Vanguard offers monthly payments for first-time investors in large stocks

Vanguard is exploring how to pay UK consumers to manage their money, with the world’s second largest asset manager offering monthly payments for the first time.

The fund manager has told Sipp, Isa and general account holders using its Self-Defense service it will start paying £4 a month to customers with an investment balance of under £32,000, from January.

Vanguard said in a statement that the introduction of the lower fee ‘is necessary to help Vanguard offset the increased cost of serving our clients’.

At the holidays, customers pay 0.15 per cent on the balance, ending up at £375 a year. This remains the case for customers with invested balances above the £32,000 cut-off, and for Junior Isas.

A customer with a total remaining investment of £20,000, for example, will see annual fees rise from £30 per year to £48 per year.

In addition, the management fee on the Vanguard Managed Isa will be reduced by a third, from 0.3 to 0.2 per cent.

Total fees are 0.51 percent, a 0.15 percent foundation fee, a 0.2 percent management fee, and a 0.16 percent financing fee. No less.

The fund manager also announced a shake-up of its withdrawal policy.

At this time, the customer withdraws everything from their account or transfers it all to another provider and Vanguard will see that the full amount requested will be released.

Buyers must pay when payments are received.

But from January 31st Vanguard will take the necessary fees first, and then pay the interest due to the client at the same time as transferring money to their bank account or new provider .

There are also no fees for withdrawals and transfers from Vanguard.

Ben Summers, head of personal financial services, UK at Vanguard said the introduction of a lower fee would allow the firm to ‘continue to invest in new features, products and services’.

He added: ‘For our Isa service, we have carefully considered the benefits of lowering the cost to join.

‘We have found that when people have made the big decision to start investing, they lack the confidence to manage their investments, hold too much money, and have trouble building accounts and equity and level of risk.

‘That’s why we cut the management fee on our Vanguard managed Isa by a third.

‘This service selects and manages investments on behalf of the client, and a team of Vanguard investment experts is on hand to guide them.’