Fund manager Vanguard is to axe its low-cost Financial Planning arm which was launched in April 2021.
The operation offered a Financial Planning service for 0.79% per annum, promoting this as significantly less than the 1.5% or 2% charged by other Financial Planners.
In a statement today the company said it had decided to close the Financial Planning arm after concluding that clients wanted “other, more adaptable forms of Financial Planning from Vanguard.”
The US-owned company, which has a major UK platform and fund operation, said: “We launched the service for clients of our existing platform with specialised retirement needs. However, after careful consideration, we have concluded that our clients are looking for other, more adaptable forms of Financial Planning from Vanguard. We have therefore taken the difficult decision to close the retirement planning service.
“We are committed to the development of further financial guidance and advice services, to give investors the best chance of investment success.”
The company has been asked for further information about the impact of the closure but it is believed the operation was relatively small.
Vanguard’s website promotes the service to clients as: “Manned by qualified Financial Planners and supported by the very latest technologies, we believe it provides exceptional value to investors.
“Knowing the experts at Vanguard Personal Financial Planning have got your finances covered will give you genuine peace of mind. Combined with our low costs, this know-how has the potential to significantly boost your retirement nest egg and make sure more of your savings stay with you.
“It’s not uncommon for people to pay more than 1.5% per year in advice, platform and fund management charges. Sometimes they can even pay northwards of 2%. What’s more, there may be initial consultation fees, performance-related charges and a host of other hidden costs. Not at Vanguard.”
The service charged a Financial Planning fee of 0.5% plus an account fee of 0.15% (capped at £375), fund management costs of 0.14% and zero exit or entry fees. Combined these charges formed a total fee of 0.79%.
The company said its lower Financial Planning fee could add £230,00 to a 38-year-old investor’s retirement portfolio if they started with £100,000 and invested £1,000 over a 30 year period, based on a 5% gross annual return.
• This is a developing story please check back for updates.
