Robo advisors are increasingly growing in popularity, and these automated services are threatening to take huge amounts of business away from traditional financial advisors.
Multiple different segments of the investing public have already taken advantage of robo advisors for a variety of reasons. Many traditional financial advisors have decided to work cooperatively with robo advisors rather than try to compete with them directly, and this strategy has helped streamline the process and reduce costs.
Millennials use robo advisors because they remove the perceived “guess work” out of investing, which provides a measure of comfort to hesitant millennial investors. And often, robo advisors offer cheaper fees than human advisors, which also makes them attractive to this group.
And retirees and high net worth individuals can often test robo advisors because they have more disposable income.
But which robo advisor should you use?
To help you narrow down the choices, BI Intelligence, Business Insider’s premium research service, has decided to review some of the most popular robo advisors on the market to help you make the most informed decision.
In this article, we’ll cover Nutmeg.
Nutmeg Review Summary
Fees & Pricing
AUM, Returns, & Portfolio Performance
Nutmeg Review Summary
Nutmeg is the U.K.’s largest robo advisor. Nutmeg offers Individual Savings Accounts (ISAs), an investment type created by the U.K. government that provides tax-free allowances. Furthermore, the robo advisor provides pension accounts. As a result, Nutmeg is a terrific option for those who are looking toward retirement. However, the company’s fee structure and minimum account requirements could dissuade more skittish investors.
Assets Under Management (AUM): £600 million
Minimum Account Balance: £500 to £5,000
Fee Range: 0.25% to 0.75%, plus underlying fund costs at an average of 0.19%
Account Types: Individual Savings Accounts (ISAs), Pension Accounts
Services: Portfolio Rebalancing, Dividend Reinvesting
Nutmeg Fees & Pricing
Nutmeg’s management fee structure is simple. The larger your account balance, the lower the fee. Consult the chart below for a quick reference on each of its account types:
Fully Managed Portfolio
Fixed Allocation Portfolio
More than £100,000
And both account types carry underlying fund costs at an average of a 0.19% fee.
Nutmeg’s minimum account requirement is also different for ISAs and pension accounts. For ISAs, customers must make an initial deposit of £500 with a monthly contribution of £100 if your account balance is below £5,000. For pension accounts, the initial deposit must be £5,000.
Nutmeg AUM, Returns, & Portfolio Performance
As stated earlier, Nutmeg has £600 million in assets under management, which makes it the largest robo advisor in the U.K. over competitors such as Moneyfarm and Scalable Capital.
As for returns and portfolio performance, let’s start with a £5,000 balance in an ISA, which eliminates the need for monthly deposits. Nutmeg predicts that over 20 years, your account would grow to £11,609, an increase of 132.18%. By comparison, a high street bank cash ISA would result in a balance of £9,293 in that same period, an increase of 85.86%.
Furthermore, the government gives basic rate taxpayers in the U.K. 25% of any contributions they make to their …read more
Source:: Business Insider