Nutmeg online investment - opinions?
Discussion
Ginge R said:
a bespoke financial plan, crafted over time, is the best solution
Don't you just need to go in and review your robo investment & risk strategy every once in a while (eg annually or every 6 months) to achieve the same? I assume there's some ability to transfer funds without incurring huge fees with these systems?Behemoth said:
Don't you just need to go in and review your robo investment & risk strategy every once in a while (eg annually or every 6 months) to achieve the same? I assume there's some ability to transfer funds without incurring huge fees with these systems?
I don't charge to do fund switches. In the days of yore, churning funds was sometimes a cynical way of generating income, so for the avoidance of doubt, I don't charge. Having said that, if you identify and nail your objectives at outset, get the strategy and tactics, the objectives and timescale right, and if you choose appropriate funds you needn't get sucked into the ("New Bestest Ever Fund now on sale!!") buy sell see-saw beloved by so many fund floggers.The answer to your point is, yes, you can dip in to stay on top of things and, yes.. you can change funds. But I don't mean that to be an attractive sales angle because it only applies if a the principle of a Robo proposition applies anyway. You would be daft to engage with a Robo prop if your needs were complicated, unless you were in a tiny minority with a set of very niche circumstances.
So that I stay on top of things, Fiver bumps clients periodically to ask them about their attitude and capacity for risk, their circumstances etc, to ensure that nothing has changed (which could make the service inappropriate). I said earlier that there were no hidden charges, I lied. You can specify a paper report instead of the PDF version every six months. It costs, funnily enough, a fiver. No one has asked for one yet mind.
Craikeybaby said:
Is this somewhere in between a managed portfolio and something like the Vanguard Lifestrategy funds?
Sort of. I use some Vanguard funds, but not the fused LS versions. Yes, it's also a MP type service but with a DFM overlay with an advised component built in, to help anyone who may be uncertain of their fund picking abilities or needs.Ginge R said:
So that I stay on top of things, Fiver bumps clients periodically to ask them about their attitude and capacity for risk, their circumstances etc, to ensure that nothing has changed (which could make the service inappropriate).
Great idea and simple to do. You must be hoping for low inflation for the foreseeable, unless you've also registered tenneraday 
Ginge R said:
Craikeybaby said:
Is this somewhere in between a managed portfolio and something like the Vanguard Lifestrategy funds?
Sort of. I use some Vanguard funds, but not the fused LS versions. Yes, it's also a MP type service but with a DFM overlay with an advised component built in, to help anyone who may be uncertain of their fund picking abilities or needs.Ginge R said:
.. thanks. This, by way of balance and a sense check, is my "Don't do business with us" blog.
http://www.fiveraday.co.uk/blog/your-pre-nup-with-...
Robo is sniffed at by some advisers, who point out that a bespoke financial plan, crafted over time, is the best solution. And they'd be right. But perfect is not the enemy of good. Many savers just want to get going and many are deterred by high initial fees, expensive fund costs, or unreasonably pricy, complicated and opaque services. In many cases, Robo is good enough. This ethos would apply, in principle, to all Robo services I guess.
It strikes me as a logical option for someone looking to start a SIPP or ISA plan to build up a pot size where there is a credible option to hire a traditional manager should there be a need. http://www.fiveraday.co.uk/blog/your-pre-nup-with-...
Robo is sniffed at by some advisers, who point out that a bespoke financial plan, crafted over time, is the best solution. And they'd be right. But perfect is not the enemy of good. Many savers just want to get going and many are deterred by high initial fees, expensive fund costs, or unreasonably pricy, complicated and opaque services. In many cases, Robo is good enough. This ethos would apply, in principle, to all Robo services I guess.
Craikeybaby said:
What are the benefits vs the Vanguard LifeStrategy funds? More bespoke?
I rewrote this a couple of times. Neither service is better or worse than the other, both have their merits. Robo sits as the halfway house between a broker or race to face advice, and DIY. Robo advice is always going to be more expensive that buying the funds directly for a few reasons. There's the advice liability first and foremost. Not much that can be done about that. So, my thoughts are not so much a reflection on the funds, rather the service.You don't get as complete a service as you would get face to face, but it's a lot cheaper. Similarly, Robo is here to guide you, so it's more expensive than doing it yourself. The issue of going to a broker is a strange one. Fund brokers such as HL, gave already come under cost pressure - if I charge 0.80% for an advised DFM basket of funds each year, what does HL currently charge a fund size of, say, £34,000 for its advised/non advised (?) Multi Manager service? I'd be interested to know.
If you want a specific allocation that’s not provided by any of the LifeStrategy funds, then you’ll obviously have to craft that allocation on your own, or get an adviser to do it. But if you want a low-cost way to start investing, Vanguard’s definitely appealing. You don’t pay an adviser, just 0.24% to John Bogle. The main disadvantage is the lack of tailoring the portfolio to your own circumstances, such as tolerance for risk and investment time frame, and the fact that the funds are not so defined in respect of risk, and more static in their composition, relying on 'just' other Vanguard funds.
Vanguard has been (imho) a bit *too* US-centric, but it has diversified. Another aspect is that once you buy your particular fund, you can leave future changes to the asset mix to the manager, who will continuously monitor the make-up of the fund in response to changing economic circumstances. I think my funds offer greater strength through diversity and a more agile service. That doesn't mean it's a better service; rather, a different one. In terms of cost benefit, in uncertain times, something actively managed is better than something a bit more fire and forget, but in times of stability, something stable(ish!) like LS40 might be more appropriate if you know what you're doing.
