Nutmeg provides United Kingdom residents with algorithmic and human financial services for multiple account types, including Lifetime Individual Savings Accounts (ISAs) which are eligible for a 25% government bonus, regular ISAs that are tax-free up to £20,000 per year, and employer-matched Personal Pensions. A Junior TSA account was added early in 2020. Nutmeg switched from fully-automated to a hybrid financial advisory in 2018, with higher investment tiers managed by human investment teams. This review is primarily concerned with the fixed allocation portfolios that are created and managed automatically, but we will touch on the other tiers as well.
Account Minimum: £100 (Lifetime ISA) to £500 (General Investment Account, Pension Plan, ISA)
Fees: 0.45% for fixed allocation (automated) tier to 0.75% for higher tiers (fully managed and socially responsible) up to £100,000 AUM, then 0.25% for fixed allocation and 0.35% for the human-managed options (all include VAT)
Automated rebalancing and dividend reinvestment
Access to financial advisors at higher tiers
Socially conscious portfolio options
Diverse account types and options
Relatively high fee for fixed allocation tier (automated)
Fixed income tier receives few services after set-up
Site marketing geared toward higher tiers
Nutmeg has a smooth, well-constructed onboarding process. You fill out a brief questionnaire that identifies goals, investment horizons, and your initial and recurring deposit levels, whether through cash, third parties, or employer contributions (for pension accounts). Once you’ve completed the questionnaire, you are asked to pick an investment style from three tiers: fixed allocation, fully managed, and socially responsible. The bottom tier is fully-automated while the other tiers feature hands-on management by a human financial team. Fees vary for each tier so you need to read the fine print in detail before making a choice.
A final onboarding page contains a simple slider with “low risk/reward” at one end and “high risk/reward at the other end. You must pick one of five risk-sensitive increments: cautious, steady, balanced, growth, or adventurous, with the choice influencing the equity and fixed income mix in the proposed asset allocation for your chosen tier. The system then outputs a graph with your asset breakdown and projected returns over the investment horizon, with upper and lower bands to adjust for market volatility.
You can review the proposed portfolio’s contents, which featured 19 equity, government bond, and corporate bond ETFs for a general investment account with a 10-year horizon in our test. This relatively high number of individual ETFs could add unexpected costs because clients are responsible for fund fees and market spreads.
Nutmeg has effective goal planning, but the goal tracking is not as well developed as you’ll find on some other platforms. New clients pick goals from a laundry list during account set-up while a resource section provides ISA and pension account calculators that offer guidance on asset levels needed to achieve financial or retirement goals. Nutmeg also offers free and paid evaluations of third party investments before account set-up, with both services doing double duty as marketing tools. A general-purpose financial blog also has content that can assist in goal planning and tracking.
Nutmeg’s portfolio allocation breakdown shows you a detailed graph with hypothetical returns for the investment horizon as well as subsequent years, providing an opportunity to tweak values to achieve those goals. That said, there’s no hand-holding, guidance, or coaching once accounts are established at the fixed allocation tier (automated) level, but fully managed and socially conscious clients can speak with financial advisors at any time.
Nutmeg’s Portfolio Review Service is an interesting add-on that lets you upload third party statements and get a free review by a member of the investment team with just a name and e-mail address. They charge £163 for a more thorough 45-minute review and interview with a financial advisor who will help the clients identify their goals.
You can set-up recurring deposits, choose cash levels, and access a broad variety of free in-house educational resources. Nutmeg will also transfer third party accounts for free upon request, although this could still generate fees at the originating brokerage. Standard account withdrawals are free but take between 3 and 7 business days to receive funds while withdrawals from ISA and personal pension accounts may incur mandatory penalties.
Nutmeg’s fixed allocation portfolio contents are standard fare for robo-advisors. Nutmeg divides asset allocations into the following 7 categories:
- Developed equities
- Emerging market equities
- Emerging market government bonds
- Developed government bonds
- Corporate bonds
- Global equities.
