Zaxon
The voice of reason
- Joined
- 5 August 2011
- Posts
- 800
- Reactions
- 881
Vanguard plans to tackle locals in super Jonathan Shapiro Jonathan ShapiroSenior Reporter Nov 5, 2019 — 12.00am
Share Vanguard, the US funds management giant that disrupted funds management and financial planning when it pioneered low cost index investing, is drawing up plans to manage the superannuation assets of Australians.
The plans would take advantage of changes resulting from the Hayne royal commission, which triggered a huge shift in savings from retail for-profit funds to non-profit industry funds, and bring the $8.3 trillion firm founded by the legendary Jack Bogle into direct competition with local players.
Vanguard said its entry into superannuation follows its experience in offering retirement products in the United States and its recent investment in improving its personal investing interface in Australia.
"It is an interesting next step for us to investigate and participate," Vanguard Australia managing director Frank Kolimago told The Australian Financial Review.
Vanguard Australia’s Robin Bowerman said the push into superannuation has been partly driven by a renewed regulatory focus on “member outcomes”.
“If you think of the industry, from a standing start 25 years ago, we would have thought the scale benefits would have delivered lower costs given the system’s success," Mr Bowerman said.
"We see an opportunity to provide an alternative offering given the global footprint we have.”
Vanguard Australia's Robin Bowerman.: "It is an important strategic direction we are taking but it's about repositioning Vanguard to be closer to the end investor." Supplied
He said the firm was at "the start of the process" of getting a superannuation offering into market, "given the rigorous licensing process involved".
“It is an important strategic direction we are taking but it's about repositioning Vanguard to be closer to the end investor. We believe we do our best work when we are close to the direct investor,” he said.
A superannuation offering, he said, was a "good way to compete in the fourth largest pension market in the world, but also one in which the investor base is very sophisticated”.
Digital portal The firm also confirmed it plans to launch an upgraded version of its Personal Investor portal, which is understood to lay the foundations of a push into superannuation.
This is because it would create the digital portal to service both superannuation and non-superannuation portfolios.
"There’s more awareness in the value of our funds and so we thought it was the right time to bring an upgrade in the capability to serve individual investors, and to refresh the retail offer," Mr Kolimago said.
The new digital portal would allow individuals to set up a Vanguard account online and invest in around 40 Vanguard managed funds, its suite of listed exchange traded funds, and buy and sell shares on the S&P/ASX 300 Index.
Mr Kolimago said the redesign was informed by the US version of its product which had 50 million digital interactions with users.
The product would in theory allow investors to top up their non-superannuation investment portfolio at a lower cost than through an online brokerage account by allowing easy access to its managed fund offerings.
Mr Kolimago said the digital platform was likely to be embraced by both older investors and younger "digital natives" who are increasingly seeking to invest their savings in the sharemarket.
The surprise in the US was how willing an older demographic was to embrace new technology, he said.
"We think the technology cuts across the age spectrum."
The Amazon and Netflix of finance Mr Kolimago was heavily involved in Vanguard's successful entry into financial planning – Personal Advisor Services – as it accumulated more than $US130 billion of assets after only launching an offering in 2015.
Vanguard has since been labelled "the Amazon and Netflix" of the financial advice industry.
"They have built this hybrid, human-based geographically untethered solution where you get an adviser for 30 basis points and they implement investments for 6 basis points," United Capital's Joe Duran told the Financial Review in an interview last year.
Vanguard is now piloting a lower cost "robo" version called Vanguard Digital Advisor in the US, with regulatory filings revealing it may charge 20 basis points for advice and management fees on balances as low as $US3000.
The firm also recently announced it was partnering with a select group of global active managers to make their funds available in Australia.
Vanguard was founded by the pioneer of index investing, Jack Bogle, in the late 1960s. As a result of its mutual ownership model where profits are redeployed into the fund, Vanguard has some of the lowest cost investment products in the world.
In a recent report, Morningstar singled out the firm for its influence on the "fee landscape".
Vangard's asset-weighted expense ratio was just 0.09 percentage points at December 31, 2018, and other firms have been forced to respond by matching or undercutting the fund management giant.
That includes Fidelity, which launched a "Zero" index fund, which charges no fees.
