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Nutmeg Review

In this Nutmeg review, I have focused on providing you with an independent resource that can help you ascertain whether Nutmeg is the best robo-advisor for you. It is my finding that Nutmeg is excellently suited to some investors, but less so for others and I will go into this in more detail below. Please be assured that I have taken every measure to ensure the details conveyed in this Nutmeg review are my own, unbiased findings and can provide you with an impartial view of the pros and cons of this robo-advisor.

Have you tracked the growth of digital-first investment platforms in the United States? Well, the UK has its own group of online wealth managers. The leader of the pack is Nutmeg, an investment platform that marries the shiny new robo advisor platform with the trappings of a more traditional stockbroker.

Despite the fact that Nutmeg has famously never made a profit, the company continues to grow and it remains a constant in a market where robo advisors tend to shutter after a few years in business. Today, Nutmeg is the UK’s largest digital wealth manager with 130,000+ active customers and, as of the first quarter of 2021, £3 billion in assets under management.

This rapid period of growth has seen the investment platform move closer to profitability, although Nutmeg are holding their cards close to their chest and have refrained from giving an exact figure of losses in recent years.

Should you follow the masses and choose Nutmeg as your tax-free investment provider? Keep reading for our full Nutmeg review.

*SPECIAL OFFER* Nutmeg are offering 0% Portfolio Management fees for 6 Months on all new accounts. Just click the Visit Nutmeg button to get started and of course T&C’s apply.

Nutmeg Rating Summary

Overall Rating: 9/10
90%
Fees: 7/10
70%
Account opening: 9/10
90%
Deposit and withdrawal: 10/10
100%
Trading platform: 8/10
80%
Markets and products: 10/10
100%
Research: 7/10
70%
Customer service: 10/10
100%
Education: 7/10
70%

Pros

Leading UK Robo Advisor with expertly designed portfolios to choose from
Independently owned resulting in a greater choice of assets and securities
No set-up fees, trading fees, transaction fees or exit fees
Full transparency on fees and performance backed by excellent customer service
0% Portfolio Management fees for 6 Months on all new accounts

Cons

Fees higher than other stockbrokers
No relief for accounts over £1 million
Minimum investment fees for each account

Nutmeg Review

Their fees are a little higher than some stockbrokers but their pricing structure is simple and easy to understand. Nutmeg may also not be the best option if you like to be in full control of where your investments are held. Nevertheless, it is the perfect choice for people who don’t have hours upon hours to spend researching tracker funds and instead just want to start putting some cash away for their future.

They have a wealth of blog posts and tutorials to familiarise users with all the lingo when it comes to investments and provide useful tools for calculating how much your money could be worth in the next decade.

Nutmeg is available on both iOS and android and you can get signed up in just a few minutes.

Product Range

Nutmeg offers investors simplified products that include UK tax-free investments and a general investment account.

When you create an account with Nutmeg, you can invest in a:

  • Stocks and Shares ISA
  • Lifetime ISA
  • Junior ISA
  • Personal Pension
  • General investment account

Your Stocks and Shares ISA, Junior ISA, and personal pension are run by Nutmeg’s robo advisor.

If you have a keen interest in investing and a fair amount of money left over at the end of each month to stick in the market, platforms that offer both tax-wrapper accounts and general investment accounts are an excellent choice. You can max out your annual tax-free contributions in your ISA and Personal Pension and then use your general investment account once you meet your limit. Because they’re offered by the same provider, you only need to learn and use one platform, which saves you time and even costly mistakes.

There are hundreds of thousands of ETFs available across all markets, which is why the Nutmeg experts choose the funds it believes represent the best in class for each asset class, industry, or region.

Because Nutmeg is independently owned, it can fill its investment portfolios with the assets and securities it deems to be most in line with its investment strategy without ties to a service provider. This differs from providers like Vanguard. For example, Vanguard can only sell Vanguard ETFs, which limits your investment choice.

While you won’t choose your own ETFs within a Nutmeg Stocks and Shares ISA or Personal Pension, you can be more confident that your portfolio will contain a mix of investments that serve you rather than the provider.

