Vanguard is overhauling how it charges UK customers to manage their money, with the world’s second-largest asset manager introducing a monthly fee for the first time. 

The fund manager has told Sipp, Isa and general account holders using its Personal Investing service that it will start charging £4 a month to clients with a total invested balance of under £32,000, from January.

Vanguard said in a statement the introduction of the minimum fee is ‘necessary to help Vanguard cover the rising cost of serving our clients’.

At presents, clients pay 0.15 per cent on any balance, capped at £375 a year. This will remain the case for clients with invested balances worth more than the £32,000 cut-off, and for Junior Isas.

A client with a total invested balance of £20,000, for example, would see annual fees rise from £30 a year to £48 a 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 will be 0.51 per cent, consisting of a 0.15 per cent platform fee, 0.2 per cent management fee, and 0.16 per cent fund fees. There will be no minimum. 

Switch-up: Vanguard told clients on Thursday it was changing how it charges fees

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

Currently, a client withdrawing everything from their account or making a full transfer to another provider would see Vanguard send the full amount requested. 

Clients would need to pay when any fees were due.

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

There are still no charges to withdraw or transfer from Vanguard.

Ben Summers, head of personal investor services, UK at Vanguard said the introduction of a minimum fee will enable the firm to ‘continue investing in new features, products, and services’. 

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

‘We’ve found that once people have made the important decision to start investing, they can lack confidence in the management of their investments, hold too much cash, and have trouble constructing portfolios with the right funds and level of risk. 

‘We are therefore cutting the management fee on our Vanguard managed Isa by a third. 

‘This service selects and manages investments on a client’s behalf, and a team of Vanguard investment experts are on hand to give guidance.’

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