Vanguard has about $165 billion of assets under management in Australia, of which $17.5 billion was managed in the form of exchange-traded funds.
Share Vanguard, the US funds management giant that disrupted funds management and financial planning when it pioneered low cost index investing, is drawing up plans to manage the superannuation assets of Australians.
The plans would take advantage of changes resulting from the Hayne royal commission, which triggered a huge shift in savings from retail for-profit funds to non-profit industry funds, and bring the $8.3 trillion firm founded by the legendary Jack Bogle into direct competition with local players.
Vanguard said its entry into superannuation follows its experience in offering retirement products in the United States and its recent investment in improving its personal investing interface in Australia.
"It is an interesting next step for us to investigate and participate," Vanguard Australia managing director Frank Kolimago told The Australian Financial Review.
Vanguard Australia’s Robin Bowerman said the push into superannuation has been partly driven by a renewed regulatory focus on “member outcomes”.
“If you think of the industry, from a standing start 25 years ago, we would have thought the scale benefits would have delivered lower costs given the system’s success," Mr Bowerman said.
"We see an opportunity to provide an alternative offering given the global footprint we have.”
Vanguard Australia's Robin Bowerman.: "It is an important strategic direction we are taking but it's about repositioning Vanguard to be closer to the end investor." Supplied
He said the firm was at "the start of the process" of getting a superannuation offering into market, "given the rigorous licensing process involved".
“It is an important strategic direction we are taking but it's about repositioning Vanguard to be closer to the end investor. We believe we do our best work when we are close to the direct investor,” he said.
A superannuation offering, he said, was a "good way to compete in the fourth largest pension market in the world, but also one in which the investor base is very sophisticated”.
Digital portal The firm also confirmed it plans to launch an upgraded version of its Personal Investor portal, which is understood to lay the foundations of a push into superannuation.
This is because it would create the digital portal to service both superannuation and non-superannuation portfolios.
"There’s more awareness in the value of our funds and so we thought it was the right time to bring an upgrade in the capability to serve individual investors, and to refresh the retail offer," Mr Kolimago said.
The new digital portal would allow individuals to set up a Vanguard account online and invest in around 40 Vanguard managed funds, its suite of listed exchange traded funds, and buy and sell shares on the S&P/ASX 300 Index.
Mr Kolimago said the redesign was informed by the US version of its product which had 50 million digital interactions with users.
The product would in theory allow investors to top up their non-superannuation investment portfolio at a lower cost than through an online brokerage account by allowing easy access to its managed fund offerings.
Mr Kolimago said the digital platform was likely to be embraced by both older investors and younger "digital natives" who are increasingly seeking to invest their savings in the sharemarket.
The surprise in the US was how willing an older demographic was to embrace new technology, he said.
"We think the technology cuts across the age spectrum."
The Amazon and Netflix of finance Mr Kolimago was heavily involved in Vanguard's successful entry into financial planning – Personal Advisor Services – as it accumulated more than $US130 billion of assets after only launching an offering in 2015.
Vanguard has since been labelled "the Amazon and Netflix" of the financial advice industry.
"They have built this hybrid, human-based geographically untethered solution where you get an adviser for 30 basis points and they implement investments for 6 basis points," United Capital's Joe Duran told the Financial Review in an interview last year.
Vanguard is now piloting a lower cost "robo" version called Vanguard Digital Advisor in the US, with regulatory filings revealing it may charge 20 basis points for advice and management fees on balances as low as $US3000.
The firm also recently announced it was partnering with a select group of global active managers to make their funds available in Australia.
Vanguard was founded by the pioneer of index investing, Jack Bogle, in the late 1960s. As a result of its mutual ownership model where profits are redeployed into the fund, Vanguard has some of the lowest cost investment products in the world.
In a recent report, Morningstar singled out the firm for its influence on the "fee landscape".
Vangard's asset-weighted expense ratio was just 0.09 percentage points at December 31, 2018, and other firms have been forced to respond by matching or undercutting the fund management giant.
That includes Fidelity, which launched a "Zero" index fund, which charges no fees.
Vanguard has about $165 billion of assets under management in Australia, of which $17.5 billion was managed in the form of exchange-traded funds.
