Nutmeg vs Scalable Capital vs Moneyfarm

kootchikokote

Can anyone recommend an investment platform? I found Nutmeg, Scalable Capital and Moneyfarm I'm not sure what's the difference between them

jimjames

Can you explain why you've chosen those 3? I've no idea of the difference between them as 2 of the 3 are complete unknowns.

I've only ever heard of Nutmeg and you've missed out some of the biggest names like HL, Fidelity.

bowlhead99

All three of them are 'robo advisors' where they attempt to profile your risk preference based on some simple questions and then construct a portfolio of assets (using ETFs) based on the bucket they put you in, and then juggle the asset mix over time (discretionary management) in an attempt to get good returns appropriate for your risk category.

Nutmeg has been going for a few years while the other two are new to the UK market having been overseas for a limited time first. They each have slightly different pricing and of course it is not possible to see if the cheapest is the best because none of them has been going long enough to show you their five year track records for the various risk classes let alone a full economic cycle or two (10-20 years)

Nutmeg claim their returns for all risk categories (3 to 10 out of 10) have beaten an unnamed 'competitor' over the last 3.25 years since they've been going. They say that their fee of between 0.3% and 0.9% depending on how much you invest compares very favourably to a 'typical' discretionary wealth manager charging 1.24%. And that their costs plus the average 0.2% ETF cost to which you'd be exposed will be much better than the average UK active fund investor paying 1.58%for a fund all in.

Of course, non-robo advisors would say that 1.58% annual cost as a comparator is a joke, and any client with a reasonable portfolio size would pay less than that for a typical portfolio, while getting actual advice rather than a robot pigeon-holed allocation. They would accuse Nutmeg et al of providing very limited 'advice' while charging full-service fees. And those investors that don't have sufficient cash to get proper advice can typically find a multi-asset or fund-of-fund solution for less than 1.58% too.

However, clearly there is some market for robo-advice in the middle ground between the very small investor that doesn't need to waste any money on any kind of advice, and the £100k investor that can get real face to face advice ongoing for half a percent a year after an initial consultation.

Eco_Miser

You could look here. Have a read round the rest of the Monevator site too, for opinion on various investment strategies and other stuff.

dunstonh

None of them are platforms. They are a mid-way house between advice and DIY. (full advice, robo-advice and DIY).

They are not as cheap as they market themselves to be. Often advisers can match or beat them on full service and DIY can easily beat them. There is a market for it but it is very small (indeed, Nutmeg is no bigger than a single local IFA firm with 2-3 advisers - other than its debt and losses which are significant compared to its turnover)

TheTracker

Next Christmas the iPod will be dead, finished, gone, kaput. – Sir Alan Sugar, 2005

"I think there is a world market for maybe five computers." – Thomas Watson, chairman of IBM, 1943

"The horse is here to stay but the automobile is only a novelty—a fad." – -The president of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor Co., 1903


"There is a market for (robo advice) but it is very small" - dunstonh 2016

dunstonh

"There is a market for (robo advice) but it is very small" - dunstonh 2016

How would you describe the current market for robo-advice only firms when one of the leaders in the field only has a turnover of £635,381 and made a pre-tax loss of £5.3 million?

If one of the leaders has a turnover equivalent to a small local IFA firm, then the market cannot, at this time, be considered anything other than small. It will certainly grow. Especially when the FCA lighten up on the regulation for it. However, it is small at this time. My prediction in the end is that full advice will continue to contract and robo-advice will become the norm but not in the format it is currently presented as (which is not really advice but self select from a menu). The big players will not likely be the ones that are in it now. The big ones will not be that cost effective either in the end. They rarely are.

jimjames

TheTracker wrote: »

Next Christmas the iPod will be dead, finished, gone, kaput. – Sir Alan Sugar, 2005

It might not have been quite that soon but how many iPods are now being sold? Apple don't even report them separately now.

Having said that I do think there is a market for automated advice based on the numbers here who are outside the scope of IFAs.

masonic

SimonScalable wrote: »

I won’t comment on what others do but allow me to tell you a little about what we do

...erm, no. Go buy advertising space on someone else's website. Spam reported.

Vortigern

SimonScalable wrote: »

I am one of the UK co-founders of Scalable Capital.

and Kootchikokote is the other?

TheTracker

dunstonh wrote: »

How would you describe the current market for robo-advice only firms when one of the leaders in the field only has a turnover of £635,381 and made a pre-tax loss of £5.3 million?

If one of leaders has a turnover equivalent to a small local IFA firm, then the market cannot, at this time, be considered anything other than small. It will certainly grow. Especially when the FCA lighten up on the regulation for it. However, it is small at this time. My prediction in the end is that full advice will continue to contract and robo-advice will become the norm but not in the format it is currently presented as (which is not really advice but self select from a menu). The big players will not likely be the ones that are in it now. The big ones will not be that cost effective either in the end. They rarely are.

Gotcha and agreed. Perhaps 'market share' would have been a better claim as I read it differently.

FWIW I think IFAs will become robo-drivers, feeding accurate personal risk reviews (what people are good at) into algorithms that match risk attributes to investments (what computers are good at).