Research Services & Tools

People know Nutmeg for its simplified approach to investing. It goes without saying that the charts and tools it provides are also going to be simple. After all, you don’t have much of an option to make use of complicated tools, particularly if you stick to the ISA or Personal Pension accounts.

Instead of charts and graphs, Nutmeg provides more general tools for financial planning and gives you the option to sort through the tools based on your existing knowledge.

The knowledge center reflects typical Nutmeg customers’ need to learn more about basic personal finance and investing topics rather than in-depth market knowledge. Even if you select the “I really know my stuff” option, Nutmeg directs you more towards its philosophies and strategies than to in-depth tools and learning.

One thing that does set Nutmeg apart from other robo advisers is the new financial advice system. All Nutmeg investors enjoy a 15-minute phone consultation with a member of the Nutmeg team. The conversation will either direct you towards seeking more financial advice or satisfy your basic questions.

The financial adviser packages are priced at £575 and include:

  • A review of your finances
  • An in-depth discussion of your goals
  • A review of your existing investments and retirement accounts
  • Retirement planning
  • Investment, pension, and tax advice

Nutmeg Fees & Charges

Nutmeg uses a sliding fee scale based on four different investment styles: Fully Managed, Smart Alpha, Socially Responsible, and Fixed Allocation portfolios.

In the table below you can see the fee charges based on an initial investment example of £5,000.
Nutmeg Fees

Fixed allocation portfolios are the cheapest because of the low touch approach taken, as Nutmeg doesn’t need to service them as frequently. The annual fees for fixed allocation portfolios include:

  • 0.45% up to £100k
  • 0.25% beyond £100k

You also pay investment fund costs to the fund providers. Fixed allocation costs are an average of 0.17% per annum.

A fully managed or socially responsible portfolio costs significantly more than the basic portfolio:

  • 0.75% up to £100k
  • 0.35% beyond £100k

The additional costs paid to fund providers include 0.19% (on average) for fully manage portfolios and 0.32% (on average) for socially responsible portfolios.

It’s important to note that there’s no relief for accounts with over £1 million in assets. Standard practice among investment providers is to stop charging management fees bonds once they meet the £1 million threshold. Nutmeg doesn’t do this, and it’s not clear whether it chooses not to or whether the typical Nutmeg investor never reaches a point where their account is worth £1 million.

Management fees are a standard charge across any investment platform that isn’t a barebones stockbroker. You won’t find a platform that doesn’t charge them unless you manage your own portfolios entirely. However, Nutmeg did axe other charges still found among some legacy institutions. When you invest with Nutmeg, you pay no:

  • Set-up fees
  • Trading fees
  • Transaction fees
  • Exit fees

That means you can take your ISA or Personal Pension to another provider without paying a hefty fee to get your money out. Although it’s an outdated practice, there are a few investment providers who do still charge exit fees, so they’re always worth looking out for before you sign up. There’s nothing like pulling your money from a poorly performing portfolio only to take out less than what you invested as a result of exit fees.

Is Nutmeg better than Moneybox?

I’ve taken a moment to compare Nutmeg’s fees with those of Moneybox and Wealthify so you can get an indication of where they stand in terms of cost in the marketplace*.

Provider Cost of investing £10,000 Cost of investing £100,000 Cost of investing £1 million
Nutmeg £100 £600 £6,000
Moneybox £87 £762 £7,512
Wealthify £82 £820 £8,200

* Costs correct at the time of writing this review

Nutmeg Stocks and Shares ISA

The Nutmeg Stocks & Shares ISA is the ‘tax-efficient’ investment account that allows you to earn money tax-free on up to £20,000 worth of deposits each year.

Nutmeg ISA Review

First, Nutmeg launched in 2011, and it has a long-term track record that you can use when assessing the performance of Nutmeg investment portfolios. History is important when comparing Nutmeg with newcomers. A new provider may demonstrate better returns in its first two years of trading, but you have a better idea of how well your accounts will perform over 5 years or 10 years, which is a much better indicator of how stable a provider is.

Nutmeg offers four managed portfolio types each offering different risk levels:

  • Socially Responsible
  • Fully Managed
  • Fixed Allocation
  • Smart Alpha Portfolios

The Socially Responsible ISA is the top-tier product. Because it invests in ETFs, it’s diverse. Nutmeg also regularly rebalances it for performance, and it’s proactively managed. The combination of regular management with the social responsibility focus does mean it’s the most expensive of the three.

