JPMorgan Purchases UK Robo-Advisor Nutmeg
As part of preparations to launch its digital bank Chase later in 2021 in the UK, JPMorgan Chase & Co. purchased Nutmeg, a UK robo-advisor, for £700 million.
Nutmeg launched in 2012 as an investment platform and quickly managed to amass a customer base of almost 150,000 investors. It had £3.5 billion of assets under its management at the moment of sale, including junior and lifetime individual savings accounts, general investment accounts, and pensions. However, Nutmeg reported a massive £21.2 million loss for 2019. The platform’s shareholders include the Goldman Sachs Group (10%) and Schroders PLC (5%), which will be bought out in the deal.
Nutmeg, like other robo-investment sites, relies on mathematical algorithms to offer its customers financial advice and enable them to invest their assets in exchange-traded funds and other investment products. The platform is tailored toward novices and provides them with easy-to-understand information about the world of finance. It is one of the best ways to start investing, right next to investment apps.
Nutmeg and JPMorgan have already worked together in the past, as Nutmeg’s platform allows investing in ETFs run by JPMorgan’s asset management arm.
JPMorgan Chase’s CEO of the International Consumer Growth Initiatives Sanoke Viswanathan said, “We are building Chase in the UK from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us. [...] We look forward to positioning their award-winning products alongside our own, and continuing to support their innovative work in retail wealth management.”
Neil Alexander, the CEO of Nutmeg, said, “Nutmeg’s customers can expect the same level of transparency, convenience and service that helped make us a leading digital wealth manager in the UK.”
Nutmeg is a brand that enjoys strong customer awareness, but whether it will remain on the market or not is a decision yet to be made. What is certain is that acquisition signals that the competition in the robo-advice sector will get even tougher in the future. JPMorgan is just one of the big names leaving their mark on the sector, creating some major casualties in the process. Investec, Tiller Investments, and Moola have already closed their doors. While several remain in business, such as Moneyfarm, the sector seems to be a tough one for making profits unless robo-advisors get backed by a deep-pocketed firm with an agenda, such as JPMorgan.
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