Nutmeg ‘may struggle to recruit’ for advice offering

Investment platform Nutmeg may struggle to attract staff to build its financial advice offering, according to advisers.

The firm announced last week it is seeking to enter the advice market. It plans to service clients online and via telephone, while face-to-face appointments will also be available if requested.

Nutmeg is seeking to recruit advisers to build out the service, although it has not yet confirmed how many staff the new operation will need. 

The platform is also yet to confirm the fees it will charge for advice. Its current fees range from 0.3 per cent for pots worth £500,000 or more to 1 per cent on investments between £1,000 and £25,000.

Philip J Milton & Company managing director Philip Milton says: “If Nutmeg wants to attract experienced advisers who are accustomed to earning £60,000 to £70,000 a year, it will have to charge relatively high fees. To do that it will need to attract the right number of wealthy clients, which could be a challenge.

“For customers who just want to invest in an Isa, it is always difficult to create a clear distinction between advised and non-advised services. For Nutmeg that will be even more of a test, as it has built its brand on a low-cost, execution-only service. It is not clear what makes this offering stand out against more established players.”

Yellowtail Financial Planning managing director Dennis Hall says: “Nutmeg has successfully built a business almost from scratch over a relatively short period and has a strong brand. It could fill a niche for clients who want advice from time to time.

“Telephone is likely to be the most profitable channel, while online and face-to-face could prove more challenging.”

Nutmeg chief executive Nick Hungerford says: “Nutmeg has become a trusted steward of investments for thousands of customers, focusing on our key values of low costs, ease of use and maximum transparency.

“Our customers often ask us for advice but to date we have been unable to help them as much as we would like to. This new stage in our development will enable us to help a wider range of people with a broader range of questions.”

He adds that Nutmeg is part of the solution to the advice gap created by the RDR.

Nutmeg launched in 2011 and offers users a choice of 10 investment portfolios, which primarily invest in ETFs to keep costs down.