What does ‘socially responsible’ mean to Nutmeg? Nutmeg offers 10 socially responsible portfolios chosen by the team using thousands of data points on issues related to environmental, social, and governance (ESG) principles. You can learn more about Nutmeg’s approach both on its website and in a series of white papers.

The Fully Managed Account offers the same benefits as the Socially Responsible account, but there’s no social responsibility focus. So if you’re not bothered where your money goes, you can save a fair bit by choosing this ISA.

The Fixed Allocation portfolio offers diversity and the same access to ETFs but it doesn’t benefit from proactive management.

New Smart Alpha Portfolios 

Nutmeg have collaborated with J.P. Morgan Asset Management to create a set of investment portfolios that bring the power of J.P. Morgan Asset Management’s market insights and deep research expertise while maintaining the same level of transparency and control seen across all Nutmeg investment styles. The Smart Alpha portfolios are not available for Personal Pensions but can be accessed via the ISA and General Investment Account types.

You can learn more about Nutmeg’s Smart Alpha portfolio range, powered by J.P. Morgan Asset Management in the video below.

Nutmeg Launches Smart Alpha Portfolios, Powered by J.P. Morgan Asset Management

 

What kind of difference do the fees make? They’re substantial. Nutmeg’s fee calculator shows that if you invest £5,000, the fee per week for each account is as follows:

  • Socially Responsible: £0.72 per week
  • Fully Managed – £0.72 per week
  • Fixed Allocation – £0.43 per week
  • Smart Alpha – £0.72 per week

Jump up to an account value of £100,000 and you’ll spend £14.38 on a Socially Responsible, Smart Alpha or Fully Managed account and only £8.63 per week on a Fixed Allocation style.

Unlike other providers, like Scottish Friendly, Nutmeg makes its fees transparent and demonstrates the difference they make in a way that’s easily digestible. You can adjust its fees calculator to see exactly what fees you might pay on your deposit schedule. Nutmeg’s easy-to-use website makes it clear what you will pay and when before you hand over your debit card details.

As an added bonus, Nutmeg are currently offering 0% Portfolio Management fees for 6 Months on all new accounts and of course, some T&C’s apply.

Nutmeg Personal Pension

A personal pension is another tax-efficient investment that you would do well to avail of before investing in the market through a general investment account.

Each pension is designed by Nutmeg’s investment team, and different portfolios cater to your chosen investment style and needs.

As with the ISA, you have the option to choose between four investment portfolios:

  • Socially Responsible
  • Fully Managed
  • Fixed Allocation

The same rules generally apply to the pension Fixed Allocation portfolio and Fully Managed portfolios as they do to the versions held under the ISA.

The Fixed Allocation portfolio offers a diverse investment with a range of ETFs and caters to your risk level. Choosing a Fully Managed portfolio grants you access to a portfolio that’s looked after by Nutmeg’s investment team. The Socially Responsible portfolio gives you all those benefits plus an emphasis on socially responsible assets.

Nutmeg Personal Pension

Nutmeg’s personal pension account differs from other robo advisors because the minimum investment is high considering its low-cost, low-maintenance position.

You can only start a Nutmeg pension with a £500 initial deposit, which knocks out the section of the market interested in starting their own pension for the first time. However, you may enjoy better rates compared to low-cost competitors. It’s worth comparing the rates of your preferred platforms to see whether it’s not worth saving the first £500 before opening an account.

Nutmeg’s Personal Pension product benefits from the same advantages as its Stocks & Shares ISA. The platform is easy to use, based on your personal goals and risk appetite. And you’ll get the benefit of a Fully Managed portfolio at a cost that’s far below what you would find at a full-service firm.

Nutmeg Fully Managed vs Smart Alpha

The Nutmeg Smart Alpha portfolio range is their most recent addition, launched in November 2020 in association with J.P Morgan Asset Management. This includes five portfolios that each consist of between 10 and 14 passive and active exchange-traded funds. 