Horses for courses I guess. Multi-asset funds don’t take clients’ individual attitude to risk into consideration when buying and selling funds, whereas mine does.. but you pay (typically) 0.8% pa instead of c.25% unadvised with Vanguard. If I'm being honest, Vanguard will always have its followers (I'm happy to use them with my face to face service too) so I suppose from a purely commercial angle, the real targets for Robo, the really low hanging fruit, are expensive brokerages like Hargreaves and Charles Stanley, especially if you pay a lot for bells and whistles you don't use or know how to get the best out of.
But Robo is a simplistic approach. If you want the latest star manager trying to beat the market, then stick with your broker. If you're bamboozled though and fed up with all the sales hype (which costs), and if your circumstances merit it, then Robo is definitely worth a look. I'm an adviser and a geek. Once I had achieved my targets I'd be happy with LS too I guess, but only because I'm a geek. Would I like its relative lack of finesse, it's relative lack of risk fine tuning, it's still relative lack of diversity etc? I hesitate to say this because it sounds like a sales pitch, but I'm not sure I'd hang everything on it. That's not to say it's not a hugely successful fund without good cause.
Ginge R said:
Craikeybaby said:
What are the benefits vs the Vanguard LifeStrategy funds? More bespoke?
I rewrote this a couple of times. Neither service is better or worse than the other, both have their merits. Robo sits as the halfway house between a broker or race to face advice, and DIY. Robo advice is always going to be more expensive that buying the funds directly for a few reasons. There's the advice liability first and foremost. Not much that can be done about that. So, my thoughts are not so much a reflection on the funds, rather the service.You don't get as complete a service as you would get face to face, but it's a lot cheaper. Similarly, Robo is here to guide you, so it's more expensive than doing it yourself. The issue of going to a broker is a strange one. Fund brokers such as HL, gave already come under cost pressure - if I charge 0.80% for an advised DFM basket of funds each year, what does HL currently charge a fund size of, say, £34,000 for its advised/non advised (?) Multi Manager service? I'd be interested to know.
If you want a specific allocation that’s not provided by any of the LifeStrategy funds, then you’ll obviously have to craft that allocation on your own, or get an adviser to do it. But if you want a low-cost way to start investing, Vanguard’s definitely appealing. You don’t pay an adviser, just 0.24% to John Bogle. The main disadvantage is the lack of tailoring the portfolio to your own circumstances, such as tolerance for risk and investment time frame, and the fact that the funds are not so defined in respect of risk, and more static in their composition, relying on 'just' other Vanguard funds.
Vanguard has been (imho) a bit *too* US-centric, but it has diversified. Another aspect is that once you buy your particular fund, you can leave future changes to the asset mix to the manager, who will continuously monitor the make-up of the fund in response to changing economic circumstances. I think my funds offer greater strength through diversity and a more agile service. That doesn't mean it's a better service; rather, a different one. In terms of cost benefit, in uncertain times, something actively managed is better than something a bit more fire and forget, but in times of stability, something stable(ish!) like LS40 might be more appropriate if you know what you're doing.
Horses for courses I guess. Multi-asset funds don’t take clients’ individual attitude to risk into consideration when buying and selling funds, whereas mine does.. but you pay (typically) 0.8% pa instead of c.25% unadvised with Vanguard. If I'm being honest, Vanguard will always have its followers (I'm happy to use them with my face to face service too) so I suppose from a purely commercial angle, the real targets for Robo, the really low hanging fruit, are expensive brokerages like Hargreaves and Charles Stanley, especially if you pay a lot for bells and whistles you don't use or know how to get the best out of.
But Robo is a simplistic approach. If you want the latest star manager trying to beat the market, then stick with your broker. If you're bamboozled though and fed up with all the sales hype (which costs), and if your circumstances merit it, then Robo is definitely worth a look. I'm an adviser and a geek. Once I had achieved my targets I'd be happy with LS too I guess, but only because I'm a geek. Would I like its relative lack of finesse, it's relative lack of risk fine tuning, it's still relative lack of diversity etc? I hesitate to say this because it sounds like a sales pitch, but I'm not sure I'd hang everything on it. That's not to say it's not a hugely successful fund without good cause.
I stand by it and so would Vanguard, Morningstar and many other research firms.
About the only thing you can control is asset allocation and fee's
https://personal.vanguard.com/us/insights/investin...
About the only thing you can control is asset allocation and fee's
https://personal.vanguard.com/us/insights/investin...
Nutmeg has just announced it's dropping its charges.
http://citywire.co.uk/new-model-adviser/news/nutme...
http://citywire.co.uk/new-model-adviser/news/nutme...
Ginge R said:
Fiver offers an ISA or non ISA (GIA) wrapper. I will be offering a SIPP wrapper later this year, once the FCA has published the Financial Advice Market Review. I could do it now, but am waiting to see what comes out. The cost will be a fraction of the cost of other providers, and limited, at the moment, to the same baskets of DFM pas dives that the ISA offers. So, it won't ever be a full blown SIPP in the traditional sense, more a SIPP lite/Personal Pension hybrid.
Are you planning on launching your own in-house SIPP or outsourcing this?Ginge R said:
I'm going to be offering a pension managed by Parmenion. The cost is going to be practically the same as a cheap personal pension, but (partly) because it's discretionary managed at no extra cost, it'll be a SIPP.
Ahh, Parmenion provide your portfolio management then (I take it)?Yes, they are good, very sad to hear of Richard's untimely death in January. I do hope they continue well and that Aberdeen ownership does not change things.
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