Vanguard introduces monthly fee for investors for the first time in major restructuring

Vanguard is reviewing the way it charges UK clients to manage their money, with the world’s second-largest asset manager introducing a monthly fee for the first time.

The fund manager has told Sipp, Isa and general account holders using its personal investment service that it will start charging £4 a month to customers with a total invested balance of less than £32,000, from January.

Vanguard said in a statement that the introduction of the minimum fee is “necessary to help Vanguard cover the increasing cost of serving our customers.”

Customers currently pay 0.15 per cent on any balance, capped at £375 a 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 £20,000, for example, would see annual fees rise from £30 a year to £48 a year.

Additionally, the Vanguard Managed Isa management fee will be reduced by a third, from 0.3 per cent to 0.2 per cent.

Total fees will be 0.51 percent and will be made up 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.

The fund manager also announced a restructuring of its withdrawal policy.

Currently, a customer who withdraws everything from their account or makes a complete transfer to another provider will see Vanguard send the full requested amount.

Customers would have to pay when the fees were due.

But starting January 31, Vanguard will first collect the fees owed and then pay the interest owed to the customer while transferring the money to their bank account or to their new provider.

There are still no fees for withdrawing or transferring from Vanguard.

Ben Summers, head of UK personal investor services at Vanguard, said the introduction of a minimum fee will allow the company 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 the cost of entry.

‘We have found that once people have made the important decision to start investing, they can lack confidence in managing their investments, have too much cash and have trouble building portfolios with the right funds and level of risk.

‘Therefore, we are reducing the management fees of 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 is available to provide guidance.”