Vanguard launches D2C investment platform

Vanguard launches D2C platform in the UK with fees at 0.15 per cent

Vanguard, one of the world’s largest fund groups, has launched its direct-to-consumer online platform for the UK mass-market investors.

In October, Fund Strategy first revealed Vanguard’s plans to launch the service as part of a “10-year plus strategy”.

The new platform will charge 0.15 per cent in addition to the underlying ongoing fund charges and will have a minimum monthly contribution of £100 and/or a £500 lump sum.

Account fees will be waived above the first £250,000 invested, meaning the maximum account fee payable is £375 per year.

The online investment service will partly replicate Vanguard’s existing US offering, as it will limit selection to its own funds.

These will include the popular LifeStrategy range, index funds, ETFs, Target Retirement funds and its four actively managed funds.

The funds are available via an ISA, Junior ISA or general account, while a Sipp will be added later.

A slice of the action

Vanguard’s head of European business Sean Hagerty tells Fund Strategy the firm doesn’t exclude the inclusion of other firms’ funds in the future depending on demand, which will bring the UK offering in line with its US direct business.

In addition, Vanguard also says it is not ruling out the launch of an advice service in the UK to replicate the US model as well as to launch the D2C platform in other European countries, but has no imminent plans for either of these.

Vanguard head of personal investing Ryan Barrows, will run the platform, reporting to Hagerty.

Hagerty tells Fund Strategy: With a lot of humility in the UK, we know that we have a lot to learn and understand about how investors think and what the important aspects of an offer will be.

“We felt we were mature enough in the UK serving advisers and institutions. We tried to understand how UK investors think and we came to the conclusion that now is the right time [to launch the service].”

Vanguard says the low cost and simple approach of the D2C platform responds to the FCA’s calls for asset managers to act in the best interest of investors and show how they deliver value for money.

Barrows says the launch of the service will is “an educational opportunity” for investors and will be good for the entire industry.

“A vast majority” still want advice

On the impact on UK advisers, where a third of them hold assets with Vanguard, Hagerty says “a vast majority” of investors still need and want advice, and that the new D2C platform will not be a threat to advisers’ business.

He says: “This offering is for folks who want to do their investments online in their own time.
The reason the advisory community will actually like what we are doing is because it is helping us to build the recognition of the brand of the company with the end investors.

“In the US, one of the reasons advisers like us is because their clients are comfortable with Vanguard in their portfolios because of the level of trust. Having the same offering in the UK will help us improve the brand recognition and demonstrate that trust.”

Type of charge / Investment Fees for annual ownership of Vanguard FTSE U.K. All Share Index Unit Trust
Fund Ongoing Charge Figure (OCF) 0.08%
Annual account fee 0.15%
Total cost of investing 0.23%
Investing £10,000 lump sum £23.00 per annum with Vanguard
£49.58 per annum average platform cost
Type of charge / Investment Fees for owning Vanguard LifeStrategy® 100% Equity Fund
Fund Ongoing Charge Figure (OCF) 0.22%
Annual account fee 0.15%
Total cost of investing 0.37%
Investing £10,000 lump sum £37.00 per annum with Vanguard
£63.58 per annum average platform cost

Source: Platforum data as at 31 March 2017