I always buy my socks from John Lewis becuase you know they are going to be good quality and fairly priced. And when I say fairly priced, I don’t mean cheap. If you want cheap you’d go to Amazon, then buy cheap and buy twice. With John Lewis you get what you pay for. I have however, often said that Hargreaves Lansdown is the Waitrose of the investing fundmarkets (mainly because it can be relatively expensive and it’s just a nice place to invest), but now John Lewis are selling investments, so surely they should be the Waitrose of investing with “quality stocks, honestly priced”?
I like shopping at John Lewis because in a world where online shopping has created almost too much choice, you know that if you browse their website, they will have curated a selection of some of the best-in-class products. They’ve cut through the chaff, to present you with fewer options which makes it easier to make a decision.
And that’s what they have done with their investing service. You can invest in a general investment account, stocks and shares ISA or Junior investment ISA, through their partnership with Nutmeg. If you haven’t heard of Nutmeg, they are owned by JP Morgan, and were one of the first “digital wealth managers” or “robo-advisors” that made investing in funds easier by taking it online. You can’t buy individual stocks and shares, you just buy into a pre-made portfolios consisting of funds and ETFs which they aim to match you with by asking you a series of questions based on your investment experience and the level of risk you are prepared to take.
When I tested the account I was only given the option to invest in one of Nutmeg’s portfolios, the Social Responsible, which rather as the name suggests focusses on ethical investing. If you go direct to Nutmeg, you get three other funds to choose from. So just like shopping at John Lewis for a new set of pots and pans, they have limited the choice, so that if you just want to start investing without having to make too many decisions and have the sort of brand loyalty and trust John Lewis instills in its customers, it’s a good place to buy into a decent investment portfolio at a relatively low cost.
It’s by no means the cheapest investment account though. Nutmeg charges an annual account fee of 0.75% (and then fund fees of about 0.29%). The fees are the same if you open an account through John Lewis, so you won’t pay less if you go direct to Nutmeg. John Lewis will presumably make their money in the traditional white label way by splitting the account fees with Nutmeg. Aviva-owned Wealthify is cheaper with account charges of 0.6%, but it is on par with another big digital wealth manager Moneyfarm which charges 0.75%. Hargreaves Lansdown on the other hand charges 0.45% for fund accounts, but it’s cheaper because you have to make your own decisions on what to invest in (although there are some pre-made portfolios, and they also provide some guidance on what funds to buy (but they don’t always get it right, cough, cough Woodford)).
John Lewis Financial Services also offer a money transfer service for sending large amounts of money abroad. This is another area where trust is a massive issue because often these are used for one-off transactions for buying holiday homes abroad. These are transactions that most people are nervous about not using their bank for as funds are not as well protected. But it is ludicrously expensive to exchange currency through your bank and can sometimes cost up to 4% of the currency bought. It’s operated in much the same way as the investment accounts, where they have rebadged HiFX. HiFX, used to be one of the largest currency brokers in the UK, but has since, moved away from dealing with consumers directly and moved online (as Xe) and into whitelable partnerships. But, to be honest, when I tested it, the costs were high for an online foreign exchange service. The don’t charge a fee for transfers, but make their money on the spread between the exchange rates, which was around 0.92%, for a £100,000 GBP to EUR transfer. Because it’s all online you can’t negotiate rates, so you may be better off dealing with a traditional currency broker with cheaper exchange rates and that can also provide advice on timing and help deal with the inevitable administration issues that come with sending large amounts of money abroad. With a currency broker, you should expect a mark-up of about 0.25% to 0.35% for a transaction of that size.
But all in all, if you trust John Lewis, as millions of Brits do and don’t really want to know how the sausage is made, the investment accounts are a decent option. They are buy and hold types of investments, where the best approach is to make an initial investment followed by regular contributions and not be too involved in the process, just let the professionals make the decisions for you and get on with it in the background. Which is all a very John Lewis approach.