Vanguard’s New £4 Fee, Is It Time to Ditch Them for Something Cheaper?
If you’re investing in a SIPP (Self-Invested Personal Pension) or Stock and Shares ISA in the UK, platform fees can quietly erode your returns over time.
Vanguard recently announced a £4 monthly fee starting January 31st, 2025 for UK investors managing portfolios under £32,000.
Ben Summers, head of personal investor services, UK at Vanguard, described the change as “necessary”.
“The introduction of the minimum fee is necessary to help us cover the rising cost of serving our clients”.
While Vanguard remains popular for its low-cost approach, this move has many asking: are there cheaper alternatives?
Here’s a quick example of how fees can quietly eat into your investments over time.
On Friday, 13th December 2024, I received an email from InvestEngine. A section of the email compared Vanguard and InvestEngine, highlighting the charges you could incur on a £20,000 ISA portfolio over 10 years at 7% growth:
Vanguard: £499
InvestEngine: Zero.
Now, let’s break down how Vanguard stacks up against other popular investment platforms in the UK such as AJ Bell, Hargreaves Lansdown, and InvestEngine when it comes to SIPP and ISA fees. Before you ask, I didn’t include Trading 212 because they currently don’t offer SIPP accounts.
1. Vanguard
Platform Fee: 0.15% annually (capped at £375), plus the new £4 monthly charge under £32,000. That’s £48 a year.
Trading Fees: Free for funds.
If you have a larger portfolio or you’re a die-hard Vanguard fund investor, it’s still competitive.
The Verdict: Great for big, passive investors but increasingly pricey for beginners.
2. AJ Bell
Platform Fee: 0.25% for portfolios up to £250,000; fees decrease with larger sums.
Trading Fees: £1.50 for funds, £5 per share deal (less if you trade frequently).
AJ Bell offers flexibility, with lower charges for frequent traders and portfolios growing beyond £250,000.
If you trade frequently or have a SIPP, AJ Bell’s capped structure can save you money. However, the trading fees could sting for smaller investors who want to buy or rebalance regularly.
The Verdict: A solid mid-ground option for active investors, especially those managing their pensions.
3. Hargreaves Lansdown
Platform Fee: 0.45% annually for portfolios up to £250,000, reducing to 0.1% for over £1m. Share fees are capped at £200 annually.
Trading Fees: £11.95 per trade.
Hargreaves Lansdown’s platform fee is among the highest, but its customer service and investment tools appeal to hands-on investors.
Unrelated Side Scoop 🌚
As if rising fees weren’t enough to shake things up, Hargreaves Lansdown is also in the headlines for a £5.4 billion private equity takeover. Change is definitely in the air.
The Verdict: Best for those who want a premium experience and are willing to pay for it.
4. InvestEngine
Platform Fee: Free for DIY portfolios. If you want a hands-off approach, there’s still a low 0.25% annual platform fees for managed portfolios.
Trading Fees: £0 yes, buying and selling ETFs is completely free.
Managed Portfolios: 0.15% for managed SIPP portfolios, capped at £200 per year.
InvestEngine emerges as the clear winner for low-cost investing, especially for those who prefer ETFs.
The Verdict: The best for DIY investors , ETFs, and smaller portfolios.
Which Platform Wins?
Small Portfolios (<£32,000): InvestEngine is unbeatable with no platform or trading fees for DIY portfolios.
Medium Portfolios (£32,000 - £250,000): AJ Bell offers competitive fees and flexibility.
Large Portfolios (>£250,000): Vanguard and AJ Bell remain cost-effective despite Vanguard’s new charge.
Keep in mind
You’re not locked into one platform forever. Moving your investments from one platform to another is easier than you might think. Most UK platforms allow you to transfer your ISA or SIPP online, and the process is generally straightforward. Always check with your current provider for any potential fees or conditions, but don’t let platform fees hold you back as switching could save you money and better suit your investment needs.
Final Word
If cost is your number one concern, InvestEngine offers unbeatable value for DIY investors focused on ETFs. However, if you’re managing a large Vanguard portfolio, Vanguard still holds its ground despite the looming £4 monthly fee. Active traders might prefer AJ Bell, while those seeking a premium experience (and can stomach the fees) will find Hargreaves Lansdown hard to beat.
Always compare platforms based on your investment size, frequency, and goals.
The bottom line? Fees matter. Even a small percentage difference can cost you thousands over time. Choose wisely and keep more of your hard-earned returns in your pocket.
Disclaimer⚠️
Remember, this information is provided for general guidance only and does not constitute financial advice.
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