Vanguard vs Hargreaves Lansdown: Best Investment Service?

Those looking for an investment platform are spoilt for choice in 2022. You can invest money in a huge selection of investment vehicles, available from a wide range of platforms via both mobile and desktop interfaces. However if you’re reading this I’ll assume you’ve already decided that the best choice for you comes down to a toss up between Vanguard vs Hargreaves Lansdown. The focus of my latest showdown here, therefore, is this pair of popular investment platforms which may appeal to investors for a number of reasons.

Both Vanguard and Hargreaves Lansdown (also known as HL) are hugely popular online wealth management services. Both have a variety of ways in which you can grow and manage your funds over time. But between Vanguard and Hargreaves Lansdown, which is likely to perform best over time or be the best option for your unique set of circumstances? Let’s take a look.

Vanguard vs Hargreaves Lansdown: Summary

• Both Vanguard and Hargreaves Lansdown are investment platforms offering various ISAs, General Investment Accounts and SIPPs.
• Vanguard has some of the lowest fees online, with no annual charges applying after £250,000. Hargreaves Lansdown’s fees stop after £2,000,000.
• Hargreaves Lansdown offers over 3,000 funds, while Vanguard offers 77 options within its own remit.
• The Vanguard system is owned by its shareholders and users. Hargreaves Lansdown’s equity is at least 46% owned by its staff and founders.
• You will need to invest at least £500 to use Vanguard, while you can start from as little as £1 at Hargreaves Lansdown.
• Hargreaves Lansdown offer a paid standalone financial advice service. As well as various information and tools to empower investors.

Vanguard vs Hargreaves Lansdown: Vanguard Overview

What is Vanguard?

Vanguard UK is an investment service which has been around since the mid-70s. In fact, it’s popular with many people for its cost-effective wealth management services. Vanguard appeals to more than 20 million people worldwide, and it is technically owned by its users.

Vanguard offers passive investment and active investment opportunities, as well as attractive fees.

What Investment Options Do They Offer?

Vanguard offers a variety of different investment options, all of which are likely to appeal to new investors and seasoned investors alike. You can choose to invest in index funds, active funds, bonds and ETFs.

Vanguard will also let you choose the model of investment which appeals best to you. For example, you can choose from actively managed funds or you can opt for passive funds (or a mixture of both). Generally passive funds have lower fees than actively managed funds as there is less work required from the wealth managers side in terms of buying and selling stocks within the fund.

There are around 77 different funds for you to invest in here, which means you should at least have plenty of choice to get started with. If you’re looking some ideas about which Vanguard funds to invest in, I have compiled some articles for you:

1. Best performing Vanguard funds for UK investors
2. Best Vanguard funds for 60-year olds in the UK
3. Best Vanguard funds for your emergency fund

However, while you can invest in SIPPs, set up a Junior ISA and Stocks and Shares ISA, as well as a General Investment Account (GIA) there is no Lifetime ISA option as yet.

Is Vanguard Good for Beginners?

Vanguard tends to be a good option for beginners thanks to it’s focussed set of funds and ready made options such as their LifeStrategy & Target Retirement funds. As a long-established company, they are also in a prime position to offer new investors more support and guidance than most. As far as usability goes, yes, there are apps and services out there with a more accessibility in terms of user interface, but Vanguard really does offer a competitive, appealing service to most beginners.

Do They Offer Financial Advice?

Yes. Vanguard offer personal financial planning and ongoing advice for a fee and depending on investment level.

What’s more, their LifeStrategy and Target Retirement funds are a packaged product which is completely passive from the investors side. All you have to do is decide how much to invest and Vanguard take care of the rest. This is likely to be very appealing to most beginner investors.

What is the Minimum You Need to Invest?

You can open up a Vanguard account from as little as £500. This might sound like a fair amount of cash for some people to invest, however, that’s likely because there are plenty of services out there which let you invest for much less. That being said, you can also get started here from as little as £100 if you are committing to a regular monthly contribution.

What Are Vanguard’s Fees?

Vanguard actually works out as one of the cheapest wealth management and investment services online right now. As of the time of writing, you’ll only pay a rate of 0.37% (0.15% account fee + 0.22% management fee) to invest in any of the LifeStrategy funds. Compared to other competitors, Vanguard is generally considered to have some of the lowest fees available.

