Online offerings set to milk advice gap created by RDR

Financial services consultant Vaughan Jenkins has argued a growing number of online investment offerings will try to exploit the advice gap created by the retail distribution review, as another proposition readies for launch.

Bluerock Consulting chief executive Jenkins, who advised on Royal London’s launch of its online financial planning tool MoneyVista, highlighted the forthcoming launch of investment website Nutmeg.

‘It is one of a number of sites that are trying to tap into the future self-directed consumer and the advice gap, where there are consumers who can’t afford advice or [are] not inclined to [seek it], or have had bad experiences,’ he said.

Nutmeg is the brainchild of Nick Hungerford, previously an investment manager at Brewin Dolphin. He said it would offer access to discretionary fund management for a minimum investment of £1,000.

Client portfolios will be set up to target goals chosen by the client, such as paying school fees or saving for retirement, and take into account attitude to and capacity for risk. They will be rebalanced automatically.

Nutmeg aims to launch at the start of the second quarter of 2012 and will allow clients to invest the minimum lump sum of £1,000 or a regular contribution of £100 a month. It plans to charge between 0.25% and 0.75% of assets under management.

The portfolios are built using low-cost collectives, predominantly exchange traded funds (ETFs).

Hungerford said Nutmeg was targeted at investors who were unable to afford a full financial planning service but did not want to use an execution-only service.

‘At the moment you have two choices about what to do with your money. If you are rich enough you can hire someone to manage it for you. The other option is to do it yourself and go to someone like Hargreaves or Fidelity, but that is not an easy thing to do. To diversify, you need to pick funds well and you have to rebalance everything,’ he said.