Vanguard “disrupts” UK retirement market with advice business

Asset manager Vanguard has launched a financial advice business in the UK aimed at pensions savers.

Vanguard Personal Financial Planning offers personalised investment advice for an all-in cost of 0.79% with portfolios managed by Vanguard.

There are no other charges such as entry or exit charges, and investors with over £100,000 get access to financial planners while those with smaller sums above £50,000 – the minimum investment for eligibility for the service – will get a “digital financial planning experience with a personal financial plan”.

Sean Hagerty, head of Vanguard, Europe, said research showed 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.”

Vanguard said it would recommend a tailored investment portfolio made up of a “finely tuned” mix of its low-cost and broadly diversified equity and fixed income funds so that retirement saves got a “comprehensive financial plan tailored to their chosen retirement date, desired retirement income and their attitude to risk”, and based on their financial situation.

Vanguard will manage portfolios and rebalance them.

The 0.79% fee includes an advice fee (0.50%), 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.

Holly Mackay, the chief executive of Boring Money, said: “This launch is genuinely disruptive, in a positive sense. The UK’s ‘Advice Gap’ remains substantial – only 9% of UK adults see a financial adviser and investor confidence shrank to all-time lows during the pandemic. 

 “We think this service offers those people with relatively simple financial affairs, in their late 20s to mid-50s, who just want to save up for retirement with minimum fuss and low fees, a really interesting new option.  

 

© 2021 funds europe

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