In a press release issued on October 27, 2023, Vanguard has decided to discontinue its brokerage services in Germany which was launched in 2019, to focus on its core business of providing low-cost index funds and ETFs.
Vanguard Invest’s division in Germany will be closed on November 7, 2023. This affects the Vanguard Invest investment service and Vanguard Invest Direkt. The decision to sunset these services signals a strategic reevaluation by Vanguard in response to evolving market dynamics and competitive pressures. The company states that the decision was taken due to Vanguard’s inability to reach the size necessary (in terms of number of customers) for efficient service in Germany.
As the German investment industry adjusts to this development, investors and industry professionals are left to consider the ramifications and explore alternative options for digital investment management and robo-advisory.
Whether you are a long-time client of Vanguard Invest Germany or have recently opened an account, you are probably wondering what steps you should take next to manage your investments. In fact, while the transition may initially raise concerns, it also presents an opportunity to reassess your investment strategies and explore alternative options that align with individual financial goals.
Here are the options available for Vanguard’s current clients in Germany:
You can sell your holdings and receive the sales proceeds, less tax, in the bank account you specified when you opened an investment account with Vanguard or in another bank account (you must provide the new IBAN before selling).
If you choose this option, you must sell before December 8, 2023, through the Vanguard Invest portal. You will receive your money within five to eleven days. Although this is the fastest way to receive your money, you must know that there are several factors to consider, such as market risk, if you sell during a market downturn, fees and expenses since Vanguard may charge transaction fees, redemption fees, or account closure fees for selling your holdings, and opportunity cost. Vanguard will, however, provide you with a one-off goodwill payment of 25 euros as compensation for any trading fees incurred, which you will receive after your account is closed.
You can transfer your investments to another financial services provider that offers similar investment products. These providers can be banks, asset managers, online brokers or financial institutions that provide robo-advisory services. Note that not all providers accept securities transfers, and some exclude shares of funds or ETFs from transfer. Therefore you must check with your new provider whether they will accept your funds/ETFs for a transfer before choosing them.
If you choose this option, you must send a secure message to the company via the Vanguard Invest portal with the following information: name of the new provider, information about your portfolio with the new provider, and a confirmation that the new provider accepts the funds and ETFs you currently hold with Vanguard Invest. The transfer will take around 3 weeks to be completed.
There are several robo-advisors available in Germany that offer similar investment products and services as Vanguard. Here are some alternatives to consider:
💵 Min. balance: €0
💲 Management fees: Between 0.48% and 1.20%
💰 Saving plans: Starting from €25
Quirion summary: Quirion is Germany’s first robo-advisor. It offers customized portfolios and automated investing strategies to fit your risk-return profile. The company offers many special features such as a learning center, autopilot saving, intelligent cash flow analysis and access to the Open Banking platform.
Financial advice: Yes
Automatic rebalancing: Yes
Regulators: BaFin, FMA, FINMA
Portfolios available: ETF saving plan PLUS, Global ETF portfolio, Sustainable ETF portfolio, Return for everyone, Megatrends portfolio, Cash investment and 13 other thematic strategies.
Products and Markets: Government and Corporate Bonds, Equities, ETFs, Treasury Inflation-Protected Bonds (TIPS) and Commodities.
💵 Min. balance: $50 to open an account; $500 to invest in Smart Portfolios
💲 Management fees: No fees
💰 Saving plans: Not available
eToro summary: Social trading and multi-asset brokerage platform that allows users to trade in various financial instruments. eToro offers the Smart Portfolios’ feature that enables users to create a diversified investment portfolio based on their risk tolerance, investment goals, and other preferences.
Financial advice: No
Automatic rebalancing: No
Regulators: BaFin, CySEC, ASIC, FCA, FMA, FINMA
Portfolios available: eToro’s Smart portfolios include: Top Trader Portfolios, Thematic Market Portfolios, and Partner Portfolios.
Products and Markets: Stocks, ETFs, Cryptocurrencies and CFDs on Stocks, ETFs, Commodities, Forex, Indices and Cryptocurrencies
💵 Min. balance: €25
💲 Management fees: Between 0.35% and 0.95%
💰 Saving plans: Starting from €25
Whitebox summary: Whitebox is a well-known German Robo-advisor company that combines active and passive investing strategies with automated portfolio management. The platform also offers payout plans for those looking to withdraw funds.
Financial advice: No
Automatic rebalancing: Yes
Regulators: BaFin
Portfolios available: 5 investments strategies: White box value, Whitebox Value Green, Whitebox Global, Whitebox Global Green, and Whitebox interest portfolio.
Products and Markets: Stocks, bonds, real estate (investments), ETFs and raw materials.
💵 Min. balance: €1,000
💲 Management fees: Between 0.49% and 0.75%
💰 Saving plans: Starting from €20
Scalable Capital summary: Scalable Capital is a financial technology company that offers a range of investment products and services, including robo-advisory, wealth management, and brokerage services. The company was founded in the UK, with additional offices in several other locations, including Berlin and Munich.
Financial advice: Yes
Automatic rebalancing: Yes
Regulators: BaFin, FCA
Portfolios available: Scalable Capital Growth Portfolio, Scalable Capital Income Portfolio, Scalable Capital Conservative Portfolio, Scalable Capital Balanced Portfolio, Scalable Capital Equity Portfolio, Scalable Capital Fixed Income Portfolio, Scalable Capital Real Estate Portfolio, and Scalable Capital Alternatives Portfolio
Products and Markets: Equities, Bonds, Real Estate, Alternative Investments, Commodities, ETFs, and Mutual Funds.
💵 Min. balance: €500
💲 Management fees: Between 0.38% and 0.68%
💰 Saving plans: Starting from €25
Growney summary: German fintech company that was founded in 2017 and is headquartered in Berlin. It is a robo-advisory platform that uses machine learning algorithms and data analysis to create personalized investment portfolios for its clients, considering their risk tolerance, investment goals, and time horizon.
Financial advice: Yes
Automatic rebalancing: Yes
Regulators: BaFin, FMA, FINMA, AFM, FSMA, CSSF, AMF, CONSOB, CNMV, and CMVM
Portfolios available: Conservative Portfolio, Moderate Portfolio, Growth Portfolio, Aggressive Growth Portfolio, Income Portfolio, Socially Responsible Portfolio, Impact Portfolio, Dividend Portfolio, Index Portfolio, ETF Portfolio, and Alternatives Portfolio
Products and Markets: Stocks, Bonds, ETFs, Mutual Funds, Real Estate, Alternative investments, Cryptocurrencies, and Gold and other precious metals
Vanguard's decision to stop offering its robo-advisory services in Germany represents a big development in the fintech industry. Despite this exit, Germany still has a number of other robo-advisors that provide various services and investment possibilities. These platforms are becoming more popular among German investors who are searching for accessible, affordable, and practical investment options.
Always remember to carefully evaluate your options and choose a robo-advisor that aligns with your investment goals and risk tolerance.
The portal will remain open until the end of April 2024. Make sure that you have downloaded all of the documents that are important to you by then.
If you choose to transfer your holdings to a new provider, your tax data will automatically be passed on to the new provider.
Yes, the terms of your portfolio continue to apply until you sell it.
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