The Smart Alpha portfolio range is designed with the intention to achieve alpha returns beyond the market for investors, although being such a recent offering there is little data at present to support this. However, the involvement of J.P Morgan’s multi-asset specialists will support the flexible asset allocation within the portfolio range and this is certainly worth consideration.

The Fully Managed Portfolios offer investors 10 choices at varying risk levels and much like the Smart Alpha are consistently adapted to take advantage of opportunities as they arise. 

Both ranges of portfolios are comprised of ETFs offering diversification, and both ranges share the same fees. However, for investors who like to give consideration to ESG principles in their investment decisions, this is incorporated into the Smart Alpha range. I think the major consideration for investors choosing between the two ranges is that the Smart Alpha portfolio is currently not available using the Nutmeg Personal Pension. 

Opening an Account

The process of opening a Nutmeg account is generally the same between the investment types. There are no setup or exit fees, and you can complete the whole process online. Nutmeg has excellent customer support to help you out if you get stuck along the way.

When you set up your account, you’re providing the details Nutmeg will use to create your portfolio. You need to provide your goals and risk appetite that make the most sense for you.

However, unlike other robo providers and low-cost investment platforms, there are minimum investment fees for each account. These include:

  • £100 for Junior ISA
  • £100 Lifetime ISA
  • £500 Stocks & Shares ISA
  • £500 for pension
  • £500 for general investment

As of June 2020, Nutmeg gives you the option to add cash to be invested later to your General Investment or Stocks & Shares ISA account. The option probably exists to attract new investors to the platform and help it keep its cash flow up even in the face of volatile markets created by both the Covid-19 pandemic and political instability in the UK and abroad. However, doing so does rob you of the option to earn any money on your savings.

In some cases, you might be better served opening an account with another provider and then transferring your accounts to Nutmeg once you meet the minimum deposit contributions. Because Nutmeg isn’t a bank, you’re not going to earn any interest on the cash sitting in your account.

Transferring Your Investments to Nutmeg

Transferring your investments to Nutmeg is straightforward. Once you create your Nutmeg account, you can provide your current investment account details to initiate the transfer.

In most cases, Nutmeg arranges an electronic ISA transfer with your current provider.

The process usually takes 5-30 days depending on your existing provider.

Unlike other providers, like Bestinvest, Nutmeg doesn’t cover any transfer fees. If your existing provider charges you money to leave your account, you are responsible for eating the cost.

Customer Service

A quick hunt around the website suggests that Nutmeg provides great customer service, particularly given the fact that it’s a robo investor.

The customer care team offers an online chat function that caters to new clients (for account setup troubleshooting) and existing clients.

Nutmeg also offers an email option for more complex issues.

Nutmeg’s Trustpilot profile suggests that people are generally happy with the service Nutmeg provides.

Who is Nutmeg Suitable for?

Nutmeg suits investors and savers ready to commit to their tax-wrapper products but who want a low maintenance option.

Although the provider’s fees are mostly in line with the low-cost platform standard, the high account minimums rule out anyone hoping to start their account with a bit of extra cash or £50 a month.

If you’re ready to get serious about saving but you’re more interested in the hands-off robo advisor approach, then Nutmeg should make it onto your list of potential platforms.

Nutmeg is available to UK residents with the exception of U.S. nationals (even dual citizens). The U.S. Internal Revenue Service’s reporting requirements make American citizens (even accidental Americans) persona non-grata.

Nutmeg FAQs

Who owns Nutmeg?

Founded by Nick Hungerford in 2011, Nutmeg is an independent company owned by its shareholders, which include:
Goldman Sachs Principal Strategic Investments, Convoy, Taipei Fubon Commercial Bank, Balderton, Pentech Ventures and Schroders.

Nutmeg hasn’t been bought or sold since it began trading. It’s also one of the longest-running robo advisors in the UK. It’s longevity counts for something in a market where these kinds of advisors are known for folding.

How safe is Nutmeg?

As safe as any other financial services business in the UK. Nutmeg is authorised to operate in the UK by the Financial Conduct Authority, which means the company follows all UK regulations. When you invest in Nutmeg, your assets are protected by the Financial Services Compensation Scheme (FSCS). FSCS protection means your account balance is protected in the event that Nutmeg goes bust.

