Vanguard is introducing a monthly fee for investors for the first time amid a major shake-up
- Sipp, Isa and general accounts will be charged below a certain limit
Vanguard is overhauling the way UK customers should manage their money. The second largest asset manager in the world is introducing a monthly fee for the first time.
The fund manager has told Sipp, Isa and general account holders using the Personal Investing service that it will charge £4 per month from January to customers with a total invested balance of less than £32,000.
Vanguard said in a statement that the introduction of the minimum fee “is necessary to help Vanguard cover the rising costs of serving our customers.”
For gifts, customers pay 0.15 percent on any balance, up to a maximum of £375 per year. This will continue to be the case for customers with invested balances worth more than the £32,000 limit, and for Junior Isas.
A customer with a total invested balance of, for example, €20,000 would see annual costs increase from €30 per year to €48 per year.
In addition, the management fee on the Vanguard Managed Isa will be reduced by a third, from 0.3 to 0.2 percent.
The total fees are 0.51 percent, consisting of a platform fee of 0.15 percent, a management fee of 0.2 percent and a fund fee of 0.16 percent. There will be no minimum.
Switch-up: Vanguard told customers Thursday that the way it charges fees was changing
The fund manager also announced a review of its withdrawal policy.
Currently, a customer who withdraws everything from their account or makes a full transfer to another provider will see Vanguard send the full amount requested.
Customers would have to pay when charges were due.
But from January 31, Vanguard will first collect any fees owed and then pay the interest owed to the customer at the same time the money is transferred to their bank account or new provider.
There are still no fees associated with withdrawing or transferring Vanguard.
Ben Summers, head of Personal Investor Services, UK at Vanguard, said the introduction of a minimum fee will allow the firm to “continue to invest in new features, products and services”.
He added: ‘For our managed Isa service we have carefully considered the benefits of reducing access costs.
‘We have found that once people have made the important decision to invest, they lose confidence in managing their investments, hold too much cash and struggle to build portfolios with the right funds and risk level.
‘We are therefore reducing the management fee on our Vanguard-managed Isa by a third.
“This service selects and manages investments on behalf of a client, and a team of Vanguard investment experts are on hand to provide guidance.”
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