Nutmeg - No Platform Fees

Picard91

Evening All,

Just wondered if anybody knew whether or not the referral with no platform fees from MoneySavingsExpert includes the management fee?

https://www.moneysavingexpert.com/savings/stocks-shares-isas/#nutmeg

I have a referal link from a friend with 6 months no management fee, however MoneySavingsExpert is 1 year no platform fees.

To me, Platform Fees is inclusive of management fees?

ffacoffipawb

Picard91 wrote: »

Evening All,

Just wondered if anybody knew whether or not the referral with no platform fees from MoneySavingsExpert includes the management fee?

https://www.moneysavingexpert.com/savings/stocks-shares-isas/#nutmeg

I have a referal link from a friend with 6 months no management fee, however MoneySavingsExpert is 1 year no platform fees.

To me, Platform Fees is inclusive of management fees?

I would say the management fees (e.g fund charges) were separate from the platform fees and that it is only the latter that is temporarily waived.

SonOf

Nutmeg is not a platform. So, it doesn't have platform fees. However, if it sells more because you call it something fashionable when it isn't then I suppose anything goes. Not sure if this is Nutmeg's fault or MSE. The MSE article is certainly very loose on the terminology.

To me, Platform Fees is inclusive of management fees?

They are not. The product fee is in addition to the investment charges.

Picard91

hmmm so the question is.. which is a better deal?

Can i contact anyone on MSE that will know what there articles deal actually entails?

Alexland

Assuming its just terminology and they are both talking about the same fee then the 1 year no-fee is better for you however your friend would probably get an incentive for referring you into the 6 month no-fee deal.

If you want to invest for the long term then Nutmeg are unnecessarily expensive compared to DIY platforms.

Alex

bowlhead99

Picard91 wrote: »

hmmm so the question is.. which is a better deal?

Can i contact anyone on MSE that will know what there articles deal actually entails?

It seems pretty clear to me.

"you'll pay no platform fees for the first year. After a year the fees will revert to 0.45% up to £100,000, and 0.25% after that for its fixed allocation portfolio"

Assuming under £100k is being invested: at Nutmeg with the fixed allocation portfolio you pay the 0.45% to Nutmeg and then you pay the costs of the actual funds you access (such costs will be taken out of the money that's invested into those funds) at about 0.17% ; will be more or less than the 0.17% depending on what actual allocation you end up with, but that's an average they quote.

The MSE deal is considering the Nutmeg 0.45% fee as a 'platform fee' to access the funds, and they are waiving it temporarily, and it will revert back to 0.45% afterwards. The management fees and other operating costs of the funds themselves, of 0.17%, are not waived.

Really, Nutmeg is not a 'platform' in the traditional sense because they don't offer a platform to distribute open-ended funds and other investments that you can pick and choose properly for yourself.

Instead, for the 0.45%, after you tell them what portfolio risk you are going to follow, they decide what you are going to buy and when you will re-balance back to target, and they administer that for you. So the 0.45% is a mixture of them letting you access the underlying funds (ETFs or other investments they choose based on your product selection) and providing you with custody and administration services, brokerage costs to buy and sell the underlying ETFs/investments, a customer services front-end with reporting etc, and also giving you some mild 'management' of your affairs to keep the allocations fixed to the 'fixed allocation' of the portfolio you chose.

Within the 0.45% they do not itemise out the custody, admin, reporting, brokerage, customer service, management and control of the funds to maintain the fixed allocation etc. They just call it the "Nutmeg fee". This is separate from the 0.17% cost of the funds themselves.

So really there are 2 levels of explicit costs being charged. The 0.45% and the 0.17%. The latter, we could call, 'the management and operating costs of the underlying funds themselves'; the former is the 'Nutmeg fee' and covers all the fees charged to you other than the management and operating costs of the funds themselves.

If you get a waiver of this 'Nutmeg fee' on the fixed allocation product you are getting Nutmeg's management services for nothing, including both their investment selection and the admin and operational stuff that goes with it. They do not itemise the components within the 0.45% into portfolio management, administration, custody, customer services etc. There is just one fee from them, the 0.45%, and they don't break it down to say 0.25% portfolio management, 0.10% admin, 0.5% custody, 0.5% customer services helpdesk, etc. So, it will not be the case that if they offer you a deal (linked by MSE to https://www.nutmeg.com/12-months?utm_source=MSE&utm_medium=Affiliates&utm_campaign=ISA) in which they say they'll waive the 'portfolio management fee', they really intend to waive only some unspecified portion of the 0.45% while you are still expected to pay the other fraction of it.

