The rumor has been causing concern in financial circles for some time.

Today, the second-largest asset manager in the world is getting serious: he is starting direct sales of his index funds for German private customers via a digital investment platform - and thus bypassing the usual route via banks or brokers.

The Vanguard Invest investment service initially starts with digital investment advice, which is commonly known as a robo-adviser.

Customers only have to answer a few questions and then, depending on their risk appetite and investment ideas, they are given a portfolio of different index funds.

Tim Kanning

Editor in Business.

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But it shouldn't stop there.

"We also want to open the platform this year for customers who want to put their portfolio together themselves," says Jesper Wahrendorf, head of Vanguard Invest in an interview with the FAZ. Initially, only 13 Vanguard equity and bond funds are available in the Robo-Adviser , investors should later be able to choose from all 36 products approved in Germany.

It is the first time that a major provider of index funds sells its products directly to end customers, bypassing banks and online brokers without further ado.

Big ship with 8 trillion dollars

Vanguard is a real heavyweight in the industry, with $8 trillion in assets under management, the wealth manager is number two in the world behind Blackrock.

Index funds, which are popular with investors today, especially in their exchange-traded version as ETFs, were once invented by society.

In Germany, however, Vanguard has only been on the market since 2017, so that it is not as well known here as Blackrock's iShares or the Xtrackers brand from Deutsche Bank.

Vanguard Invest is set to change that.

"In Germany, the long-established house banks have a very large market power," says Wahrendorf.

"Sparkassen, Volksbanken, but also a Deutsche Bank all have their own fund companies." Not easy terrain for a newcomer to enter the market, especially if you explicitly advocate not paying any commissions.

The fund company intends to continue the existing cooperation with conventional banks.

But with the new investment platform, it has now built up a sales channel in which the entire value chain is in-house.

To do this, Vanguard had to apply for a license as a securities institute from the German banking supervisory authority Bafin, as Wahrendorf explains.

"No robots work for us"

There are many robo-advisers on the German market.

The best known include Scalable Capital, Cominvest or Liquid.

Some time ago, Deutsche Bank launched Robin.

How does Vanguard intend to set itself apart?

"I have a hard time with the term robo-adviser because we don't have any robots," says Wahrendorf.

"Here are real people with many years of expertise and experience in asset allocation and portfolio management." Investors should also be able to call Vanguard if they have any questions about investing.

In terms of costs, Vanguard moves in the broadly diversified market environment, depending on the investment amount.

In addition to the "all-in service fee" of 0.65 percent, an average of 0.15 percent fund fees should be added.

The new investment platform is not intended to become another online broker.

Rather, via Vanguard Invest, investors should gradually build up a fortune through long-term investments.

according to the motto: put it on once and leave it.

Savings plans with minimum installments of 25 euros can also be saved there.

Therefore there will be no trading app for the hand, but primarily an offer for the computer browser.

"Big decisions need a big screen," says Wahrendorf.

“Our goal is not for the customer to just buy and sell as much as possible on the S-Bahn.

He should build up a fortune with us in a well-considered manner.” There should also be an app.

In the, however, the customer can only check his current portfolio status.

That's why Vanguard also explicitly points out that the investment platform works with index funds, but not with exchange-traded ETFs.

Vanguard has already gained experience with similar offers in other markets.

According to the company, the Personal Advisers Service manages 275 billion dollars in its home market of America.

In the UK, clients have entrusted £11.8 billion to Personal Investing.

Despite this previous experience in the group, the German product was redesigned from the ground up, says Wahrendorf, who had managed the hire purchase fintech Ratepay for ten years before moving to Vanguard in autumn 2020.

Before that, he worked for the Otto Group and set up a furniture shipping company that was supposed to work with as few middlemen as possible: the furniture should be delivered as directly as possible from the container to the customer's living room, as he explains.

So history is repeating itself to a certain extent for Wahrendorf: index funds are now available almost directly from the producer;

the supermarket Bank is simply bypassed.

Vanguard can do this because the asset manager covers the entire range itself.

The investment robot can initially select from six equity index funds that focus on America, Europe, emerging markets, Japan, the Pacific region or small stocks from all over the world.

There are also seven bond ETFs that have different risk characteristics depending on the origin, type and term of the securities they contain.

Initially, Wahrendorf did not name any concrete goals in terms of customer numbers or the sums that one wants to attract.

"Our first goal is to get as many customers on board as possible and to learn from them, and accordingly to continuously optimize and expand the offer."