Nutmeg vs Wealthify: Best UK Passive Investment Platform?

Investing has come a long way in the last few years, and that’s largely thanks to the rise of the internet.  If you’ve taken a look at some of my recent guides to online investing, you will already know that I’ve looked at a handful of platforms out there which are starting to gain some prominence.  Naturally, I thought it would be worthwhile to consider which of the major UK online investment platforms was worth more of our time and money.

Investing has been made easier thanks to platforms such as Nutmeg and Wealthify, but each still carry their own pros and cons.  I’ve examined both services in previous match-ups, which does make this guide something of an all-star showdown.  Ultimately, though, both services have plenty to offer people who want to start investing money from home, or from the comfort of their smartphones.

I’ll take you through everything you need to know about both Nutmeg and Wealthify, and which measures up best – if at all – as a solid online investment platform.

Nutmeg vs Wealthify: Summary

• Depending on the package you choose, Nutmeg will let you pay as little as 0.25% in fees each year.  Wealthify has a fixed fee of 0.6%.
• Both services offer an automated investment system to an extent, though you will still have access to human expertise and support through Nutmeg.
• Wealthify is virtually free to join and start investing in, however, with Nutmeg, you will need to pay in at least £100, or £500, depending on the plan or package you choose.
• Nutmeg allows you to dabble in both ISAs and pension schemes as you wish.
• Both services are protected via the FSCS, meaning that any money you put in up to £85,000 is backed.
• Both services take an approach of diversifying your finds as much as possible.
• Nutmeg is backed by Oxford Risk, which should supply a modicum of confidence.
• Wealthify is backed by Aviva, which should give some confidence to seasoned investors.

Nutmeg vs Wealthify

What is Nutmeg?

Nutmeg offers online investment to people who are just getting started in the world of growing their money.  However, what is refreshing about this service is that it appears to be levelled towards experienced investors, too.  That may go down well with various people in different ways, however, it is a good sign that the platform is willing to diversify.

Nutmeg’s approach seems to be that of affordability.  There can be a lot of costs involved when it comes to investment, which means that some beginners can find themselves put off by the hassle and the expense.  You’re able to invest across four separate areas, including pensions, ISAs stocks and more.  You’re going to need around £500 to put into your initial pot, unless you choose the ISA option, where you can get away with a smaller initial contribution of £100.

Nutmeg now has over 200,000 clients and manages assets in excess of £4.5 billion.

How Does Nutmeg Actually Work?

The way Nutmeg works is refreshingly simple.  Whether you choose their ISA pot, general investment account or their pension investment service, you will have help from portfolio specialists who work on your behalf.  These specialists will take care of your money and carefully manage all the risks involved.  In fact, one of Nutmeg’s most positive qualities is that it is backed by a leading risk system, which should appeal to investors at all stages of their journey.

The sign-up process is pretty straightforward.  Any beginners who are worried about getting ‘in too deep’ will only need to answer a handful of pointed questions to build a profile.  The experts at Nutmeg will then take this data and build a profile on you, now that they have a good idea of how you see investments, and where you are on your journey.  This is a very nice touch indeed, as it means, regardless of the investment options you go for, you’ll always benefit from a tailor-made plan and portfolio.  That’s going to appeal to plenty of people at all stages of experience.

Further Details

Once you’re up and running, you can use Nutmeg to manage your money at any time of day, week, month or year.  You have complete access to and clearance over your projections, which means you can always see what the Nutmeg team are up to.  You can fine-tune your experience by choosing a plan that suits your needs, too.  For example, if you’d like Nutmeg to fully manage your portfolio, you can ask them to as early as the sign-up screens.  This means that they will take the reins if you’re just getting started.

Want more say over your investments, risks, and where your money is headed?  Don’t worry.  A fixed allocation plan is offered to people who would rather than the Nutmeg experts keep their hands off.  This could be a preferred choice for those who are moving their pensions across, for example.  Generally, though, you can expect pension plans to be managed to some extent.  Take a look at the small print before you get started, and never be afraid to reach out to Nutmeg’s team for more details.  Keep in mind that managed services can often cost less than the alternative.