MSE and Nutmeg have not helped make it particularly clear because MSE are thinking of the 0.45% as a 'platform fee' as distinct from the management and operating costs of the underlying funds themselves, so they tell you the deal is a saving of your platform fees and they'll revert to 0.45% after a year. While when you follow the MSE link to Nutmeg's promotion page, Nutmeg are saying they will waive their 'portfolio management fee' (again, as distinct from the management and operating costs of the funds themselves, which they can't waive). They have not helped themselves by describing the charge that they waive as a 'portfolio management fee', because on the 'our fees' page they do not call it that, they just call it the Nutmeg fee.

Can i contact anyone on MSE that will know what there articles deal actually entails?

There is no point contacting someone at MSE because when you invest you are not contracting with MSE and it doesn't matter what MSE think the deal is. If you like the idea of the deal, you will follow their affiliate link to the Nutmeg landing page which gives the terms and conditions. (https://www.nutmeg.com/12-months?utm_source=MSE&utm_medium=Affiliates&utm_campaign=ISA).

If those T&Cs are not clear to you and you need to clarify with Nutmeg that what they describe in their T&C as 'portfolio management fees' being waived is the same as the 'Nutmeg fee' being waived, you could contact Nutmeg via email, give them the link to the Nutmeg landing page T&C that you are looking at, and ask them to clarify. There is absolutely no point in contacting MSE to see if MSE can clarify what they think you will get if you take the deal. The T&C published by Nutmeg are sitting on a part of the Nutmeg website and if anyone is going to tell you what it means, Nutmeg (not MSE) is the person that can do it.

But what it will mean (the way Alex and I are reading it) is that the 0.45% is waived for a year. If your buddy gets a kickback for signing you up to only a 6 month waiver, it might be nice to do that and thank him for the introduction. But it is less of a good deal for you. MSE have much more volume of introductions than your friend, so Nutmeg will reward them with a better financial package, allowing them to give you 12 months rather than 6 while still making money for themselves.

Picard91

Wow, what a wonderful and detailed description. Thank you very much, makes it a lot clearer now and I understand your point about contacting MSE, always better to contact the provider themselves to clarify.

Alexland wrote: »

however your friend would probably get an incentive for referring you into the 6 month no-fee deal.

If you want to invest for the long term then Nutmeg are unnecessarily expensive compared to DIY platforms.

Alex

Correct he just get 100GBP bonus basically, however I am sure he will understand the situation.

I saw Nutmeg are more expensive than DIY platforms, but I am not sure i have the time to be looking at the stocks and share market all the time and would prefer it to be managed. I am going to put in 2000 and just see what happens to it with a low risk factor over the next year, hopefully be better than the banks interest, maybe a small gamble, but lets see!

bowlhead99

Picard91 wrote: »

Correct he just get 100GBP bonus basically, however I am sure he will understand the situation.

I saw Nutmeg are more expensive than DIY platforms, but I am not sure i have the time to be looking at the stocks and share market all the time and would prefer it to be managed. I am going to put in 2000 and just see what happens to it with a low risk factor over the next year, hopefully be better than the banks interest, maybe a small gamble, but lets see!

If you use the MSE deal, you would get 12 months of saving the 0.45% a year, instead of just six months. 0.45% per year on the £2000 you are proposing to invest is £9 per year or £4.50 every six months.

If the MSE deal lets you get that saving for a full year instead of just half a year, you'll make £9 of savings instead of just £4.50.

With the £4.50 of extra saving available by using MSE's referral rather than your friend's referral, perhaps you could take your friend to the pub and buy him a pint. Y'know, to apologise for using the offer to get £9 for yourself rather than to get £4.50 for yourself and £100 for him. As you say, I'm sure he'll "understand the situation" even though he will think you are being a bit thick.

Alexland

Maybe explain that MSE have a better offer and your friend might be willing to share their £100 between you 50/50 or whatever ratio which would be better for both of you? Still maybe you want to support MSE?

DIY options can be just as easy as Nutmeg for example investing in an all in one Vanguard LifeStrategy multi asset fund via the Vanguard Investor platform.

Alex

Picard91

bowlhead99 wrote: »

even though he will think you are being a bit thick.

Haha he definitely will, but as Alex mentioned it is also about supporting MSE. I do not post that often but I do love to read the threads and am grateful for the advice given by others and the forum.

Maybe getting a drink will ease off the pain.... ha:money: