Digital wealth manager Nutmeg has rebranded – casting aside its cuddly squirrel in favour of simple shapes and imagery that it says focuses “on the human stories that our investment strategy and technology are powering”.
It added that while its core vision remains unchanged – investing to a wider audience, bring transparency with a great user experience, and help people to reach their financial goals – both the business and its client base have grown.
“Our product set expanded with new investment styles and tax wrappers, new payment methods and an enhanced mobile experience. Our clients have grown up as well. Many of them have been with us for years, they are more financially confident, and Nutmeg has become part of their life, as they reach financial milestones and adapt their goals,” the company said in its explanation of its new design.
Fee transparency
What hasn’t changed, however, is the level of fee transparency that Nutmeg offers its clients. To be clear on what the charges are for their products and services, the majority of asset and wealth management companies offer a total cost or annual fee percentage figure.
Nutmeg, however, along with only a handful of others, also display this cost in pounds.
A spokesperson for the digital wealth manager told Portfolio Adviser breaking down costs this way is easier for clients.
“Percentages are difficult to comprehend if they are not round numbers – 10% of 100, for example is an easy calculation to do in your head. Traditionally, the sector hasn’t been overly clear on fees because it hasn’t had to be, a percentage is widely accepted as being enough. This might change in the future.”
“All our research indicates a huge preference for fees to be disclosed in pounds and not percentages. Wealthify and PensionBee are other examples of firms which do this,” agrees Boring Money CEO Holly Mackay.
“Sceptically, I think firms still use percentages as this is poorly understood. Our research confirms that if you show consumers fees expressed as percentages and pounds, they will say they would pay more for a service in real terms as a percent, rather than as pounds. Precisely because they don’t feel comfortable with translating percentages to pounds.”
New owner, new look
The refreshed look was inevitable following the deal announce in June 2021 that saw JP Morgan Chase acquire Nutmeg and its 140,000-strong client base that will form the bank’s digital wealth offering outside of the US.
The deal was announced at an interesting time, with robo-advice firms under fire for struggling to turn a profit and concerns as to the long-term viability of these types of firms without the financial backing of larger businesses.
In 2020, Nutmeg claimed to have reduced losses by 30% to £15.4m, down from £22m in 2019 and £18.4m in 2018.
Nutmeg launched back in 2011 and was one of the UK’s first notable robo-advice providers. It wasn’t until three years later, however, that the marketplace really took off with launches including Fiver a Day, Moola, Wealthify and UBS Smart Wealth, among others including some high street banks.
Despite support from the Financial Conduct Authority, this competitive digital marketplace didn’t last and in just five short years, UBS SmartWealth, Investec Click & Invest, Fiver a Day and Moola exited the market.
Nutmeg benefits from Covid investment boom
The question now, however, is whether they left too soon. According to Nutmeg’s chief executive, Neil Alexander, the company has benefited from the pandemic as many people found themselves with more disposable income and started to look for ways to make their money work for them.
Nutmeg’s revenue in 2020 was up by 66% and client numbers jumped by 53% to 130,000.
Mackay explains: “The bigger picture here is a fairly quick tie-up with the new Chase digital bank brand in the UK – how can you persuade cash savers to get on board and work to become their primary cash service? Then to facilitate round-ups into an ISA, and encourage consolidation of pensions?
“It’s one of those things which is a logical Power Point strategy document and bloody hard to do in practice. But the building blocks are there.”
See also: John Lewis looks to tap into DIY investing boom with Nutmeg partnership
Cutting out the jargon
While it is positive that more people are investing their money in the hope that it will grow into a substantial nest egg over time, there has been some interesting outcomes as a result.
Firstly, the Covid-19 pandemic seemingly acted as a catalyst for more men than women when it comes to turning their hand to investing, according to research by Charles Stanley.
That same study suggested that one of the main barriers for 27% of women and 20% of men was understanding the financial terminology.
The Mind the Investment Gap report, states: “Off-putting financial jargon is probably the biggest barrier of all. Well over half the people we questioned weren’t confident they understood financial terms, and this was particularly true among women.”
As a direct-to-consumer portal, cutting out the financial jargon has been one of Nutmeg’s main aims since it launched back in 2011. However, despite the refreshed look, there are still some phrases on its website that could leave new investors baffled – smart alpha, for example.
Mackay says: “Consumers do not even understand portfolio descriptors such as Conservative or Level 8, for example, so terms such as Smart Alpha are a no go. I suspect if we tested Smart Alpha with a focus group, they would think we were describing a car.”
A spokesperson from Nutmeg, explains: “We have, and continue, to look at the phrasing we use and frequently run customer testing. Currently, the clients that are invested understand how the processes work. This doesn’t mean that it won’t change in the future as we are always working on making sure we are as clear and transparent as possible.”
