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 75,000 active customers and, as of January 2020, £2 billion in assets under management.
Having crossed the £1 billion assets under management threshold, Nutmeg could start not only seeing profits but also expanding the breadth and quality of its service.
Should you follow the masses and choose Nutmeg as your tax-free investment provider? Keep reading for our full 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 provides 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.
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 (SIPP)
- General investment account
Your Stocks and Shares ISA, Junior ISA and personal pension are run by Nutmeg’s robo advisor. But as you might expect, you have the chance to fly free and choose your own investments with the general investment account.
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 SIPP 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.
Within your Nutmeg account, you have access to a pool over more than 1,800 electronically traded funds (ETFs). There are hundreds of thousands of ETFs available across all markets, but Nutmeg chooses 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 SIPP, 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 SIPP 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 centre 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 three different investment styles: fixed allocation portfolios, fully managed portfolios, and socially responsible portfolios.
Fixed allocation portfolios are the cheapest because you have no options and 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 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% for fully manage portfolios and 0.32% 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 SIPP 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.
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 offers three managed portfolios:
- Socially Responsible
- Fully Managed
- Fixed Allocation
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.
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
Jump up to an account value of £100,000 and you’ll spend £14.38 on a Socially Responsible 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.
A personal pension, or SIPP, 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 three 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.
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 use your general investment or Stocks & Shares ISA account as a savings account. You can add cash to the account and then invest it later. 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.
Nutmeg ISA Review
Nutmeg doesn’t offer any kind of unique value proposition. It doesn’t have obviously low fees nor is the company renowned for providing better returns.
However, Nutmeg’s ISA products do have several things working in its favour.
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.
Second, Nutmeg works well for new investors who are interested in socially responsible investing. Responsible or green portfolios are always more expensive than the cheapest fix-it-and-forget-it portfolio. However, Nutmeg’s socially responsible portfolio is priced and run largely the same way as its fully managed product, which is a relief if you want to invest with your conscious but you don’t want to sacrifice your retirement to do so.
As an added bonus, Nutmeg grants stocks and shares ISA, SIPP, or general investment account holders up to 2,500 Avios when you open a new account. If you’re into travel hacking, signing up with Nutmeg can be a quick and easy way to see a big Avios boost and help you towards your next free flight or holiday booking. (This information is correct as of June 2020. Check with Nutmeg before you sign up to see what deals are currently available.)
Nutmeg SIPP Review
Nutmeg’s pension account differs from other robo advisors because the minimum investment is high considering it’s 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 SIPP 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.
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 set up 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.
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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
- Taipei Fubon Commercial Bank
- Pentech Ventures
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?
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.
Beyond complying with the compulsory stuff, Nutmeg is well trusted and respected among both investors and the media. Nutmeg earned an 'Excellent' on TrustPilot.
Nutmeg also provides diversified portfolios, and the team oversees the fully managed and socially responsible portfolios daily. While there's no portfolio balance that can protect you from market volatility, diversified portfolios sporting ETFs fall on the low-risk end of the spectrum.
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 to Withdraw Money from Nutmeg
All you need to do to withdraw from your ISA is 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.
Conversely, an independent financial adviser has access to the entire financial market and can therefore match the best product for your situation. An independent financial adviser has extensive knowledge of all financial areas including investments, savings, insurance, pensions, tax planning and family estate management and should be registered with the Financial Conduct Authority in order to ensure ethical practice in line with your best interests.
Is Nutmeg Any Good?
Ours is unlikely the only Nutmeg review you've read so far. 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.
The 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
- PAM 2018 - Digital Wealth Solution
- Shares Awards 2017 - Best Online Investment Platform
- ETF.com Awards 2016 - Best ETF Advisor & Best Robo Advisor
- FStech Awards 2016 - Overall winner & Financial sector innovation of the year
- The Aberdeen UK Platform Awards 2015
- Online Personal Wealth Awards 2015 - Best Wealth Investment Platform
- Investment Marketing and Innovation Awards 2015- Highly Commended in the Consumer Campaign Category
- Fintech Innovation Awards 2015 - FinTech Marketing/PR Campaign of the Year & Startup or Early Stage Company of the Year
- European ETF.com Awards - Best ETF Investor 2014
- The Good Web Guide Awards 2014 - Best Finance Site of the Year
The awards collected by Nutmeg stretch right back to 2012.
Of course, awards aren't everything. So you should compare Nutmeg's performance with your other top contenders before choosing to sign up.
How to Contact Nutmeg
You can get in touch with Nutmeg in a few different ways.
If you're a current customer, you can ring customer support on 020 3598 1515. The hours are 9 -17:30 Monday to Thursday and 9-16:30 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 email@example.com
Finally, if your query is something that you want to solve in person, you can visit the London office. You'll need to ring the customer service number to make an appointment.