What’s interesting about Nutmeg’s default model is the diversification approach to investment.  We’ll look at this in a little more detail a bit further down.

What Does Nutmeg Charge?

Nutmeg charges 0.75% on any fund invested up to the value of £100,000 in its ‘socially responsible’ and fully managed portfolios.  This drops to 0.35% if you invest more.  You’re looking at more in terms of fees if you choose the ‘fixed’ option, where 0.45% applies to anything up to your first £100,000.  However, this will pay off if you invest more, as it will drop to 0.25%. Even better, you can get fee free money management for six months if you sign up via my link.

Thankfully, there are no extra fees and costs at play here, which means Nutmeg will not penalise you if you want to leave or take on specific transactions.  The only costs you should be aware of in addition to these rates are the £20 levies which apply when you move stock over to someone else.

What Can Nutmeg Invest In?

Nutmeg will invest in stocks and shares at an ISA level, as well as on a lifetime ISA basis.  You can also ask Nutmeg to take care of your pension for you, where they will make investment choices on your behalf.  Nutmeg’s investment model is mainly based around the idea that variety is better than building savings, which may not appeal to everyone.  Certainly, it’s likely that diversifying is going to be more appealing to those who have invested several times before, and who are keen to explore a world of options.

Can You Control Investments Through Nutmeg?

Yes – to some extent.  You will need to establish how you’d like to manage your portfolio and choices when you first start out, however, there are various plans on offer which will give you a wider playing field to pick from over some systems.  Many people prefer the hands-off appeal that Nutmeg seems to gravitate towards, however, others will still want to ensure that they have some control.

I don’t think there is much to worry about when it comes to automating your investments via Nutmeg, however, it’s easy to see why plenty of investors still want to know where their money is going.  That being said, Nutmeg has a very solid risk backing, which means plenty of seasoned investors might be confident enough to go completely control-free.  The choice is yours, but do some research and, of course, shop around.

Are Nutmeg Investments Protected?

Yes.  Any money you invest via Nutmeg is protected via the FSCS up to the value of £85,000.  This means that, should anything happen to the company while your money is still in the system, you will have full rights over claiming this cash back.  Anything invested over this amount will of course be at full mercy of the universe, but chances are you’re already pretty confident in the brand if you’re going this far.

What is Wealthify?

Wealthify is a bit of a different fish to Nutmeg or Moneyfarm, however, it does follow a similar ideal of hands-off investing.  The Wealthify approach is to do this through a robo-investor platform, where you can get started from as little as £1.  That’s not going to travel too far unless you’re an investor genius, however, it’s worth knowing that the buy-in here is a little easier to swallow than Nutmeg.

Wealthify is backed by scores of experts and financial gurus, and also has the solid benefit of being backed by a major financial provider.  They were adopted by Aviva in recent times.  That will have been enough to drive confidence for more experienced investors, and there’s a good chance it rubbed off well on newbies, too. 

Wealthify appeals to people because it is affordable, and because it has this strong backing.  However, is it necessarily enough to stand up against Nutmeg, which does already have plenty going for it?

Which type of accounts does Wealthify offer?

Wealthify offers stocks & shares ISA, junior stocks & shares ISA, general investment accounts, and pensions accounts. Additionally, Wealthify also offers a savings account. However at the time of writing, the interest rate was a paltry 0.17%, so you’re like better off with someone like Chip where the rates are significantly higher.

How Does Wealthify Actually Work?

Wealthify works on a similarly passive model to Moneyfarm and Nutmeg, in the sense that it wants to diversify the money you put in as much as possible.  It’s even more hands-off than Moneyfarm, in a way, as while there are experts involved behind the scenes, there is very much an emphasis on automating the investment process.  This could appeal to plenty of people, but at the same time, something of a human touch is generally recommended, especially when you are looking at big sums of money.

