Vanguard challenges robo-advisers as it expands into UK

By Moriah Costa on 21st September 2017

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The US investment giant wants to be the biggest direct-to-consumer platform.

Vanguard challenges robo-advisers as it expands into UK

As Vanguard expands its low-cost products into the UK, it could become a threat to robo-advice platforms and spark a price war.

The investment giant launched a low-cost bond fund on Friday and already has a direct-to-consumer platform in the UK. With an annual account fee of 0.15 per cent, the company offers lower fee options than some of the leading robo-advice providers.

And just last week Ryan Barrows, head of business development for Europe at Vanguard, said he expects investing in the UK to soar thanks to low-cost services. But it doesn’t mean traditional investment advice will die off either, he added.

“There is still a great need for advice,” he said at a Boring Money conference. “We believe, and time will tell, that the mindset of doing the right thing by investors and being low cost will be as successful in the UK as it is in US. We will continue to evolve the offer in line with what clients are looking for but in terms of growth we rely on good word of mouth in the media. Amazon hasn’t grown because they sponsor golf tournaments. They have grown because they are a great value proposition.”

Vanguard's online investing platform has a minimum lump sum of £500 or a minimum monthly contribution of £100. There is also no account fee above the first £250,000, which means that for the most part, fees won’t go higher than £375 a year.

Shares in several leading investment platforms fell in May when Vanguard announced its plans to launch in the UK, including Hargreaves Lansdown.

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While the company's online service is not a robo-advice platform, Vanguard does have an automated wealth management service in the US. Called the Personal Advisor Services, it has more than $65bn in assets under management. Vanguard has not said whether it will expand the Personal Advisor Services into the UK.

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