United Kingdom’s newest investment adviser—Vanguard

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Shadrach   in Business & Finance

Last updated: 14 January 2020, 12:29 GMT


It has been recognized that the United States manager is known for low-cost passive funds, but now they have made a move to stir up the wealth management sector. 

The city watchdog gave Vanguard a head start in providing investment advice in the United Kingdom. This is an indicator of the arrival of an aggressive new rival in Britain’s wealth management sector. 

The United States-based fund supervisor was given a consent by the Financial Conduct Authority to provide retail investment guidance in order to turn up the heat on the fee models that is currently operated by the United Kingdom wealth managers.  

Vanguard may be new in the UK but it is a fact that it has been the fastest-growing fund manager worldwide for the past seven years and it is driven by its low cost passive fund options. 

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A growing number of investors are now turning their backs on actively managed funds in favour of the less expensive index tracking alternative for which Vanguard is famously known. In accordance to the data compiled by Morningstar for the FT by the Investment COmpany Institute (trade association), there is about $10 trillion in assets that are now held in passive funds and about $2.3 trillion a decade ago. 

Vanguard is not in a rush to offer financial advice in the UK, in fact, they stated that they were still in the early phases and could not give an accurate timeline for when a direct-to-consumer advisory product would be bought to market. 

In spite of this, the regulator’s decision made a way for the “natural next step for our presence in the UK’, the company stated. 

In addition, the head of Vanguard’s European business—Sean Hagerty stated this: “We are committed advocates of the value advisers add and will continue to invest in the services and support we provide to help traditional investors.

The provision of advice will never be one size fits all. Investors should have access to advice that is robust, low cost and puts their interests first.

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The Vanguard Personal Advisor Services in the United States online wealth management unit has accrued about $150 billion in assets since its launch in the year 2015. A face-to-face advice and a digital tool were provided by PAS for the clients who has a $50,000 minimum in assets.  

When Vanguard launched an online service in 2017 that sells its funds directly to the United Kingdom investors… it shook up the market. This resulted in the throwing down of the gauntlet on fees charged by binding fund managers and brokers.  Its direct-to-consumer business in the United Kingdom had gathered about 80,00 retail customers with $2.3 billion under the management, this activity started this month. 

It was announced the previous month that Vanguard would launch a self-invested personal pension (Sipp) this year and  charges a yearly account fee of 0.15% , compared with an average of around 0.35%on UK platforms competitors 

It was also announced last week that there will be a creation of a new team that will partner with external financial advisers. The newly formed team will provide portfolio analysis and consulting services.