Nutmeg online investment - opinions?
Discussion
Ginge R said:
It’s a real shame that you felt compelled to do that, based on one or two contributions to the thread.
First of all it is a little patronising to make a statement like that as if a poster has no mind of their own. And secondly, what is this apparent beef that you seem to have which sees you following others around and making repeated seemingly snide remarks? Could we not just dial it back a bit?Ginge R said:
brickwall said:
I've just put in the application to transfer the whole lot to HL, where I'll invest in a self-selected mix of funds. Will take 3-4 weeks to complete I I imagine; I guess they won't have gone bust by then.
It’s a real shame that you felt compelled to do that, based on one or two contributions to the thread. DonkeyApple said:
First of all it is a little patronising to make a statement like that as if a poster has no mind of their own. And secondly, what is this apparent beef that you seem to have which sees you following others around and making repeated seemingly snide remarks? Could we not just dial it back a bit?
‘Others’?Of whom do you speak?
Aside from the legal aspects, it’s tacky as hell to undermine someone from within the same sphere.
Dial it back a bit? Let’s revisit that one..
Badda said:
As someone who supplies a similar 'robo' product to Nutmeg, perhaps you're not the most objective person to comment?
I don’t provide a similar product. And I certainly wouldn’t comment, no, even if I currently was. I think these posts expose the website publishers to claims, too. I’m trying to do Julian a favour. Ginge R said:
Badda said:
As someone who supplies a similar 'robo' product to Nutmeg, perhaps you're not the most objective person to comment?
I don’t provide a similar product. And I certainly wouldn’t comment, no, even if I currently was. I think these posts expose the website publishers to claims, too. I’m trying to do Julian a favour. sas62 said:
Surely a personal message rather than quoting for posterity would be a better way to do this?
Julian is aware of my sentiment. Anyone authorised and regulated in a senior management capacity, you should know better than to suggest a rival is going to go under without a direct message. There are potentially peoples jobs at stake here, and investors money, if it became known that a SIPP CEO was stating publically, that a company such as Nutmeg was about to go under. On a personal basis, I find attempting to name and shame unedifying, (at best). 
Ginge R said:
Julian is aware of my sentiment. Anyone authorised and regulated in a senior management capacity, you should know better than to suggest a rival is going to go under without a direct message. There are potentially peoples jobs at stake here, and investors money, if it became known that a SIPP CEO was stating publically, that a company such as Nutmeg was about to go under. On a personal basis, I find attempting to name and shame unedifying, (at best).
What’s the real beef? It’s clear that you’ve got one for some reason. Ginge R said:
sas62 said:
Surely a personal message rather than quoting for posterity would be a better way to do this?
Julian is aware of my sentiment. Anyone authorised and regulated in a senior management capacity, you should know better than to suggest a rival is going to go under without a direct message. There are potentially peoples jobs at stake here, and investors money, if it became known that a SIPP CEO was stating publically, that a company such as Nutmeg was about to go under. On a personal basis, I find attempting to name and shame unedifying, (at best). JulianPH said:
WindyCommon said:
Julian - £2,382/client makes no sense. Have you arrived at that by dividing the £116m they've raised between the 48,700 clients?
If so, I'm not sure I agree with your methodology.
In 2017, reported client numbers rose from from 25k to 48.7k. They had total opex of £16.9m (your point about acquisition costs being on top of op ex is - I suspect - mistaken) so their per client acquisition costs can not have been higher than £16.9m / 23.7k = £713. As they will have all sorts of expenses that are not client acquisition related, I suggest that the "right" number is substantially lower than £713/client.
Anyway.... Will they run out of corporate funding before they reach critical mass and profitability? Almost certainly, as that is the traditional fate of these ventures! As you point out, that may be an uncomfortably near-term reality for them...
Tough sector, for which the answer has not yet been found. Perhaps the man from the Pru with his with-profits fund wasn't such a bad model after all....?
Opportunity cost would have been a better phrase. £116m of capital deployed and 48,700 clients generated (at the last available figures) remains £2,382 per client.If so, I'm not sure I agree with your methodology.
In 2017, reported client numbers rose from from 25k to 48.7k. They had total opex of £16.9m (your point about acquisition costs being on top of op ex is - I suspect - mistaken) so their per client acquisition costs can not have been higher than £16.9m / 23.7k = £713. As they will have all sorts of expenses that are not client acquisition related, I suggest that the "right" number is substantially lower than £713/client.
Anyway.... Will they run out of corporate funding before they reach critical mass and profitability? Almost certainly, as that is the traditional fate of these ventures! As you point out, that may be an uncomfortably near-term reality for them...
Tough sector, for which the answer has not yet been found. Perhaps the man from the Pru with his with-profits fund wasn't such a bad model after all....?
Setting aside the capital raised altogether, a business model that generates £92.40 in revenue for every £347.44 of overhead is quite simply not viable in any event.
Given that their operating expenses keep growing (up from £12m in 2016 to £17m in 2017) as their client numbers grow, unless they have unlimited access to capital to cover their losses (£12,356,970 in 2017) from people who are not bothered about seeing a return on their money for a very long time, this model is not going to end up well, as you rightly point out.
It is a tough sector, but I have found an answer in delivering a low cost digital investment solution with full human interaction available, that has a seemingly alien concept of actually making a profit and paying dividends to the shareholders!
