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A Smarter Investment ISA is Shaking-Up the Sector

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Online wealth manager Nutmeg is going from strength to strength with its stocks and shares ISA, promising investors a simpler, more transparent investment.

Nutmeg, the brainchild of Nick Hungerford, Exeter University graduate and former employee at Barclays Wealth, has given up the day job to focus on offering a stocks and shares ISA that marries up an old financial service with new technology. Very much at the spearhead of the fintech industry, Nutmeg is committed to the development of a service everyone can use, without the hurdles and obstacles traditional wealth management firms put in place.

Discussing the project with the FT in December, the Nutmeg co-founder and CEO identified the gap he was trying to fill: “People who knew I worked in finance asked if I could manage their money. The problem was they did not have enough money to interest traditional wealth management firms, who charge extortionate fees anyway.

“Aspiring investors pondering whether to go it alone with little experience find the prospect daunting and risky. So I made a business plan for a new type of company.”

What makes Nutmeg different?

Nutmeg offers an online, low-cost stocks and shares ISA that makes it easy for first-time investors to keep track of exactly how their funds are performing. The key tenets of Nutmeg’s products are total transparency and great customer support. Users can access their investors through Nutmeg’s intuitive interface 24 hours a day and see a jargon-free overview of their investments. Importantly, they also know exactly how much they’re paying in fees.

Effective customers support is something that’s desperately lacking in a number of traditional wealth management firms, and that’s something Nutmeg aims to put right. Investors can get in touch with Nutmeg’s customer support team via ‘Nutmail’, live chat or phone, which is a level of contact traditional firms cannot rival.

One of the biggest differentiators between Nutmeg’s offering and traditional ISAs, is the £1,000 investment minimum for every fund created, which is significantly lower than most. There’s also no minimum investment period with Nutmeg’s ISAs, and investors can withdraw their funds whenever they like.

How are the ISAs set up?

The final ace in Hungerford’s pack is the way each fund is the ease of set up. A novice investor is only 10 minutes away from having a professionally managed portfolio. All investors have to do is tell the company about their financial situation, how much they want to invest, their timeframe and attitude to risk, and Nutmeg will build and manage a portfolio based on that information.

The lowest annual cost investors can end up paying is 0.6 percent a year, although costs can be higher depending on how they invest, and how much they have in their ISA.

In 2014, there were 35,000 users of the Nutmeg site, and Hungerford is aiming to treble that number by the second quarter of 2015, by expanding the product range with the recent launch of a personal pension. It’ll certainly be interesting to see how they get on.