AJ Bell vs Vanguard
Which provider is the best to invest with?
By Boring Money
21 Mar, 2023
AJ Bell and Vanguard are both super solid, decently priced, credible options. So investors will be in safe hands with either. That said there are some key differences that we can highlight here, helping to decide which is really the best for your investing needs.
Which is the best Stocks & Shares ISA provider for you? Which is best for saving for buying your first home? And who to turn to for a private pension to boost your income in retirement?
Scroll down to learn more about AJ Bell and Vanguard’s costs, products and service - who do we think is most suited to help you achieve your financial goals depending on your priorities right now?
AJ Bell vs Vanguard: Boring Money's review
AJ Bell is steadily building its brand and customer base, and is a very credible provider which supports both financial advisers and DIY investors. Their content is strong and the investment research is good. The app and site are decent, but can still feel a bit overwhelming for less confident investors or beginners. Their charges are typically at the mid to low end and offer fair value to customers.
Vanguard is not just popular in the UK but a massive global player, with an almost cult-like following from fans of its no-frills, low-cost, keep it simple mantra. They are best known for simple ‘ready-made’ funds which do all the heavy lifting for customers, typically using ‘tracker’ or ‘passive’ funds to serve up a cheap one-stop shop. Their charges will typically be amongst the lowest in the market.
I don’t think this decision will be made on trust or credibility – both do well here. I think AJ Bell is a better option for those who want some investment choice and to be in charge of calling some of the shots. Or maybe to start simple but to learn and gradually take a more active role in managing their investments or pensions.
And Vanguard is a fab choice for people who either can’t be bothered to keep up to speed with markets, and fine-tune their investments, or who haven’t got a clue where to start! If price is your number one thing, Vanguard will generally be cheaper.
AJ Bell pros and cons
Check out the table below to get a summary of the pros and cons of investing with AJ Bell. You can read our full review of AJ Bell here.
Vanguard pros and cons
Check out the table below to get a summary of the pros and cons of investing with Vanguard. You can read our full review of Vanguard here.
AJ Bell vs Vanguard: Which is best for your financial goals?
We've matched which of the two providers we think is best depending on your saving or investing needs. Click on the financial goal that matters to you most in the column on the left to read more about our reasoning.
How do AJ Bell and Vanguard compare on charges?
In the table below, we've crunched the numbers for you and calculated the amount you can expect to pay for the all-in fees for the ready-made solutions on each provider and the platform charge on AJ Bell or Vanguard depending on how much you're investing.
Comparison of administration costs
Platform | Investing £1,000 | Investing £5,000 | Investing £10,000 | Investing £20,000 | Investing £50,000 | Investing £100,000 | Investing £250,000 |
AJ Bell | £4 | £14 | £28 | £53 | £131 | £259 | £637 |
Vanguard | £1.50 | £7.50 | £15 | £30 | £75 | £150 | £375 |
These fees represent the annual cost of holding different-sized portfolios on the platform in funds. Fund trades have been factored in proportional to the account size.
Comparison of ready-made portfolio costs
Platform | Investing £1,000 | Investing £5,000 | Investing £10,000 | Investing £20,000 | Investing £50,000 | Investing £100,000 | Investing £250,000 |
AJ Bell (Balanced Fund) | £7.10 | £29.50 | £59 | £115 | £286 | £569 | £1,412 |
Vanguard | £4.20 | £21 | £42 | £84 | £210 | £420 | £1,050 |
These fees represent the cost of holding an in-house ' ready-made’ option on these providers. Trades vary by portfolio size. In this table, we have used AJ Bell’s Balanced Fund (0.31%) and Vanguard’s LifeStrategy 60 (0.27%). AJ Bell’s Balanced Fund is slightly more expensive, and users of AJ Bell would have the option to purchase Vanguard’s LifeStrategy range on the AJ Bell platform.
Boring Money's Review: AJ Bell vs Vanguard for key financial goals
Investing
AJ Bell vs Vanguard: Which is the best Stocks & Shares ISA provider?
Best: The jury's out!
This decision will be made by your investment approach – do you want a super simple choice from a limited range? Or do you fancy having a bit of a say in the matter and some more options to choose from?
Both providers offer simple ready-made options, which are useful for investors who don't want to go through the hassle of creating a carefully prepared portfolio.
AJ Bell has a range of ready-made portfolios, which offer 4 different choices to investors, from the less volatile Cautious to the more rollercoaster Adventurous. Or they have their bigger range of ready-made funds, such as Cautious, Balanced and Global Growth. The funds are better options for people who don’t want the responsibility of managing and maintaining an investment portfolio, or trimming and tweaking around the edges.
