Vanguard to enter financial advice market

Vanguard to enter financial advice market

Vanguard is set to enter the UK advice market as the fund house “evolves” to meet the “changing needs” of its investors.

The asset manager has received regulatory permissions from the Financial Conduct Authority to provide retail advice in the UK and is developing a proposition to launch in the future.

There is currently no timescale for bringing the advice service to market and the process is in the “early stages”, according to Vanguard.

In a letter to the firm’s adviser clients, the firm’s head of Europe, Sean Hagerty, said Vanguard was exploring the launch of direct to consumer financial advice in the UK to provide “additional levels of service” to its self-directed clients.

Mr Hagerty said: “From the beginning we’ve set out to serve the needs of those looking to build a better financial future by taking a stand for all investors, treating them fairly, and giving them the best chance of investment success. 

“In order to deliver on these principles, Vanguard has consistently evolved to meet the changing needs and preferences of our investors.”

The letter went on to stress the firm’s belief in the importance of fee-based financial advice and claimed financial advisers would “always play an important role” in providing wealth management to investors who wanted a more personal service.

Mr Hagerty added: “We are committed advocates of the value advisers add and will continue to invest in the services and support we provide to help traditional advisers with their practices.”

The fund house already runs a number of advice services — from hybrid in-house services to digital options — in the US, but FTAdviser understands the new offering will be "bespoke to the UK" based on the needs and preferences of UK clients.

Vanguard has been a fast-growing fund house across the globe in recent years as low-cost passive funds, which the fund house is best known for, have experienced high levels of inflows.

The asset manager’s move into advice would be the latest example of the vertical integration — when a firm owns more than one part of the value chain — gripping the industry.

One-stop-shop giants is a growing trend in the industry but is not without controversy, particularly on the topics of conflict of interest and price.

In its report into the asset management market, published in June 2017, the Financial Conduct Authority expressed concerns about the conflict of interest between the different functions at firms, and particularly cited value for money concerns.

Financial advisers have also been fierce critics, arguing those firms operated against the spirit, if not the actual wording, of the Retail Distribution Review which was introduced to sever the stranglehold of influence fund management houses had over the provision of financial advice.

Paul Stocks, financial services director at Dobson and Hodge, said: “This has been the general direction of travel for big firms in the industry for a while now, such as Prudential and Quilter.