Wealthify offers a similar process to Moneyfarm when it comes to signing up.  That means you can expect to receive a series of questions which will ask you about your general investment experience, as well as where you’d like your money to go. 

Once you have entered your data, you get an output showing the sample portfolio construction. Like most services, Wealthify uses a mix of passive funds from the well known providers like Vanguard, Fidelity, Blackrock, etc.

A good feature installed into this process is an automatic block, which means that Wealthify will stop you if it believes that the system is not going to benefit you long-term.  There are some online investment services which simply let you continue, which isn’t always a great look if you’re trying to help people be responsible with their funds.

Wealthify doesn’t have anything akin to an advisor team ready to help look at your finances, however, there are always some specialists working behind the scenes to ensure that their robo-investment standards are doing exactly what they are supposed to.  Again, some form of human touch would be palatable, however, it’s easy to see the appeal in going completely hands-off.

Having said that, Wealthify does have a support team for general inquiries and assistance. They’re available via the phone, live chat, or messaging through their platform.

What Does Wealthify Charge?

Wealthify used to have a tiered fee structure, but they have moved to a flat rate structure now. Wealthify now charges a flat rate of 0.6%, regardless of the amount invested. They do highlight that there are additional investment charges – typically the costs associated with the underlying funds’ management fees and market spread. However this latter fee is standard across all platforms.

Wealthify’s fees are higher than Moneyfarm’s fees for their Fixed Allocation portfolio. On the Actively Managed offering, Wealthify is cheaper if your portfolio is less than £100,000. Beyond this, Moneyfarm is once again cheaper.

What Can Wealthify Invest In?

If you want to let Wealthify take control of your portfolio, you will need to entrust it to spread your money over a wide array of smaller, diverse pots which the system believes will be worth your while.  The Wealthify approach is, on the whole, to spread your money as far and as wide as possible. 

The actual holdings are exclusively passive funds, whether they’re ETFs or mutual funds. As stated earlier, they offer a mix of funds from providers like Vanguard, Fidelity, Blackrock, etc.

When creating your portfolio mix, Wealthify first offers two options:

1. Original: This is the typical market portfolio that would would think of which includes a mix of cash, bonds, stocks, and alternative investments.
2. Ethical: In tune with the market demand, Wealthify offers funds that have been specially selected to deliver higher scores on ESG metrics.

It appears that Wealthify lets the investor decide what their risk profile is so you have to select whether you want to be in a balanced allocation (Wealthify calls this “Confident”), growth focused (“Ambitious”), or nearly all in on equity (“Adventurous”).

In looking at their portfolio allocation, I feel that their buckets are skewed a little bit towards the conservative side. Consider for example the industry standard allocation for a balanced investor – 60% in equity and 40% in bonds. Wealthify’s equivalent plan, called Confident, has a 50-50 allocation. Similarly, the industry would have a growth investor at 80-20, whereas Wealthify’s Ambitious plan is at 70-30.

What this means is that in the long run, a Wealthify portfolio will underperform even a standard Vanguard Lifestrategy fund due to a more conservative allocation than perhaps necessary.

If your risk tolerance tends to be on the lower side, then you’re going to be fine. However for those who have a neutral or higher risk tolerance, Wealthify will most likely undershoot on expectations.

Can You Control Investments Through Wealthify?

Ultimately, you have very little to do with how your investments are handled via Wealthify.  This means you are going to need to trust the robo-advisors with a lot, which shouldn’t be too much of an issue if you are confident in their backing from Aviva, and in their summary of your profile.  If you feel that Wealthify has got a good measure of you, then there are very few reasons why you shouldn’t move forward.  However, always measure the rough with the smooth.  For beginners, the appeal of a hands-off investment service is probably going to be fairly strong.

Does Wealthify have an app?

Yes, Wealthify does have an app and it works on both iOS and Android.

Are Wealthify Investments Protected?

