The new Vanguard Personal Financial Planning service is available on Vanguard's UK Personal Investor platform.
Vanguard says the service offers “personalised retirement saving advice” and is supported by Vanguard’s Financial Planning team who will select only from Vanguard's funds.
The all-in cost is 0.79% which includes the advice fee plus ongoing fund charges, transactions costs and platform costs (see below for details).
Vanguard says there are no other charges but investors will require a minimum of £50,000 invested on Vanguard UK Personal Investor to be eligible for Vanguard Personal Financial Planning. Lower tier investors will get a cut-down "digital" service.
A financial advice service from the US-owned fund manager, which has expanded strongly in the UK, has been long expected as the firm has steadily expanded in the UK from its initial fund offering and now offers a platform, SIPP and other services.
The company says that 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 the plan, Vanguard will recommend a tailored investment portfolio made up of equity and fixed income Vanguard funds. Vanguard will manage the portfolio on the investor’s behalf, rebalancing as appropriate, and reducing their level of risk as they approach retirement. The personalised financial plans will be reviewed and updated annually, the firm said.
The “all-in” fee is 0.79% which includes an advice fee (0.5%) 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 or exit charges.
There is a tiered level of service depending on the amount invested.
• Clients with £50,000 to invest receive a “digital Financial Planning experience with a personal financial plan, implemented and managed by Vanguard and reviewed annually. Clients have access to Vanguard’s service team for administrative support.
• Clients with over £100,000 receive can, in addition, access to a team of Financial Planners who will provide telephone or video-based Financial Planning support. They will receive an annual review from a Financial Planner and can arrange a review when circumstances change
• Clients with over £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.
The Financial Planning team is led by former Evolve Financial Planning director James Norton CFP Chartered FSCI, head of Financial Planners, Vanguard, Europe.
At launch, this service is directed at providing Financial Planning for a single investor. Functionality for couples will be added later.
Sean Hagerty, head of Vanguard, 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.”
Financial Planning Today Analysis: A service like this from Vanguard has long been expected and, also as expected from Vanguard, the focus is on low fees. The question is: how much of a threat is this to mainstream Financial Planners? With its tiered approach, only investors with £750,000 or more can expect the “full” holistic Financial Planning service. At this level they would be likely to consider mainstream, whole of market Financial Planners and perhaps negotiate on fees. Many Financial Planners already offer lower fees for larger sums invested so the question will come down to how good is the service from Vanguard and will investors be willing to use a restricted service? Will it match or beat the service from, say, a good quality local Financial Planning firm? That remains to be seen. The lack of advice for couples at outset is a weakness many planners will point out. Advising both partners in a couple is ofter core to good Financial Planning. At lower investment levels Vanguard certainly seems committed to competing with the robo firms and others trying trying to offer a cut-down “digital” Financial Planning service. This area of the market, still pretty small, could well prove to be one of the most interesting battle grounds in coming years. Vanguard also talks about helping to bridge the advice gap and this service, and Vanguard’s reputation as a decent fund manager, may well appeal to new audiences. If Vanguard can make this new Financial Planning service work it may put pressure on advice fees which many planners will find unwelcome but for the time being it seems as if Vanguard’s core market for its new service is its own clients, not those advised by mainstream Financial Planners.