Advisers have mixed views on the advice offering Vanguard launched earlier this week.
The advice service, which has an ‘all-inclusive’ ongoing fee of 0.79 per cent, has generated mixed views from 114 advisers who responded to a survey carried out by FTAdviser this week.
The survey asked advisers whether Vanguard's entry into the financial advice market was good for advisers, bad for advisers, or made no difference.
A total of 38 advisers thought the new service, which incorporates annual platform charges of 0.15 per cent and ongoing fund charges of 0.12 per cent, alongside an advice charge of 0.5 per cent, would be good for them.
However, a slightly higher number of advisers – 42 – thought the financial advice service would be bad for them.
A total of 34 advisers said the service would make no difference to their business.
Scott Gallacher, chartered financial planner at Leicester-based Rowley Turton, said: “On the one hand, it is good to bridge the advice gap; on the other hand the service is severely limited.
“If you want holistic planning, it is not offering that. Beyond a certain point, clients will want other bits of financial planning and some of the assets will flow back into traditional advisers who offer more holistic services."
Alan Chan, director and chartered financial planner at IFS Wealth & Pensions told FTAdviser he was “indifferent” because they “target a different market”.
He said: “It might suit some clients who are very cost-conscious and just want Vanguard and nothing else, but there are IFAs who charge 0.5 per cent already - so in terms of the advice fee it is not groundbreaking - and might even be argued expensive for what is a fairly limited advice service.”
Darren Dicks, head of wealth management at Age Partnership, said: “The FCA acknowledge that retirement advice is the most complex advice to provide. At Age Partnership we firmly believe that everyone deserves a grown-up conversation about their retirement planning with a real human being.
“I am fortunate to have been involved in digital advice propositions in the past and I know first-hand that customers prefer the human touch. As an industry we struggle to provide advice to funds under £100,000, so I can understand why a full digital service has been set at this level. ”
Vanguard will not charge an initial fee. The service is targeted at clients with assets of £50,000 or more.
Ruth Gillbe is a freelance reporter for FTAdviser