US fund manager Vanguard is exploring the possibility of entering the UK advice market after it was granted Financial Conduct Authority (FCA) approval to provide investment guidance.
Vanguard said its plans to offer financial advice in the UK were in the “very early stages” and that it did not have an exact timeline for when a direct-to-consumer advisory product would be brought to market, according to the Financial Times.
The US fund manager’s decision comes as no surprise, as Vanguard have been one of the fastest growing global fund managers. Their products have proved popular with investors due to their passive, low-cost nature.
Dzmitry Lipski, investment analyst, interactive investor, said that Vanguard products were a popular choice with their investors in December (2019): “Whilst there’s the usual jostling between well-known fund managers and passive giants, it’s striking to see Vanguard not just accounting for half of the top ten fund purchases, but moving up the rankings to second place too, ending a nineteen month run in the number two spot for Lindsell Train Global Equity.”
“The provision of advice will never be one size fits all. Investors should have access to advice that is robust, low cost and puts their interests first.”
Vanguard’s move is likely to put pressure on UK wealth managers and financial advisers, as the trend for a “one-stop-shop” continues within the sector.
Sean Hagerty, head of Vanguard’s European business, said in a statement: “We are committed advocates of the value advisers add and will continue to invest in the services and support we provide to help traditional investors.
“The provision of advice will never be one size fits all. Investors should have access to advice that is robust, low cost and puts their interests first,” said Hagerty.
In the US, its online wealth management unit, Vanguard Personal Advisor Services (PAS) has accumulated approximately $150bn in assets since its launch in 2015.
PAS provides face-to-face advice alongside digital tools for clients with a minimum $50,000 in assets.
Vanguard shook up the UK market in 2017, when it launched an online service selling its funds directly to UK investors, throwing a spotlight on fees charged by fund managers and brokers.