How do I close my account at Nutmeg?

Closing your account is straightforward. First, you need to either request a withdrawal or provide your account details to your new provider if you want to close your account to switch providers.

Once you withdraw, you can send the request to close your account through the Nutmail function on your dashboard. It may take up to six months to fully close the account because you need to wait for the final payments of any interest income or dividends owed to you from your investments.

If you have more questions, it’s probably easier to direct your request to the Customer Engagement Team over the phone.

How do I withdraw money from Nutmeg

To withdraw from your Nutmeg ISA you need to make a withdrawal request within your account. Nutmeg doesn’t charge for withdrawals on your Stocks and Shares ISA or any other account. Withdrawals take 3-7 business days because Nutmeg sells investments on a twice-weekly cycle.
However, you should remember there are government penalties for withdrawing from a Lifetime ISA.

Is Nutmeg any good?

Yes. Their awards speak volumes. While most reviews are positive and there’s a general consensus that Nutmeg is one of the best low-cost investment providers in the UK, it’s also worth noting that Nutmeg also regularly wins awards, particularly for its Stocks & Shares ISA.

Nutmeg company won YourMoney.com’s Best Online Stocks & Shares ISA provider for five years in a row.
In the past, Nutmeg won a long list of awards including: Platform Awards 2018 – Best Digital Wealth Manager

Of course, awards aren’t everything. So you should compare Nutmeg’s performance with your other top contenders before choosing to sign up.

How do I contact Nutmeg?

If you’re a current customer, you can ring customer support on 020 3598 1515. The hours are 09:00-17:30 Monday to Thursday and 09:00-16:30 on Friday. The customer support team is based in London. Nutmeg’s live chat feature runs the same hours.
If you’re a customer, you can also use the Nutmail function once logged into your account.
For other enquiries, you can email support@nutmeg.com

Which is better Wealthify or Nutmeg?

These are two very similar offerings in the marketplace. For small investment amounts, Wealthify did work out slightly cheaper, although this was reversed as soon as you started investing over £100,000. In terms of what’s on offer, Nutmeg pull ahead of the game with their LISA and their investment advice which are currently unavailable to investors using Wealthify.

4 Comments. Leave new

  • The Fully Managed and Smart Alpha ISAs carry the same fees – how do you choose between them? What has been the measurable performance to date of each?
    Thanks

    Reply
    • Peter Field
      24/02/2021 8:38 am

      Hi Steve

      Within each of those portfolio there are sub-portfolios that have different risk profiles to suit your level of risk, on the website you can see the past performance of each sub-portfolio as well as the asset allocation by sector and country.
      If you click these links and scroll down the page you will find what you are looking for
      Fixed Allocation Portfolios
      Fully Managed Portfolios

      Safe Investing!
      Peter

      Reply
  • George Morley
    21/02/2021 1:26 am

    In the Nutmeg FAQs you state: “When you invest in Nutmeg, your assets are protected by the Financial Services Compensation Scheme (FSCS). FSCS protection means your account balance is protected in the event that Nutmeg goes bust.”.

    If my account balance is £285,000 and Nutmeg goes bust, the FSCS protection is only good for £85,000, so I then lose £200,000. Isn’t this the case?

    Reply
    • Peter Field
      21/02/2021 5:09 pm

      Hi George

      This is a great question and one you should always look into before opening an account with anyone.

      Nutmeg doesn’t actually hold any of your money, instead this is what happens:
      1) All assets are managed by StateStreet as you can see from the Wikipedia they have 3 Trillion USD under direct management and over 35 Trillion USD in assets under custodial management. All assets held with StateStreet are held in a segregated account (more on this in a moment)
      2) All cash is held by Barclays bank again all cash is held in a segregated account

      So, what happens if something goes horribly wrong and StateStreet or Barclays run into trouble? Well because your assets and cash are held in segregated accounts, the accounts don’t belong to StateStreet/Barclays and will be transferred to another assets manager/bank, you would be kept informed and would have full access.

      For more specific questions I would highly recommend speaking with Nutmeg support who we find to be super helpful.

      Safe Investing!
      Peter

      Reply

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