Yes – again, like Nutmeg, your money is protected up to a certain amount by the FSCS.  The amount you’re protected up to is exactly the same, too.  £85,000 appears to be the standard, and this at least means you should be well-safeguarded in case anything disastrous happens to Wealthify in the short term.

Before we wrap up completely, let’s take a look back at both Nutmeg and Wealthify, and attempt to narrow down the pros and cons which will appeal to people most likely to use their services.

Nutmeg vs Wealthify: Pros and Cons

Nutmeg – Pros and Cons

Pros

• Nutmeg has a good edge on many investor services when it comes to fees, as depending on the package you go for, you could be subject to as little as 0.25%. Plus sign up via my link you can get 6 months of no fees at all.
• There is a fair amount of risk involved with Nutmeg thanks to its hands-free approach.  However, it tempers this by making sure it’s backed by Oxford Risk, which should encourage seasoned investors to get involved.
• 24 hour access to your portfolio is always a good thing, even if you don’t always have full say over what’s going on with it.
• Nutmeg completely knuckles down on extra fees, with just a £20 charge applying if you want to move stocks over to a different investor.
• The service does offer a nice range of investment packages and plans, with a pension option open for anyone who is happy for the Nutmeg experts to manage their retirement pot.
• Nutmeg takes something of a diverse approach to investing, in that it prefers to spread itself thin with very low risk money attached to each pot.  This is definitely a positive if you’re keen to take on as many different markets as possible.  And why not?
• The sign-up process is very straightforward, and the system will build a thorough profile for you based on just a handful of questions.

Cons

• Nutmeg’s range of investment opportunities may not appeal to everyone, especially as there are systems elsewhere which go a little more diverse.
• The entry investment at Nutmeg can start at £100, but most people will likely need to spend at least £500 to get up and running.
• There are more than a few terms and conditions attached to pension management, which means that you should certainly look carefully at the small print before you get started.
• Nutmeg’s approach to diversifying investments and keeping manual control off the table isn’t going to appeal to everyone, however, it will provide plenty of newbie investors with the chance to explore the world of investing at a safe distance.

Wealthify – Pros and Cons

Pros

• Wealthify is extremely cheap to start with.  You can put in £1 and start making money back!
• There are no account closure fees, though do be aware that other charges may apply during your time investing through the platform.
• The hands-off approach here lets you completely automate the money you spread across investments.  This could appeal to people who want to avoid having to make tough decisions!
• Wealthify benefits from the backing of a big name in the world of finance – Aviva.  This should do a lot to balance out the perceived risks of letting the system completely manage your money for you.
• There’s a useful ‘block’ which comes into play if Wealthify believes that investing, and robo-investing, aren’t going to be worth your while.  It’s a very nice touch which shows the brand is concerned about risk.
• There is a dedicated app available, which will let you check how your investments are performing on the move.
• Wealthify appears to be a good choice for anyone who may not be confident about investing.

Cons

• One of the main drawbacks of Wealthify lies in the fact that it is completely free from human expertise.  There are people working behind the scenes, but you won’t get the benefit of personal assistance or control.
• In addition to this, there are fees which will apply along the way.  While Nutmeg goes completely hands-off when it comes to transaction fees and additional costs, Wealthify doesn’t.
• Wealthify’s asset allocation takes a more conservative approach than industry standard. If you are a young investor and/or have higher risk tolerance, you may end up underperforming.
• Do also be aware that Wealthify is fully automated, which means that there is even less control here than there is through Nutmeg.

Nutmeg vs Wealthify: Verdict

Both Nutmeg and Wealthify are similar in terms of their approach to online investing.  They both believe in a model where you should feel free to let a service or a robot make the right choices for you.  To many people, this will definitely be appealing.  To others, there may simply be too much risk on the table.  There’s a difference in terms of fees here, which Nutmeg pulls through on.  Ultimately, too, Nutmeg gives you a little more control – meaning that it just clinches the head to head.