Vanguard reveals all on discount deals and platform evolution

Vanguard’s plans to offer a Sipp account in the UK are progressing as planned, but the platform has no plans to offer discount fund deals anywhere.

Vanguard’s newly launched direct platform is not a threat to advisers and should be seen as an alternative for clients who want to self-serve, Vanguard head of UK retail Neil Cowell also tells Fund Strategy.

Vanguard launched its direct-to-consumer service in May competing with the likes of Hargreaves Lansdown. Cowell says the service has had an initial “very significant uptake”.

He says: “In the UK, many of our adviser firms have been positive on some of their clients actually accessing Vanguard directly. We have anecdotal evidence that some are referring clients to us.”

Cowell says Vanguard is on track to offer a Sipp next year, which will make the new D2C platform “more robust”.

The firm says a younger-than-expected audience has started investing with the new service.

Cowell says: “The platform is very embryonic now, it is the most basic offering you can imagine. For the foreseeable future we’ll build tax wrappers. From advisers, the reaction [to the platform launch] was sensible. Firms generally have a benefit of having a more pronounced retail presence.”

More than a third of UK advisers have some assets with Vanguard, according to the asset manager.

Cowell says Vanguard has reached £40bn assets in its advice arm and is committed to keep advisers close to its business.

He says: “In the US our financial advisory community is growing six-fold…In the UK, it is a three-fold growth so far. [But] there’s real evidence that having a pronounced retail presence is helping the advisory market because Vanguard is an acknowledged brand.

“Advisers see that hopefully as it isn’t really intended to be in competition with them.”

Despite the growth, Cowell says there are no immediate plans for Vanguard to offer advice itself in the UK as opposed to the US business.

No discounts

Fund Strategy sister publication Money Marketing has recently analysed the adviser platform market to find out who agrees discount deals with fund groups as the FCA prepares its review of the platform market.

Vanguard does not provide any discounts on platforms for its funds.

Cowell says: “We don’t have different pricing on different platforms. It is part of our DNA, we are very clear that people should be able to access a fund whether they come to us through a platform, an adviser or directly, they should be able to have the same funds priced at the same way with same terms and conditions as any other investors.

“We wouldn’t allow any end investor – or create an environment where the end investor – would get a different price depending on what platform it gets on.”

Cowel hints the regulator is more interested in how vertical integrated firms operate with regard to discounts.

He says: “We had a few years ago this evolution of super clean share class which didn’t really take off. That was platforms saying they have scale and that has to be worth something to the asset manager. And then the asset management community was saying: ‘You have scale but do you have control?’

“It is about that dynamic of scale and control…That gets less clear when platforms start to become product providers and we are seeing that evolution now.”