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Vanguard pours cold water on UK robo launch

Vanguard pours cold water on UK robo launch

Vanguard’s head of retail sales has said the company has “no plans” to bring its US robo-advice business to the UK.

Neil Cowell said he could not say how the market would develop, but said the company is not planning to bring Vanguard Personal Advisor Services across the Atlantic.

Since its launch in 2015 the Personal Advisor Service has swelled to become one of the world's largest robo-advice providers with assets of around $40bn (£31bn).

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It is a hybrid model which combined face-to-face advice with robo-advice.

Mr Cowell said: “You have to say who knows how the marketplace will develop but we have got no plans to do it in the UK.

“We don’t see any need or requirement for it. It takes you into a whole different ball game and not one we are thinking about.”

Mr Cowell predicted that technology would play a greater role in distribution, with large advice firms and robo-advisers – which often use the passive products Vanguard is known for – becoming more prevalent.

He said: “Certainly in the US we have seen a greater use of technology to support distribution and I think that will continue.

“We will see a shift towards more of those large distribution channels, vertically integrated and restricted advice models and maybe that will require different distribution techniques.”

In May Vanguard launched its first active funds in the UK with a selection of four low-cost funds – charging between 0.6 per cent and 0.8 per cent.

Mr Cowell said: “This is clearly something new for Vanguard in the UK. It is the start of the journey for us with active.

“The take-up so far has been sensible. It is very early days to be quoting any statistics but advisers understand what we are trying to achieve.”

He said Vanguard is able to run low-cost active funds because of its “high quality managers” and because of its scale.

Mr Cowell said the business had no targets about how much of its business in the UK it wanted to be active.

Richard Ross, director of Norfolk-based Chadwicks, said: "The problem with robo-advice in the UK generally is that the market is not ready for it. I think Nutmeg has shown that.

"I suspect they are looking at the UK market and seeing that now is not the right time. When the first movers start to get it right they will probably change their strategy and come and eat them up."