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View the article online at http://citywire.co.uk/wealth-manager/article/a691543

Top economist Kay backs Nutmeg with 'significant' investment

by Elsa Buchanan on Jul 15, 2013 at 14:46

Top economist Kay backs Nutmeg with 'significant' investment

Nutmeg.com has found financial backing in the form of UK economist John Kay.

Kay, who will also act in an advisory capacity, has made a ‘significant’ personal investment, co-founders Nick Hungerford and William Todd said in a statement.

Kay explained his investment follows a surge in clients at Nutmeg.com, in the wake of the implementation of the retail distribution review (RDR) while attributing widespread dissatisfaction in the industry to over-intermediation, ineffective regulation and a severe lack of transparency around charges and fees.

‘To some degree RDR may bring down the cost for investors, however what we’ve been seeing is intermediaries employing a range of devices to minimise the impact, that don’t actually make that much difference when it comes down to it.

'Investors need a simple choice when it comes to intermediation, and development in online technology is the best way of making this happen,’ Kay said.

He added: ‘One of the attractive things about Nutmeg is it is providing a better version of intermediation in two senses- one, it is a genuine complete aggregation of your holdings, [and] the other, it provides a real service of relating the underlying investments to your risk preference, rather than simply being in effect an execution only vehicle.’

The alternative online investment manager offers zero upfront charges, zero withdrawal charges and zero transactional costs, while management fees are 1% or less.

It says that loyalty is rewarded by lowering the management fees, which can be cut to as low as 0.3%.

Former Brewin Dolphin divisional director and Nutmeg.com chief executive Hungerford (pictured) explained Kay's investment would strenghen the firm's position as a 'low-cost, transparent and high-quality investment management' company. 

He said: ‘To have the support of Kay, an industry stalwart and expert in this field, affirms our belief that there is a need to shake up the investment management industry.

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