Vanguard, UBS and Investec reveal robo-advice ambitions

Vanguard, UBS and Investec reveal robo-advice ambitions

Vanguard has revealed plans to be the biggest direct investment platform in the UK in the next 10 years.

At the moment, Vanguard is spending less than £1m a year on advertising and Ryan Barrows, head of business development for Europe for Vanguard, said there was no plan to change this approach and plough loads more cash into marketing.

He said the US investment giant hadn’t launched in the UK with “specific financial targets but believes it will be biggest direct provider” through positive word of mouth about its low cost investment products.

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Back in May, when Vanguard unveiled plans for a direct-to-consumer investment platform in the UK, the share price of Britain's current dominant consumer investment platform, Hargreaves Lansdown, tumbled by 8 per cent in a single day

Vanguard’s direct-to-consumer online service charges an annual account fee of just 0.15 per cent.

The service has a minimum lump sum investment of £500 or a minimum monthly contribution of £100.

There will be no account fee above the first £250,000 invested, meaning this fee is effectively capped at £375 a year.

Mr Barrows said instead of spending cash on advertising, money was currently being spent by Vanguard on creating services investors want.

He said Vanguard is currently working on adding a self-invested personal pension to its suite of products, after feedback that a lack of a Sipp is what is currently putting people off shifting cash onto the do-it-yourself investment platform.

In the US, Vanguard also has an advice proposition where a human adviser looks at whether a direct investor is on track to achieve their goals.

But Mr Barrows didn’t reveal any plans to compete with advisers in the UK.

During a panel session at the Boring Money conference today (14 September), he said he expects the amount of direct investments made by UK investors to soar as a result of low cost platforms like Vanguard’s.

But Mr Barrows said he does not expect the direct channel to overtake the advice channel in the UK as being the way the bulk of the nation’s cash is invested.

Mr Barrows said: “There is still a great need for advice.”

Vanguard’s proposition was deliberately not a robo-adviser as the asset manager saw demand for an execution-only proposition, he said.

“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.”

When asked about UBS’s ambition for growth in the UK, Nick Middleton, co-head of the asset manager’s SmartWealth, which launched in February, said the UK was seen by the financial services giant as a test bed.