As mentioned, you can view different sample fixed allocation portfolios prior to setting up an account. Moving a slider through Nutmeg’s risk categories will generate different asset allocations from over 80% in bond ETFs at one end of the spectrum to 99.7% in equities (via ETFs again) at the other. If you are interested in a particular sample portfolio, you can click the allocation to see a full breakdown of the ETFs included.
Once an account is funded, the robo-advisor buys and sells fractional shares of ETFs to populate portfolios. These ETFs come from a broad variety of UK, US, and international fund sources that include Lyxor, iShares, Vanguard, PIMCO, and UBS.
All portfolios seek diversification and other elements of Modern Portfolio Theory (MPT). The fully-automated fixed allocation tier provides a diversified portfolio for you at set up and performs regular rebalancing when there is too much drift. Any dividends that are paid out by assets in your portfolio are also reinvested automatically. Support beyond that, such as coaching on increasing contributions to keep on target, is provided at the higher tiers by human advisors.
The rough breakdown of the portfolio management for the other two tiers are as follows:
- Fully managed portfolios are actively managed by a human investment team that makes regular strategic adjustments to your portfolio designed to insulate against losses and boost returns.
- Socially responsible portfolios invest in sustainable funds and are actively managed by a human investment team who again make regular strategic adjustments to your portfolio designed to insulate against losses and boost returns.
Nutmeg offers integration with Yolt, Emma, and Money Dashboard, which allow customers to see their Nutmeg ISA, Lifetime ISA, pension, general investment account, and Junior ISA balances in the apps alongside other financial products they hold.
Nutmeg offers dedicated and full-featured mobile apps for iPhone and Android operating systems, with robust account functions. The company is well-versed in mobile business delivery because it was initially launched in 2012 as an app-based robo-advisory.
Nutmeg’s website is easy to navigate, highlighting major account features, services, and disclosures. Support resources are useful and wide-ranging, with calculators and a blog with hundreds of general-purpose financial articles.
Nutmeg makes it easy for you to get your questions answered. The company phone number, e-mail address, and live chat link are listed on each page, offering easy contact with customer service representatives. There’s also a handy call back feature that allows new and prospective clients to pick an appointment time for a representative to call. Phone service hours are listed from Monday to Thursday between 8 am and 7 pm and Friday between 8 am and 4 pm. Customers can also schedule a visit to the London office.
Education & Security
Nutmeg offers free educational content in the form of resources, tools, and a blog. The well-populated blog covers a variety of educational topics in addition to market analysis based off current headlines. The Nutmeg Investor Update is a monthly content piece with a video component that summarizes some of the market news and ties it back to Nutmeg’s offering. Well extensive, the educational content would benefit from a table of contents and index with better-organized listings.
Nutmeg meets the standard security and protections for the UK industry. The site uses heavy-duty 384-bit SSL encryption. Client funds are held in segregated accounts at State Street Bank, providing protection up to £85,000. Nutmeg also provides default protection up to £50,000. The platform also offers 2-tier authentication for web and mobile accounts while mobile apps provide additional security through fingerprint and face recognition technology.
Commissions and Fees
Nutmeg’s automated fixed allocation tier charges you a 0.45% fee on the first £100,000 in assets under management, dropping to 0.25% above that level. This is a bit higher than average for the features Nutmeg offers. The fully managed and socially responsible tiers will charge you a 0.75% fee on the first £100,000 in assets, dropping to 0.35% above that level. Annual ETF fees average 0.17% for the fixed allocation tier, 0.19% for the fully managed tier, and a hefty 0.33% for the socially conscious tier. Nutmeg also estimates the average market spread at 0.07%.
Is Nutmeg a Good Fit For You?
If you are a UK resident looking to automate your investments, Nutmeg offers a solid choice at a reasonable price. Of course, there are many robo-advisors that offer MPT-based portfolios with the same automated features (and more), but many of these are designed to serve residents of the United States. Lacking the same level of competition in the UK, Nutmeg does not seem to face as much pressure to compete on fees or additional features and services. That said, it would be easier to justify Nutmeg’s slightly higher than average 0.45% fee for the automated tier if its algorithms intervened to a greater degree after your account is set-up. For the UK, however, it must be noted that Nutmeg is on the low end for fees compared to robo-advisors serving that market and only 0.1% above the US average.