However, the funds on offer with Vanguard might not work out to be the best option for all investors, particularly as there is much more diversity to be found elsewhere. While Vanguard charges low fees, there is a fairly limited pool of fund choices.

Is there an app for Vanguard UK?

At the moment, Vanguard UK does not have an app.

Is My Money Safe With Vanguard?

Vanguard makes sure to FCA-protect your funds, which means that even if the company does go under, your money will be returned to you. This means you can expect your money invested through the platform to be pretty safe and secure.

Vanguard reportedly reserves all their customer through a single account, though again, this is overseen by the FCA for regulatory purposes. Should Vanguard go out of business, your funds may be transferred elsewhere, if it is at all an option.

Vanguard vs Hargreaves Lansdown: Hargreaves Lansdown Overview

What is Hargreaves Lansdown?

Hargreaves Lansdown is a very popular UK investment platform, particularly as they are market leaders in large portfolio support. HL has over £127 billion in assets under management – an impressive figure. HL users will also find that there is huge variety of funds and individual company stocks that you can invest in. HL tends to be very popular with most people getting started with investing, as their site offers a series of impartial guides.

What Investment Options Do They Offer?

As mentioned, Hargreaves Lansdown offers a range of funds for you to invest in.  With over 3,000 options to choose from, there is much more variety on offer here than at many other competitors. In the battle between Vanguard vs Hargreaves Lansdown, there is a clear winner in this section.

There is the full range of investment ISA options available: Stocks and Shares ISA, Junior ISA and Lifetime ISA as well as a range of pension options: SIPPs and Junior SIPPSs. There’s also General Investment Accounts available and to make the most of your cash savings they also offer an Active Savings account. Which will help you to get the best possible rate available for your cash savings.

HL offers three different investment options to their clients:

1. Leave it to the Experts: This is the lowest effort approach and is well suited for those who want the experts to choose the best portfolio for their own risk tolerance.
2. Help Choosing Funds: This is a middle-of-the-road approach wherein HL guides you to funds that are in their shortlist.
3. Choose Your Own Funds: This is the fully DIY approach wherein you make all the necessary decisions regarding which funds to buy.

These options help you to self-select in to the bucket that is best suited for your skills, time, and expertise. I like this aspect and it helps that Hargreaves Lansdown is one of the most comprehensive investment platforms around, meaning that if you are really in the market to pick one provider, you should be onto a winner.

Is Hargreaves Lansdown Good for Beginners?

For the most part, yes. Hargreaves Lansdown is famous for its introductory guides, which are surprisingly impartial. While Vanguard’s fees and simple setup will appeal to many beginners, HL offers a more realistic approach for long-term investment that beginners will likely want to get involved with. HL’s Leave it to the Experts offering will be perfect for beginners as you can outsource all the difficult work to HL’s experts.

What’s also likely to appeal to people is the fact that you can get started from £1, however, fund investments are going to demand at least £100 in a lump sum. Once again, this puts HL ahead of Vanguard in that regard.

Do They Offer Financial Advice?

Yes. Hargreaves Lansdown offers a standalone impartial financial advice service. However this financial advice is very much a separate service and is chargeable – Usually the cost is a minimum £495+VAT or 1-2% of your advised portfolio. Aside from the paid financial advice service, Hargreaves Lansdown also has a comprehensive knowledge base, which means that some people may not feel they need to get in touch with advisors at all.

What is the Minimum You Need to Invest?

As mentioned, if you want to invest in stocks, you are going to need to have at least £1 available or £100 for ISAs and SIPPs. For a high-value investment service, this is likely to be very appealing. It’s certainly competitive with some of the emerging low-fee trading apps and services out there.

However, you are going to need at least £100 as a lump sum to invest in funds, or to deposit at least £25 per month through direct debit instruction. This shouldn’t set many investors back much, even those who are just getting started.

What Are Hargreaves Lansdown’s Fees?

Hargreaves Lansdown’s fees do put them behind Vanguard. However the benefit is that you get much more choice as you’re not simply limited to one company, like Vanguard. You have the flexibility to own it all: active funds, passive trackers, and shares.

HL’s fees are charged at two different levels:

• HL’s administration fees: You’ll need to pay 0.45% on anything up to £250,000, and beyond that, there’s a fee of 0.25%. If you have an ISA or SIPP, and invest in shares, investment trusts, ETFs, and bonds, your fees will be capped at £45 per year for the ISA and £200 per year for the SIPP.
• Fund fees: As you can also buy mutual funds or tracker funds from 3rd parties such as Vanguard, you will be charged by the fund provider. These fees can be as high as 1% for active funds or go down to as little as 0.05%.
• There are no fees for buying or selling the funds.

