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The tech start-up bringing wealth management to the masses

It hasn’t taken long for digital business Nutmeg to become a serious contender in the wealth management sector – but trust and agility are key to scaling this unique business offering.

“It may surprise you that 60pc of people in this country are not confident they’re going to be able to retire with the standard of living they want,” says Martin Stead, chief executive of Nutmeg. “That’s an issue we see across the world. The problem is that our wealth management industry just isn’t able to serve people who aren’t already very well-off.

“At Nutmeg we’re using technology to radically reduce the cost of wealth management services. Everyone has goals in life, and everyone should have access to high-quality investments to help them get there.”

As one of the world’s first digital wealth managers, Nutmeg certainly ripped up the rulebook when it came to personal investment. Since launching its online and mobile platforms in 2012, customers have been able to start investing with as little as £100 – a far cry from the hundreds of thousands many traditional wealth managers ask for.
Users are also able to select their preferred investment style and level of risk. Plus, when you need that personal touch, wealth managers will be on hand behind the scenes to help manage your portfolio and offer advice when needed.

Stable growth

Mr Stead, who succeeded Nutmeg’s founder Nick Hungerford as chief executive in 2016 and was formerly its chief revenue officer, says the company’s biggest challenge now is achieving profitable scale.
“I joined the company to take it from start-up to scale-up,” he explains. “As a digital business, our costs to customers – and our own margins – are typically low, which means we need several thousand customers in order to be truly profitable.”

A more product-led marketing strategy helped expand Nutmeg’s customer base from 12,000, when Mr Stead joined, to more than 75,000 today. But sustainable growth meant turning these customers into advocates.
“We’re managing our customers’ life savings, which is a huge privilege but also a massive responsibility,” says Mr Stead. “It means that we need to make every effort to put our customers first – and build trust, through a mixture of digital and human interaction.”

It’s a strategy that appears to be working. Nutmeg consistently boasts a Net Promoter Score (NPS) of upwards of +60 (out of 100); and this year the business secured £3.8m through crowdfunding, proving that customers are eager to invest in the platform as well.

But such strong engagement doesn’t come as a surprise to Mr Stead. “One piece of criticism levelled at us is that we can’t offer the kind of high-touch service that’s required in wealth management,” he notes.
“Actually we know our clients are logging onto our platform four times per week. That’s a lot more active interaction than people might get through an annual meeting with their traditional wealth adviser,” he points out.

Perpetual pioneers

For Mr Stead, part of the joy of working at an early-stage company is the ability to be more agile. This is borne out by Nutmeg’s swift response to market trends. In 2017, the company took just two months to launch its new Lifetime ISA; and in 2018, it became the UK’s first wealth manager to provide an ESG rating across all of its portfolios, smartly tapping into a growing desire among investors to support ethically responsible stocks.

Then there’s the pride in being able to tread new ground, particularly in the company’s culture. Diversity is an issue especially close to Mr Stead’s heart – he’s both a Diversity Role Model (DRM), and has been credited as a Top 100 LGBT+ Executive by the Financial Times and Yahoo Finance – so he’s always on a mission to instil this in the business.

“Nutmeg has always had an inclusive culture, and I’m just taking that forward a step,” he says. “It’s not just about diversity – it’s about having access to the widest pool of the best talent, and leveraging diverse experiences to deliver a better service.”

Of course, disrupting a long-established industry is never a simple task. But Nutmeg’s accessible and diverse offerings are certainly resonating. “There’s a misconception that Nutmeg is just serving millennials who have never invested before, and who don’t have much money,” he says. “In reality, 60pc of our customers have a lot of investing experience – and we’re winning them from traditional wealth managers.

“We don’t think people have been getting a good deal in this country. But I believe Nutmeg is the future of wealth management – and there are more than 10 million people in the UK who would benefit from moving to us right now.”

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