Vanguard vs Hargreaves Lansdown
Which provider is the best to invest with?
By Boring Money
6 Mar, 1970
Vanguard and Hargreaves Lansdown (HL) are both enormous and well-respected brands. When you look into the details, however, they're chalk and cheese.
We’ll help you understand which option will be best for your investing needs. Which is the best Stocks & Shares ISA choice? Which is best for saving up to buy your first home, or saving for the kids? And who to turn to for a private pension to boost your income in retirement?
We’ve done the research and crunched the numbers to help you decide which is the right home for your money. Scroll down to learn more about Vanguard and Hargreaves Lansdown's costs, products and who we think is the better choice to help you achieve your financial goals.
Vanguard vs Hargreaves Lansdown: Boring Money's review
Hargreaves Lansdown is the biggest DIY investment platform in the UK and is a FTSE 100 giant. Solid, stable and reliable, they are known for good customer service and have an efficient website and app. They are typically seen to offer fantastic service at a cost – their administration fee is as high as they come for mainstream ISAs and pensions. They are the Waitrose of investing – pricey, but good quality and they offer lots of choice.
Vanguard is a huge global player with an almost cult-like following amongst some for their low-cost, no nonsense style which doesn’t believe that anyone can outsmart investment markets. They buy all the biggest players and offer investors simple ready-made packages of investments, which by definition will return the average of any market. There are no flashy fund managers trying to get an edge or charge you for this. This won’t suit those who like lots of choice and building their own portfolios. It will suit those who want a hassle-free low-cost life. Their app and site is not as rich or as full as Hargreaves Lansdown and their service is not as comprehensive. But you will pay a lot less over the years and this could make a material impact on how much you end up with.
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.
Hargreaves Lansdown pros and cons
Check out the table below to get a summary of the pros and cons of investing with Hargreaves Lansdown. You can read our full review of Hargreaves Lansdown here.
Vanguard vs Hargreaves Lansdown: 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 table below to read more about our reasoning.
How do Vanguard and Hargreaves Lansdown 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 Vanguard or Hargreaves Lansdown, depending on how much you're investing.
Vanguard vs Hargreaves Lansdown: Administration costs compared
Platform | Investing £1,000 | Investing £5,000 | Investing £10,000 | Investing £20,000 | Investing £50,000 | Investing £100,000 | Investing £250,000 |
Vanguard | £1.50 | £7.50 | £15.00 | £30.00 | £75.00 | £150.00 | £375.00 |
Hargreaves Lansdown | £4.50 | £22.50 | £45.00 | £90.00 | £225.00 | £450.00 | £1,125.00 |
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.
Boring Money's Review: Vanguard vs Hargreaves Lansdown for key financial goals
Investing
Vanguard vs Hargreaves Lansdown: Which is the best Stocks & Shares ISA provider?
Best: Depends on what you want!
Vanguard has 5 so-called 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.) These can be bought inside the Vanguard ISA account and it’s a ‘set and forget’ option which is very reasonable on price. You can only buy Vanguard funds or ‘ETFs’ in their ISA so it won’t give you choice, or the ability to buy shares too, for example. But if low fees and solid, simple investment choices float your ISA boat – Vanguard wins. You will pay 0.15% for the ISA administration every year and 0.27% for the LifeStrategy fund, for example. It’s pretty compelling value.
If you are keen to learn and to build your own portfolio, or want to add some specific shares to your ISA, then Hargreaves Lansdown will support this choice. They are also hard to beat on service and the website and app work well, the customer support is very good and it remains a slick operation. So if quality of service and user experience is the most important thing, and you're happy to pay a premium for this coupled with investment choice, Hargreaves Lansdown will suit you best. The ISA administration fee is 0.45% and you could put a Vanguard fund in your ISA account at the same 0.27% fund fee, along with other investment funds which will all be individually costed by the fund managers who make them.
If you’re not sure and not a super confident investor, Vanguard will be a sensible default choice here given their lower charges.
You can read more about Stocks & Shares ISAs in our guide and see what we think of Vanguard and Hargreaves Lansdown's ISAs here and here respectively.
Retirement
Vanguard vs Hargreaves Lansdown: Which is the best SIPP provider?
Best: Depends on your investment strategy!
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 £300 a year with Vanguard. If you have £400,000, it would cost £375. The same pension held on Hargreaves Lansdown would cost you £900 and £1,500 respectively.
There are two key differences here:
Hargreaves Lansdown charge a significantly higher platform fee (3 times larger).
Hargreaves Lansdown continue charging on portfolios up to £2m, whereas Vanguard cap their charges at £375, which has the effect of no additional fees once you hold £250k or more in your pension with them.
Vanguard will almost certainly be cheaper. However, service also matters. If you are coming up to retirement in the next 5 years or at the point of decision-making, or even just moving into retirement, I think Hargreaves Lansdown will provide more help and give you a smoother path.
In summary, Vanguard will suit those with relatively simple requirements in the ‘accumulation’ phase (the saving up for retirement phase). Hargreaves Lansdown will be better for those who want investment choice and possibly those coming up to retirement in a few years who want and who value good support and choices, made easy to understand and action.
You can read more about what we think about Vanguard and Hargreaves Lansdown's SIPPs here and here respectively.
Buying your first home
Vanguard vs Hargreaves Lansdown: Which is the best Lifetime ISA provider?
Best: Hargreaves Lansdown
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.
Hargreaves Lansdown recently dropped their 0.45% platform charge down to 0.25% for LISAs which is a pretty reasonable fee for all the bells and whistles on offer at this platform giant.
You can read our full reviews of Hargreaves Lansdown's Lifetime ISAs here.
Saving for the kids
Vanguard vs Hargreaves Lansdown: Which is the best Junior ISA provider?
Best: Hargreaves Lansdown
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.
On the one hand, 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.
On the other hand, Hargreaves Lansdown make it fairly easy for family and friends to contribute towards a child’s JISA so there’s no real distinction here. But when it comes to costs, Hargreaves Lansdown have cut all fees for JISAs, making it completely free to open and hold any investments. There are no hidden fees and users still get access to all the tools and research offered by the platform. This makes HL the clear winner when it comes to JISAs. You get the service of the UK’s largest investment platform for free. Enough said!
You can read our full breakdown of Vanguard and Hargreaves Lansdown's Junior ISAs here and here respectively.
