Nutmeg vs Moneyfarm: what’s the difference?

Moneyfarm vs Nutmeg: what’s the difference?

When choosing between robo-advisors, it’s worthwhile to compare Nutmeg and Moneyfarm. 

Both offer accessible platforms for people looking to invest without extensive knowledge of the stock market.

They take away the complexity of managing an investment portfolio by leveraging algorithms, and both provide a hands-off approach to investing. 

However, while they may operate in the same industry, Nutmeg and Moneyfarm differ significantly in their investment strategies, fees, and customer experience. 

What are Nutmeg and Moneyfarm’s specific investment strategies?

Nutmeg investing focuses heavily on exchange-traded funds (ETFs), creating diversified portfolios that match the investor's risk tolerance.

Nutmeg offers five types of portfolios: 

• Fixed allocation
• Fully managed
• Thematic
• Socially responsible. This focuses on companies and bond issuers with high environmental, social and governance (ESG) standards.
• Smart alpha

These portfolios range from low to high risk, making Nutmeg suitable for various investors, whether you're a cautious beginner or a seasoned investor seeking more sophisticated options.

Moneyfarm’s investment strategy is to take a more personal approach to robo-advising by offering customers an initial consultation with a human financial adviser.

This hybrid model blends human expertise with algorithm-driven investing, making it appealing to those who want support.

Moneyfarm’s investment offering also relies on ETFs, but they offer only two types of portfolios: managed and fixed allocation.

The managed portfolio offers full strategic management and a regular rebalancing of investments. Moneyfarm also offers fixed allocation, which offers simpler, cost-effective management.

You can customise your portfolio by focusing on ESG or thematic investing, or by focusing on more competitive yields.

This approach makes it more streamlined but slightly less versatile than Nutmeg.

Regarding risk, Nutmeg offers broader flexibility due to the range of portfolio types, while Moneyfarm's hybrid model provides a sense of security for those who prefer human advice.

What fees can I expect from Moneyfarm and Nutmeg?

Nutmeg’s fees are tiered, based on your account balance.

According to the Nutmeg website, you can expect an annual management fee starting at 0.75% for investments up to £100,000, dropping to 0.35% for investments above that threshold. For their fixed allocation portfolios, fees are lower, starting at 0.45% for up to £100,000.

Moneyfarm’s fees work similarly but with some slight variations.

According to Moneyfarm, their management fee starts at 0.75% for investments from £500 and drops depending on the value of your investments. It reduces to 0.65% for investments between £20,000 and £50,000, and drops to 0.35% for investments over £500,000.

They also charge an average underlying fund fee of around 0.2%, but this can vary.

Both platforms charge trading fees when buying and selling ETFs, but neither has any inactivity or non-trading fees, which is a relief for those who like to take a more passive investing approach.

Is Moneyfarm or Nutmeg better?

The answer depends on what you're looking for as an investor.

Nutmeg and Moneyfarm are not a like-for-like comparison, as each platform has unique advantages and disadvantages.

The pros of Nutmeg 

• It has a broad range of portfolio risk levels so that it can be suitable for various investors with different risk appetites.
• It can be suitable for beginners and experienced investors alike.
• Nutmeg offers lifetime ISAs, which can be useful for those looking to buy their first home or save for retirement and potentially benefit from the government bonus.

Cons of Nutmeg 

• The fees can add up, especially for smaller portfolios. While fees may not seem like an issue, they can eat into your investment returns over a long period of time if they are high.
• Limited access to human advisers. A financial adviser can offer personalised advice based on your unique circumstances.

Pros of Moneyfarm

• Human consultations for more personalised advice, which can be useful if you have specific money goals you're working towards.
• Online assistance for investment choices, although its always worth doing your own research or getting expert advice so they're right for you.
• Share investing accounts are available, allowing you to buy and sell various investments.

Cons of Moneyfarm

• There are fewer portfolio types, so you may face less choice if you're hoping to find a portfolio that requires minimal intervention and management.
• Higher fees for smaller portfolios, which can eat into your long-term investment returns.

Moneyfarm or Nutmeg: which should I choose?

The choice between Nutmeg or Moneyfarm depends mainly on your personal investment needs.

As well as fees, investment strategy, and various pros and cons, here are some other questions you should ask yourself when choosing between Moneyfarm and Nutmeg.

How do Nutmeg and Moneyfarm remain competitive and adapt to changing market conditions?

Both platforms remain competitive by constantly updating their portfolios and embracing new technologies. 

Nutmeg has partnered with J.P. Morgan for its smart alpha portfolios, giving it a competitive edge in offering actively managed strategies. Moneyfarm, on the other hand, leverages its human advisers to offer more personalised strategies that adapt to changes in the market.

Which platform is better for passive or long-term investing?

For passive investors, Nutmeg is wort considering. With its easy-to-use platform and various low-maintenance portfolio options, Nutmeg caters to those who want to invest and forget. 

Moneyfarm investing is better for long-term investors who prefer ongoing human advice, making it ideal for those with larger portfolios seeking personalised attention.

Can you have an account with both Nutmeg and Moneyfarm?

Yes, it’s entirely possible to have accounts with both Nutmeg and Moneyfarm.

However, be mindful of tax liabilities, as having investments spread across platforms could complicate your tax reporting. You may also find yourself paying double the fees.

Which platform provides better customer service and support?

When you compare Nutmeg and Moneyfarm, both platforms offer reliable customer support.

However, Moneyfarm may appeal more to those who value personalised assistance, as it offers consultations with human advisers. Nutmeg is known for its efficient, straightforward service, which is primarily online-based.

Get expert financial advice

When deciding between Nutmeg and Moneyfarm, it ultimately comes down to your personal investment needs and preferences.

Both platforms offer strong features and make investing accessible to a broad audience, but they differ in their approaches and portfolio options. 

Whether you value the flexibility of Nutmeg’s portfolio range or the personalised service from Moneyfarm, understanding these differences will help you make an informed choice.

Find a financial adviser via Unbiased to get expert financial advice tailored to your investment goals and personalised strategies.