Equally, Vanguard has their LifeStrategy funds – 5 choices ranging from the less volatile 20% Equity option to their rollercoaster, the 100% Equity fund. (Just remember folks that rollercoaster also brings the potential for higher returns so with longer timeframes by which we mean 7 years +, this might actually be a very sensible choice.)
Both Vanguard and AJ Bell funds have performed pretty well over the last few years in our analysis. And both have decent fees for these ready-made funds. Vanguard is the lowest cost at 0.27% and AJ Bell’s are around 0.31%.
AJ Bell's platform charge (the fee for administering your investment account) is 0.25%, which is a touch higher than Vanguard’s 0.15%.
If price is your thing, then Vanguard will win out as their platform fee and fund fee combined come to 0.42% all-in a year. Which is damn good value for a Stocks and Shares ISA. But AJ Bell is still pretty reasonable at about 0.56%.
AJ Bell will be worth the extra money for those who want to learn, to build a portfolio over time, or trade a share, or buy a fund in a sector or a theme which floats your boat. You can access a much broader range of investments.
So if costs float your ISA boat – Vanguard. And if choice is your thing – AJ Bell.
You can read more about Stocks & Shares ISAs in our guide and see what we think of AJ Bell and Vanguard's ISAs here and here respectively.
Retirement
AJ Bell vs Vanguard: Which is the best SIPP provider?
Best: AJ Bell
If you're looking for a straightforward SIPP (Self-Invested Personal Pension) AJ Bell has a fantastic pedigree and offers access to thousands of investments, from UK and international shares to investment trusts. They also know their pensions, supporting thousands of financial advisers with their pension administration and even some other big names in the industry.
AJ Bell charge a 0.25% platform fee, which drops to 0.10% on portfolio values between £250k - £500k. There are no additional fees incurred for holding over £500,000. Platform charges applied to holding shares in your portfolio are capped at £10 per month (£120 per year). Effectively, this means that you are not charged on holding anything above £48,000 in shares, so if you have £100,000 in shares for example, you would only pay the 0.25% charge on the first £48,000 before the £10 per month maximum fee comes into play.
Vanguard has a low fee of 0.15% on pensions and this is capped at a maximum of £375 a year. So if for example, you have a £200,000 pension, it would cost £500 a year with AJ Bell and £300 a year with Vanguard. If you have £400,000, it would cost £775 for AJ Bell and £375 with Vanguard.
Vanguard will almost certainly be cheaper. However, service also matters. If you are coming up to retirement in the next 5 years, or at that point of decision-making, or even just moving into retirement, AJ Bell staff will just know their stuff. It’s their thing.
I think service and knowledge tips the scales for AJ Bell but if you’re a younger saver, or just after a super simple low-cost option and don’t want to trade shares or get involved, then Vanguard might make sense at this time in your life.
You can read more about what we think about AJ Bell and Vanguard SIPPs here and here respectively.
Buying your first home
AJ Bell vs Vanguard: Which is the best Lifetime ISA provider?
Best: AJ Bell
This one’s an easy one – Vanguard doesn’t have a Lifetime ISA. Simples!
LISAs (Lifetime ISAs) are increasingly popular as a vehicle for first-time buyers to save up to purchase their first property. LISAs have a restriction that stipulates a maximum annual contribution of £4,000, which WILL restrict most portfolio sizes and makes it unlikely for portfolios to go into the hundreds of thousands.
AJ Bell charge 0.25% for a Lifetime ISA admin fee with various dealing charges on top. You might be interested to check out their cheaper brand aimed at more novice investors called Dodl when it comes to ISAs – could be a better option for those who want a simple range of investment and a straightforward app.
You can read our full reviews of AJ Bell Lifetime ISAs here.
Saving for the kids
AJ Bell vs Vanguard: Which is the best Junior ISA provider?
Best: Vanguard
Even the most enthusiastic parents can run out of steam when it comes to managing money for their rugrats. With a maximum contribution of £9,000 each year, and parental nerves about handing over large sums of money when they turn 18, balances tend to be smaller and investment strategies kept simpler.
Vanguard’s LifeStrategy funds popped into their Junior ISA offer a low-cost, responsible way to ‘set and forget’ a sensible investment option for your children. With minimum faff.
AJ Bell will be the better option for someone keen to either teach their children and allow them some choice (want to buy an Apple share, anyone?) or for enthusiastic grandparents who want some say in the matter.
You can read our full breakdown of AJ Bell and Vanguard Junior ISAs here and here respectively.
