Online wealth manager Nutmeg has simplified and reduced its yearly fees. But is it really as good as it looks?
Investment manager Nutmeg has announced significant changes to its management fees, which it claims makes them both simpler and cheaper.
The fees that you pay to invest through Nutmeg vary, depending on the size of your pot. Previously there were six fee bands. Here's how those bands looked:
|
Pot size |
Old fee level |
|
£1,000-£25,000 |
1% |
|
£25,000-£50,000 |
0.9% |
|
£50,000-£100,000 |
0.75% |
|
£100,000-£250,000 |
0.6% |
|
£250,000-£500,000 |
0.5% |
|
£500,000+ |
0.3% |
However, that has been sliced down to four. In addition the fee paid by those with smaller pots has been cut. Here's how the fees now look:
|
Pot size |
Old fee level |
|
£1,000-£25,000 |
0.95% |
|
£25,000-£100,000 |
0.75% |
|
£100,000-£500,000 |
0.5% |
|
£500,000+ |
0.3% |
Nutmeg claims that the majority of existing customers will benefit from lower fees, with its very richest clients neither better nor worse off under this new fee regime.
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What does Nutmeg do for its fees?
Regardless of how much you invest with Nutmeg, what do you get for your money?
[SPOTLIGHT]The whole selling point of Nutmeg is that it makes the investment decisions for you. The firm does this by offering an online-only investment-management service that allows customers to set multiple life goals, aligned to their risk appetites. Based on these goals, Nutmeg's software then builds low-cost portfolios – mostly using low-charging Exchange Traded Funds (ETFs) – to suit each client's specific needs.
What's more, Nutmeg designs its portfolios to be flexible, with clients able to transfer, top-up or withdraw their money as and when they choose.
Is Nutmeg right for you?
If you want to take a hands on approach to your investing, making all of the decisions about exactly where your money is going, then Nutmeg probably isn't your best bet. However, there are plenty of people who want to invest, want to build a nest egg for the future, but who either can't or don't want to do all of the necessary legwork to make the right investments. For those people, a service like Nutmeg, where the investing decisions are made for you but based on your attitude to risk, is sure to be appealing.
Nutmeg is also likely to appeal to investors who are fed up with the sky-high fees charged by other wealth managers and want to invest broadly across different markets using cheap ETFs or index-tracking funds.
Nick Hungerford, chief executive of Nutmeg, said that he remained astonished how many other financial services bamboozle their customers with multiple charges.
He added: "The only mechanism we have for guaranteeing greater returns is reducing fees. With our lower fees, customers get to keep more of their money – and even a small change in fees can have a big impact."
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