While Hargreaves Lansdown has the most customers in the DIY platform market by far, Vanguard is a popular smaller player for investors who want to keep their investments simple, passive and low cost. Both firms have long legacies in the investment world, with Hargreaves Lansdown famously starting from the founder’s spare room in a Bristol flat in 1981. Vanguard started in the US in 1975, becoming one of the world’s largest fund groups known for its low-cost passive funds, coming to the UK in 2009. When choosing between the two, look at cost alongside product range. Vanguard may be cheaper, but it has limitations.
What is Hargreaves Lansdown?
Hargreaves Lansdown is a constituent of the FTSE 100 Index of the largest companies listed on the London Stock Exchange. It has over 1.7 million clients and £120 billion of assets on the platform. Alongside investments and savings, individual savings accounts (ISAs), and self-invested personal pensions (Sipps), the firm also offers a wider range of financial services. These include an investment arm, which manages a range of in-house funds, financial advice, and annuity and currency brokerage services.
What is Vanguard?
Vanguard’s US founder John C. Bogle was a pioneer of index funds in the US and a proponent of low-cost investing by individuals. Index funds, also known as passive funds, don’t pick individual shares or bonds to beat the market, they track the performance of the entire market. In 2009 Vanguard opened its UK office and in 2017, it launched the Vanguard Investor platform. However, by only offering investments in Vanguard funds, it’s a reduced product offering compared to other UK fund platforms, which offer wider ranges of funds from different providers. Nevertheless, in June 2023 Vanguard passed the milestone of 500,000 UK customers, with £16 billion in assets on the platform.
Hargreaves Lansdown v Vanguard – product on offer
Both platforms offer stocks and shares Individual Savings Accounts (ISA), Junior Individual Savings Accounts (JISA), Self-Invested Personal Pensions (SIPP) and General Accounts. But Hargreaves Lansdown also offers Lifetime ISAs and Cash ISAs.
While Hargreaves Lansdown allows you to get started investing with as little as £25 a month, with Vanguard you need £100 per month, or can get started with a £500 lump sum.
Hargreaves Lansdown offers a wide investment choice of active and passive funds (including Vanguard’s passive funds), plus UK and overseas shares, corporate and government bonds, exchange traded funds (ETFs) and investment trusts. Vanguard gives investors access to 86 Vanguard funds, including index and active funds, Exchange Traded Funds (ETFs) and the popular LifeStrategy and Target Retirement Fund (TRF) ranges, which are like ready-made portfolios. The Vanguard funds are low cost, charging 0.20% on average.
Hargreaves Lansdown fees v Vanguard
Hargreaves Lansdown charges a headline platform fee of 0.45% on the first £250,000 invested in collective funds in its ISA and Sipp, with reductions for larger amounts. That would work out as £45 a year on an investment of £10,000. This is high relative to other platforms that charge percentage fees and has stayed the same for many years. But its charges for customers who only invest in shares are capped at £45 a year in the ISA and £200 a year in the Sipp. There’s no dealing charge for buying or selling funds but share trades are usually charged at £11.95, with reductions for more frequent traders.
Vanguard charges a much lower platform fee of 0.15% per year (£15 on an investment of £10,000), capping this at £375 per year for accounts with investments over £250,000. It also has no dealing charges for buying or selling funds.
Vanguard also offers a Managed ISA with ‘guidance from real human experts’ for investors who don’t want to make their own decisions. This charges a total of 0.60% a year.
Hargreaves Lansdown has partnered with sixteen banks and building societies to create a standalone savings platform, called Active Savings. This allows you to hold your cash savings in one place and pick and mix between easy access and fixed rate bonds.
They are both regulated by the Financial Conduct Authority and covered by the Financial Services Compensation Scheme (FSCS).
Hargreaves Lansdown v Vanguard – research, tools and features
Hargreaves Lansdown’s Wealth Shortlist is a selection of 74 funds that its analysts have identified as having the potential to outperform their peers over the long term. The Wealth Shortlist, includes active and passive funds, plus responsible investing options. The list was overshadowed by its predecessor, the Hargreaves Lansdown Wealth 50, promoting the Woodford Equity Income fund until the fund’s collapse in 2019. But Hargreaves Lansdown says the newer Wealth Shortlist launched in 2020 comes with significantly greater risk monitoring.
For those who don’t want to choose, monitor and manage their investments on a day-to-day basis, Hargreaves Lansdown offers a suite of four ‘ready-made investments’ with different risk levels. These funds use a selection of different managers, chosen and managed inhouse by Hargreaves Lansdown. With ongoing charges of 0.88 to 0.99%, they are relatively expensive.
Vanguard has a tool to help you choose funds, which starts by asking 6 questions to help us understand your attitude to risk. It has a decent pension calculator to help you find out if you’re on target for the retirement you want.
Vanguard also offers some educational resources to help customers navigate the investment world, but they are not as regular or as prolific as the Hargreaves Lansdown output.
Hargreaves Lansdown offers articles and newsletters written by its inhouse experts, plus a daily round up from leading news agencies, and a regular investment podcast. It also puts on educational events and webinars.
Hargreaves Lansdown v Vanguard – user experience
Hargreaves Lansdown has a TrustScore from consumer website Trustpilot of 4.1 (based on 8,556 reviews) vs Vanguard at 4.0 (based on 2585 reviews). But while Hargreaves asks its customers for reviews, Trustpilot states it has no recent records of Vanguard asking their customers to review them. Overall, businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that don’t.
Hargreaves Lansdown’s app has a 4.7 rating on the app store (based on 50,800 ratings), while Vanguard doesn’t yet have an app available to UK investors, though says it has one ‘in testing phase’.
Hargreaves Lansdown v Vanguard – quickfire advantages & disadvantages
Hargreaves Lansdown advantages
- Wider choice of investments
- Offers Lifetime ISA and Cash ISA
- App with a high rating
Hargreaves Lansdown disadvantages
- Platform charges are expensive
Vanguard advantages
- Low-cost platform
- Low-cost funds
- Tool to help investors choose
Vanguard disadvantages
- Only offers Vanguard funds
- No lifetime ISA or Cash ISA
- No app for UK customers
Our conclusion
Saving of 0.30% a year on the platform fees by choosing Vanguard is perhaps a bigger deal than you may think. Over many years the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums. If you invested £10,000 over 25 years and got an average annual growth of 6% from the investments, with a 0.15% charge your fund would grow to £41,425. But a 0.45% charge would reduce the end sum to £38,588.
Plenty of investors are happy with passive investing and Vanguard funds are popular on Hargreaves Lansdown and other platforms. Nevertheless, if you want more investment choice beyond Vanguard funds, or are looking specifically for a Lifetime ISA then that would lead you Hargreaves Lansdown. Otherwise, your best option is to work out if you’d be happy with Vanguard’s more limited range, plus to use CompareandInvest.co.uk to find out what you’d potentially be charged for investing with each of the platforms.
