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Vanguard to refund financial planning fees ahead of service closure

Paloma Kubiak
Written By:
Paloma Kubiak

Vanguard has confirmed it will close its financial advice service just two years after launch, with fees returned to users in the next couple of weeks.

The fund giant will close the Vanguard Personal Financial Planning (VPFP) service on 31 May 2023.

The VPFP service was only launched in April 2021 and was aimed at offering low-cost advice to existing UK Personal Investor customers who were at least five years away from retirement, and with a minimum holding of £50,000.

However, it is understood there was a mismatch between the target audience and the actual customer base acquired.

The firm has an estimated 480,000 self-directed clients on its UK Personal Investor platform giving them access to all Vanguard funds. However, YourMoney.com understands the average age of customers stands at 38, with a third under the age of 30, a much lower age than anticipated.

Further, it is understood that less than 10% of existing customers used the advice arm.

Fee refunds

The VPFP charged users a 0.15% platform fee (capped at a maximum of £375 per year) which was the fee paid by all UK Personal Investor customers.

They were also charged a financial planning fee of 0.5% and 0.14% fee for underlying funds.

Vanguard confirmed it will refund the 0.5% financial planning fee to all clients using the service at the time of the closure announcement.

This will be paid into bank accounts after details have been verified, and should be received by customers within the next 10 working days.

Customers will also be given one of two choices going forwards:

  • Return as a self-directed UK Personal Investor to manage funds on your own
  • If you want to continue to receive financial advice, you will need to transfer to another provider.

If you take no action, Vanguard said option one will be the default measure taken.

For anyone looking to continue with advice elsewhere, it refers customers to Unbiased, Personal Finance Society or VouchedFor to help you find an adviser.

Vanguard confirmed there will be no exit or other fees associated with an external transfer.

‘Difficult decision’

A Vanguard asset management spokesperson, said: “We launched the service for clients of our existing platform with specialised retirement needs. However, after careful consideration, we have concluded that our clients are looking for other, more adaptable forms of financial planning from Vanguard. We have therefore taken the difficult decision to close the retirement planning service.

“We are committed to the development of further financial guidance and advice services, to give investors the best chance of investment success.”