Nutmeg expands human-led service in ongoing bid for profitability

Nutmeg expands human-led service in ongoing bid for profitability

Nutmeg's head of advice Lisa Caplan has spoken to Finextra about the continued expansion of its digital wealth management offering beyond the automated investment platform for which its known.

The UK robo-adviser launched a financial planning service in late September to provide new and existing customers with guidance about their current financial situation and plans for the future.

This is distinct from the regulated automated advisory service that has been part of Nutmeg's offering since October of last year. 

The ongoing move to a "hybrid" wealth management service may be seen as a necessary move for online investment platforms to attain profitability.

Investec, ABN Amro and UBS are among a number of high-profile players to have recently withdrawn from the robo-advisory market after attracting fewer customers than expected.

Nutmeg can boast £1.8bn of assets but saw operating losses for 2018 widen to £18.6m from £12.4 the year before, with increasing regulatory costs cited as a reason.

"The regulatory burden is different in financial planning compared to advice," Nutmeg's head of financial advice, Lisa Caplan, tells Finextra.

"It doesn't involve a recommendation about how to proceed. It's more about helping the customer understand how their financial future might play out and how it can be optimised."

The planning service may then be seen as an alternative to the FCA-approved advisory offering, which according to Caplan was not always what customers were seeking.

"When we were talking to people about the advice service, I found that what they really wanted was not a recommendation about how to invest.

"They wanted to know if they'd be secure in retirement, if they could take a career break, how they could educate their children about money, that type of thing."

The cost of a financial plan costs £275 compared to the advice service costing £575.

Nutmeg is still keen to drive the latter, only charging the difference between the two if a customer does choose to proceed from one to the other.

Caplan tells Finextra that the financial planning team has received 80 phone calls in its first month, demonstrating the work still to be done to challenge established players in this space.

Nutmeg received £45 million of funding led by Goldman Sachs and Hong Kong-based avisory firm, Convoy, in January of this year and currently has 75,000 customers worldwide. 

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