What makes an online investment ISA different? Well, the fact that an investment company delivers such a personal service online is something many of us wouldn’t even have considered just a few years ago. However, in that time, FinTech has gone from strength to strength, and is continuing to break down the boundaries that used to dictate how we thought things should be done.
A recent article in the Financial Times described just how important face-to-face contact was for high-net worth individuals considering their wealth management plans, but Nick Hungerford, the founder of online stocks and shares ISA provider Nutmeg, is determined to buck that trend.
Overcoming the Misconceptions that Customer Contact is Key
Hungerford launched the online investment company Nutmeg in 2012, with the aim of not only offering an online alternative to the traditional wealth management company, but also to more effectively meet the needs of the ‘average’ investor.
There are misconceptions in the industry that a large amount of customer contact is essential when opening a stocks and shares ISA or a personal pension, and this is lining the pockets of financial advisers across the UK. Many people also believe you need a large lump sum to open an investment portfolio; this puts many people off; instead, they head to the bank and save in cash.
Nutmeg aims to break down the barriers that have traditionally existed between personal finance providers and their customers. Nutmeg offers a range of simple tools and jargon-free language that makes it easy for investors to monitor and track their money. The minimum investment is also just £1,000 for every fund the investor creates, with minimum monthly contributions of just £50.
What Kind of Investors are Drawn to an Online Investment ISA?
Nick Hungerford’s initial plan was to create the perfect platform for the ‘average’ investor; however, he has been surprised by just how many high-net worth individuals have been keen to let Nutmeg manage their money on their behalf.
The Nutmeg proposition is aimed at people who are currently using an IFA or a wealth manager, first-time investors, and those who manage their investments themselves. Historically, the type of investment Nutmeg offers was only open to the very wealthy, but now these have been opened up to first-time investors who find the Nutmeg platform easy and comfortable to use. It is this intuitive interface combined with transparent charges that has attracted such a broad customer base.
How can an Online Provider Compete with the Banks on Trust?
Competing with the banks on trust should certainly not be a problem for Nutmeg given the ongoing litany of banking cock-ups and injustices. The industry was initially built on the idea of helping people grow their family’s money, but over the years it has become fat, outdated and greedy.
The large investment companies are built on inefficient systems, opaque process and inflated fees. By offering the same service digitally, customers can review services like-for-like. This means the leading banks now have to be more transparent and compete with smaller firms like Nutmeg, rather than relying on name alone.
