Nutmeg vs Wealthify: Private Banker International compares two of the most popular robo-advice platforms in the UK to see which can best help beginner investors make their hard-earned wealth work harder for them.
Nutmeg and Wealthify are two of the more established “robo-advisors” in the UK, founded in 2011 and 2014 respectively. Both present users with a range of portfolio options based on his or her own risk appetite and focus on low-cost investments like ETFs.
How do the two differ and which one would most help you earn a lucrative return on your savings?
Nutmeg vs Wealthify – Costs
Nutmeg and Wealthify’s fees are broadly similar, though the latter offers more tiered costs depending on the amount invested.
Nutmeg’s managed portfolio fee is 0.75% for amounts from £0-£100,000, and 0.35% for anything above.
Wealthify’s fees meanwhile start at 0.7% for portfolios of £0-£15,000, and slide down on portfolios worth £15,000+ (0.6%), £50,000+ (0.5%), and £100,000+ (0.4%).
(All figures sourced from moneytothemasses.com)
Nutmeg vs Wealthify – User Experience
Both platforms work by creating an investment plan to suit the client’s aversion to risk.
Nutmeg has 10 different portfolios ranging from “cautious” to “aggressive”, while Wealthify offers five, from “cautious” to “adventurous”.
Nutmeg’s appears the more detailed offering, assessing the user’s concern for volatility as well as an overall rating for risk tolerance.
However, Wealthify’s assessment includes questions asking for the user’s annual income, monthly expenses, amount of debt, etc. suggesting its eventual rating is the more bespoke.
Nutmeg and Wealthify are geared largely to beginners who are happy to be hands-off with their investments.
In this sense, Nutmeg and Wealthify are both well-suited, as both choose passive investments requiring little input from the end user.
However, there will be users who wish to see more room for pro-activity, in order to acquire the skills and knowledge required to become more sophisticated investors in the future.
This is where Nutmeg and Wealthify are both found wanting.
Nutmeg vs Wealthify – Advice
Nutmeg introduced a personal service in November, offering portfolio reviews and fund recommendations.
This is not, at present, offered by Wealthify. In fact, it shies away from even labeling itself a robo-advisor.
Reviews of the two apps at StockBrokers.com suggests Nutmeg slightly has the edge for its educational content. Its Nutmegonomics blog provides articles on overviews of investing and finance as well as the latest economic events.
Wealthify’s offering is comparatively basic and less frequently updated, staying true to its assertion that it does not give advice.
It’s worth mentioning that, unlike Nutmeg, Wealthify is not regulated to do so.
Nutmeg vs Wealthify – Security
In both cases, investors’ first £50,000 is protected under the Financial Services Compensation Scheme (FSCS).
The long-term safety of robo-advisors is rather clouded by their unproven profitability. Despite being the most established and popular of its kind, Nutmeg is yet to return a profit, posting losses of £12.3m in 2017.
However, no less a financial behemoth than Goldman Sachs obviously sees something in the platform. The US investment bank led a funding round of £45m in January.
Wealthify is also backed by mainstream financial players with the insurance company, Aviva, buying a majority stake in the company in 2017.
Nutmeg vs Wealthify – Conclusion
Nutmeg and Wealthify’s popularity appears well-founded as both are tailored well towards the novice investor. Even investors wishing to be more pro-active with their market dabbling may find value in these apps as a starting point.
Nutmeg is the more established platform having been around some years longer, and this is shown in that their model is the more polished. It benefits from FCA-regulation to offer personal investment advice and more detailed educational content.
This may well be something that Wealthify attains in the years ahead as it further establishes its place in the market.
Nutmeg portfolios also show overall better performance according to Boring Money.