What’s interesting here is that despite being one of the older firms in the business, HL’s fees are actually lower than that of Moneyfarm!

The only point you have to aware of is that many of the actively managed funds offered by HL charge a 5% entry load, which means that you are instantly charged a one-time fee of 5% when you purchase these active funds. This fee does seem a bit excessive to me. The two ways to mitigate this fee are to either choose passively managed funds or to minimize the repeated trading of these funds, as you would get slapped with a charge each time you re-purchase the fund.

If you are trading in shares, then the trading fees are £5.95 up to £11.95 per trade, which will vary depending on trade volumes. 

If you want to trade mostly in shares, you’re likely better off with a dedicated platform like Fineco as the fees are lower and you have much more flexibility. You can read more about Fineco in my review article.

Does Hargreaves Lansdown have an app?

Yes, Hargreaves Lansdown has an app. The app supports all the features you would expect nowadays – viewing, managing, and trading your portfolio, getting news and research, and adding and removing cash. It’s all there!

Is My Money Safe With Hargreaves Lansdown?

Hargreaves Lansdown is protected by the FSCS, which means you will be able to recall anything up to £85,000 if the company goes bust. The company is a FTSE 100 mainstay and they are likely to be one of the most secure investment platforms around.

Hargreaves Lansdown also states that the staff involved in the company own 46% of the total equity, which by their own reasoning means they have significant interest in making sure the company stays afloat.

Now that we have looked at Vanguard vs Hargreaves Lansdown in detail, let’s run through a few pros and cons to close down the debate.

Vanguard vs Hargreaves Lansdown: Pros and Cons

Vanguard: Pros and Cons

• Vanguard is a great beginner’s investment platform, in the sense that it offers very competitive fees, and it is very easy to get started.
• However, compared to other likewise services, it is clear that Vanguard offers a little less in the way of fund options.
• You shouldn’t have to pay too much in terms of annual fees. In fact, there’s a rate of 0.15% account fee which applies across the board, on anything up to £250,000, and from then on, you won’t have to pay any account fee.
• You can only invest in Vanguards own funds. This could be a sticking point if you are looking for a wider range of options.

Hargreaves Lansdown: Pros and Cons

• Hargreaves Lansdown is the best choice for people who want to invest money in a variety of investments. With over 3,000 funds available, as well as multiple ISA and Pension options, it’s certainly one of the most diverse personal investment platforms around.
• HL offers their clients flexibility for guidance: from a fully Do-it-for-me approach to a fully DIY approach.
• For the privilege of using the HL platform and enjoying the range of funds on offer you’ll need to pay 0.45% on anything up to £250,000. 
• Individual stock trading fees can be expensive, depending on how much you are investing, so you’re better off with a cheaper stock brokerage like Fineco.
• That being said, there are no dealing fees at all for buying and selling funds which is a big plus point.
• It’s also a good choice for beginners. There are few platforms out there which offer quite so many introductory guides and tutorials. What’s more, there is a standalone financial advice service, should you need it.
• The Active Savings service is a great way to make the most of your cash savings.
• You can also invest from as little as £1, clearly beating Moneyfarm in this category, too.
• The 5% entry load on their active funds is disappointing. It would be great if HL dropped this charge from their actively managed funds.
• In some cases, the total combined cost when going with actively managed funds can be quite high – up to 1.85% annually, so be sure to check the total cost before you pull the trigger.

Vanguard vs Hargreaves Lansdown: Verdict

I’ve chosen Hargreaves Lansdown as the winner here for the variety of funds and stocks, the range of services, the hands-on availability, and value for money. 

If your main motivation is to simply find the investment provider with the lowest fees, then Vanguard actually does beat HL without a doubt. Their funds are also amongst the lowest cost products around.

However Vanguard takes a back seat to HL when it comes down to the level of guidance, advice, and education that HL offers. Additionally, HL gives you the added benefit of being able to own a large variety of investments – stocks, actively & passively managed funds from a large variety of providers – in one account. Vanguard has its perks certainly, but even for those investing a small amount of money, Hargreaves Lansdown is an excellent platform that supports you every step of the way.