Nutmeg squirrels away new clients and grows AUM as investors embrace digital wealth platforms
Robo Advisor Nutmeg hit a milestone today crossing the 100,000 client threshold largely thanks to a substantial Covid related boost. Client numbers at the group rose by a heady 33% as new clients scrambled to invest in the climate of economic uncertainty, created by the pandemic.
Assets under management at Nutmeg rose from a figure of £2.0 billion prior to the Coronavirus crash to stand at £2.30 billion today
Nutmeg CEO Neil Alexander said:
“Nutmeg has benefited from these changes in consumer sentiment and behaviour with faster than anticipated growth in 2020”
“Coronavirus and the subsequent lockdown restrictions in 2020 have accelerated the adoption of digital services and fundamentally changed the way investors think about their investments and wealth management providers.”
The news of growth in both clients and assets comes just one month after Nutmeg published its 2019 accounts- they showed a loss for the year of £22.0 million pounds up substantially from 2018’s loss of £15.50 million.
One of the supposed advantages of Robo Advisors is that they should benefit from the economies of scale and synergies that their use of technology creates, quite where the tipping point for Nutmeg to do that it is remains to be seen.
One area that is growing very quickly for Nutmeg is responsible investing where the firm now has more than 20,000 accounts.
Nutmeg is one of a number of Robo Advisor startups trying to disrupt the traditional wealth and investment management spaces. The firm levies charges based on a clients portfolio value and investing style, starting at 0.75% per annum on an investment of £100,000 or less.
Whereas rivals Wealthify charge monthly fees that would average around £68.33 per month on a similar sum. Whilst MoneyBox, which has 400,000 customers, charges £1 per month plus platform fees of 0.45% per annum, with fund management fees of 0.30% pa on top of that.
There is no doubt that the market share of Robo Advisors is growing and that growth is being driven by demographic changes within the investing audience.
Research by Business Insider’s intelligence unit, published in late October, showed that around $830.0 billion is likely to be managed and invested by Robo Advisors by 2024 and that nearly a quarter of US millennials had used a digital wealth manager.
Where the US leads the UK often follows, and according to data from Statista there are approximately 12.36 million millennials in the UK so there is certainly a decent audience for the Robo Advisors to target.