John Lewis has entered a striking partnership with JP Morgan Chase’s digital robo-advice firm Nutmeg.
The British department store chain has launched its first investment products as it branches out from its retail roots. The services on offer include a junior ISA, a stocks and shares ISA and a general investment account, all of which align with ESG standards.
Holly Mackay, CEO at Boring Money, said that the the partnership is an interesting move, particularly after the past year saw record numbers of UK adults becoming DIY investors.
“John Lewis has been flirting with the investment industry for years and it is interesting to see the timing of this engagement, confirming that investing has now firmly moved from the City to the digital high street.”
Mackay said that a major barrier for robo-advisers is the cost of acquisition and a lack of consumer trust in smaller brands. Nutmeg’s partnership with John Lewis deals with “both headaches” as it supports customer acquisition, as well as access to one of the most recognized brands in the UK.
“It is quite valuable for Nutmeg as a badge of honour, and I suspect the terms that John Lewis have been able to negotiate will have been extremely favourable.”
See also: JP Morgan Chase strikes deal to acquire robo-adviser Nutmeg
Other retailers have tried and failed to break into investment realm
Despite Nutmeg having access to the prestigious John Lewis brand, Clive Waller, managing director at CWC Research, remains doubtful about its future success.
“Many years ago, M&S tried to launch unit trusts and they failed as investment did not appear to sell with knickers,” he said.
“I don’t see any change in behaviour today and doubt that investment will sell with sheets, towels or dining room furniture.”
Demand for savings could lure customers
The pandemic has spurred a shift in consumer attitudes towards saving.
Minesh Patel, a chartered financial planner at EAF solutions said that any partnership which increases people saving is a good idea.
A survey conducted with 2,000 UK adults by OnePoll on behalf of John Lewis found 52% of people reassessed how they spend and save. Around three quarters of people considered investing in stocks and shares rather than just putting their money into a current account.
“The pandemic has demonstrated of people of all wealth levels the importance of savings and the importance of reserves,” Patel said.
“Nutmeg are stronger with this partnership with JP Morgan, and I believe that with the large majority of population not being covered by financial advice this partnership can penetrate that market.
“For any business there has to be a balance of savings and consumption. Anything that facilitates saving in an easy format is welcome.”
John Lewis has undoubtedly been tested by the pandemic. In the last year, the retailer cut 4,000 jobs, and closed major stores in York, Peterborough and Sheffield.
