Challenge

The UK is facing a huge savings gap, with 59% of adults believing they will not have enough money to live on in retirement. Despite this, people are simply not investing for the future. This may be because they feel investing is not for them, they are put off by traditionally high costs or wealth managers have not wanted to deal with them. This problem is fuelled by a significant level of financial illiteracy. As a result, the wealth management sector is perceived as profiteering and half the population (46%) does not trust financial services.

The challenge for us was this: how can we give everyone access to the kind of financial services offered to the very wealthiest in society, whether they have £5 million to invest or £500. And in doing so, how can we rebuild trust?

Action

We took the best aspects of a private wealth management service, used technology to strip out the complexity and automate previously manual services, and combined it with an investment vehicle that harnesses lower-cost but globally diversified, multi-asset investment portfolios. This allows us to offer a high-quality investment service at a fraction of the cost and to put customers – all customers – at the heart of what we do.

Traditionally, people have been frustrated by high fees and hidden charges in financial services. We are honest and transparent. All of our costs and charges, in pounds and pence, are right up front on our website, not hidden away with the full cost only becoming obvious after you invest.

We are also upfront about how portfolios perform. When a customer is signing up with us, we show them a range of possible outcomes, not just a best-case scenario. Customers can see the impact of changing their investment timeframe or risk level. And everyone can see how our portfolios are performing against the industry benchmark, right there on the homepage.

Our customers also want us to be consistent, reliable and available. Technology has hugely increased access to our services, but sometimes people need the reassurance of speaking to a person. We have a London-based customer support team, which is available over the phone, via web chat and on email five days-a-week, and more at busier times of the year.

We are also clear in what we say, knowing that too much jargon puts people off. Two of our first five employees were user experience designers and we are continually testing our website, emails and customer dashboard with our customers, to ensure they are intuitive and straightforward.

Impact

Over the last six years, Nutmeg has created a new industry in the UK and Europe, which is now seeing other providers – from start-ups and traditional wealth managers to high street banks – entering the market. We have also grown rapidly. Nutmeg was the first European online wealth manager to manage £1 billion in assets and we now manage investments for more than 60,000 people.

Our youngest customers are 18 and our oldest is 96. Approximately 35% of our customers are female, which is higher than the industry average, and nearly half of our customers are first-time investors – proving that we are on the way to democratising wealth management.

Key lesson

Do not be surprised if the industry incumbents criticise you at the beginning. We were the first online wealth manager in Europe and there were plenty of critics from the traditional wealth management industry. Now, we are seeing some of those incumbents launching their own online wealth management services, as well as the big high street banks. Challenge the status quo!