And yes, despite its manifest failings, there was something to be said for the man from the Pru model that delivered a generation of people with retirement provision!
There is nothing wrong with a financial services firm that makes a profit by providing a good service at a price that makes sense for all parties involved.
The man from the Pru and his ilk probably delivered more people from pensioner poverty than any government initiative could dream of.
Ginge R said:
brickwall said:
I've just put in the application to transfer the whole lot to HL, where I'll invest in a self-selected mix of funds. Will take 3-4 weeks to complete I I imagine; I guess they won't have gone bust by then.
It’s a real shame that you felt compelled to do that, based on one or two contributions to the thread. - Mediocre returns, which were challenging to benchmark
- Lack of transparency on what was being held, and the real risk profile
I work in the City - though I'm more of a Corporate Finance guy than fund management. But I do vaguely know what I'm doing.
brickwall said:
The thread had nothing to do with it. My decision was based on
- Mediocre returns, which were challenging to benchmark
- Lack of transparency on what was being held, and the real risk profile
I work in the City - though I'm more of a Corporate Finance guy than fund management. But I do vaguely know what I'm doing.
You are making the same mistake I did, in assuming that Al (Ginge R) paid any attention to what you were actually saying, or took into consideration your previous posts!- Mediocre returns, which were challenging to benchmark
- Lack of transparency on what was being held, and the real risk profile
I work in the City - though I'm more of a Corporate Finance guy than fund management. But I do vaguely know what I'm doing.
All he seems to do is knock others in order to get his own point across. He used to be far more subtle but it looks like those days are long gone.
I agree. Nutmeg has delivered pretty mediocre (putting it politely!) returns. This is exactly what this thread is about.
My comments were solely related to the recent news story.
They have already publicly stated they need £20bn of asset to reach break even and given the colossal advertising spend over the last 8 years that has only achieved £1bn - £1.5bn they are a very long way short of this.
Together with the money tap appearing to be shut off this could mean that unless they make some pretty dramatic changes to their overheads the future does not look that bright for them. However, I wish them well in turning things around.
JulianPH said:
brickwall said:
The thread had nothing to do with it. My decision was based on
- Mediocre returns, which were challenging to benchmark
- Lack of transparency on what was being held, and the real risk profile
I work in the City - though I'm more of a Corporate Finance guy than fund management. But I do vaguely know what I'm doing.
They have already publicly stated they need £20bn of asset to reach break even and given the colossal advertising spend over the last 8 years that has only achieved £1bn - £1.5bn they are a very long way short of this. - Mediocre returns, which were challenging to benchmark
- Lack of transparency on what was being held, and the real risk profile
I work in the City - though I'm more of a Corporate Finance guy than fund management. But I do vaguely know what I'm doing.
Together with the money tap appearing to be shut off this could mean that unless they make some pretty dramatic changes to their overheads the future does not look that bright for them. However, I wish them well in turning things around.
I don't have the time for Hargreaves Lansdown but believe they were 20+ years.
A trade sale to a bank or existing XO platform looks the likely exit IMO.
Edited by Helicopter123 on Saturday 6th April 20:48
I assume that a large part of their plan to reach £20bn was to source clients from overseas? Convoy are a large backer so I assumed they would be aiming to use the tech to roll out a product through HO and Asia?
Likewise GS being onboard and their new ambition to enter the retail market you’d think they would be pushing client investment capital in?
Or is the latest round of funding so as to expand overseas? Firms like Fidelity have been pushing to attract Asian client wealth for a while now.
Likewise GS being onboard and their new ambition to enter the retail market you’d think they would be pushing client investment capital in?
Or is the latest round of funding so as to expand overseas? Firms like Fidelity have been pushing to attract Asian client wealth for a while now.
DonkeyApple said:
I assume that a large part of their plan to reach £20bn was to source clients from overseas? Convoy are a large backer so I assumed they would be aiming to use the tech to roll out a product through HO and Asia?
Likewise GS being onboard and their new ambition to enter the retail market you’d think they would be pushing client investment capital in?
Or is the latest round of funding so as to expand overseas? Firms like Fidelity have been pushing to attract Asian client wealth for a while now.
A global strategy makes sense, leveraging the UK regulatory regime and reputation for 'fair play' but Nutmeg are in the micro-investor space.Likewise GS being onboard and their new ambition to enter the retail market you’d think they would be pushing client investment capital in?
Or is the latest round of funding so as to expand overseas? Firms like Fidelity have been pushing to attract Asian client wealth for a while now.
GS used to be £5m equivalent to open an account at its wealth arm.
I'm just not convinced you can make money at this end of the market, at what Nutmeg are charging clients.
Helicopter123 said:
A global strategy makes sense, leveraging the UK regulatory regime and reputation for 'fair play' but Nutmeg are in the micro-investor space.
GS used to be £5m equivalent to open an account at its wealth arm.
I'm just not convinced you can make money at this end of the market, at what Nutmeg are charging clients.
Not with their costs and overheads. It would work as a bolt on to something else like Revolut where the customer acquisition cost is already factored in. GS used to be £5m equivalent to open an account at its wealth arm.
I'm just not convinced you can make money at this end of the market, at what Nutmeg are charging clients.
GS have a retail side now. In the UK it’s Marcus. I figured that was the reason for their investment in a robo entity?
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