice and is designed to appeal to millions of savers who lack guidance on pension planning.
The all-in cost is a competitive 0.79%, comprising an advice fee (0.50%) that includes VAT where applicable, ongoing fund charges (0.12%), transaction costs (0.02%), and platform fee (0.15%, capped at a maximum of £375 a year). There are no entry, exit or other charges.
The Vanguard Personal Financial Planning service will provide investors preparing for retirement with a comprehensive financial plan tailored to their chosen retirement date, desired retirement income and their attitude to risk.
As part of this plan, Vanguard will recommend a tailored investment portfolio made up of its low-cost and broadly diversified equity and fixed income funds. Vanguard will manage the portfolio on the investor’s behalf, rebalancing as appropriate, and reducing their level of risk as they approach retirement. This personalised financial plan will be reviewed and updated annually to keep it on track.
Sean Hagerty, head of Vanguard for Europe, said: “We strongly believe that many people will benefit from taking financial advice, particularly in preparation for retirement. However, research, including a recent FCA report, shows that over 90% of the UK’s adult population do not currently take advice.
“For some investors, the cost of advice is a barrier. The data indicates people can pay more than 1.5% for advice, platform, and fund management charges. It’s not uncommon to see fees north of 2%. With people living longer and working longer, these costs have the potential to make a considerable dent in their hard-earned retirement savings.”
Vanguard Personal Financial Planning offers tiered support service levels, with support increasing as investors’ portfolios grow and their financial needs evolve.
Investors require a minimum of £50,000 invested on Vanguard UK Personal Investor to be eligible for Vanguard Personal Financial Planning. Clients with £50,000 to invest towards retirement receive a digital financial planning experience with a personal financial plan, implemented and managed by Vanguard and reviewed annually.
Clients with more than £100,000 receive, in addition, access to a team of financial planners, who are on hand to provide telephone or video-based financial planning support. They will receive an annual review from a financial planner, as well as being able to arrange a review when they experience a change in circumstances.
Clients with more than £750,000 are supported by a dedicated financial planner, available to provide face-to-face support via video or in person at Vanguard’s offices in London.
At launch, this service is directed at providing financial planning for a single investor. Functionality for couples’ retirement planning will be added in due course, as will support for planning towards additional investment goals.
Holly Mackay, CEO at Boring Money, said: “This launch is genuinely disruptive, in a positive sense. The UK’s Advice Gap remains substantial – only 9% of UK adults see a financial adviser and investor confidence shrank to all-time lows during the pandemic.
“We think this service offers those people with relatively simple financial affairs, in their late 20s to mid-50s, who just want to save up for retirement with minimum fuss and low fees, a really interesting new option. At 0.79% a year all-in, to have a discretionary managed account, a service which maximises your tax allowances, does the juggling between ISAs and pensions for you, keeps an eye on future nasties such as the Lifetime Allowance, and provides regular access to people on the phone if you have more than £100k invested – that’s interesting.
“Existing Vanguard customers are pretty happy with the core investment service – 86% say they would recommend it. It will be interesting to see if the advice service gets such strong user feedback.
“More of our readers are questioning the traditional model of paying 2% or more on an ongoing basis for a package of advice and investments. At less than half the cost, this service seriously challenges the status quo and is a cat amongst what can be some pretty chubby pigeons.”