Review: UK Robo-Advisor Nutmeg

Non-residents welcome for a change


Here’s another one for Brits, especially ones who are planning to move back to the UK at some point or just want to diversify their holdings a bit across currencies, countries, and companies.

Nutmeg is a UK robo-advisor that is fairly unique in that they are willing to do business with non-UK residents.
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You do need a UK bank account, and you will be required to submit your Japanese tax info (My Number), but I was able to open an account last month and so far everything has been pretty smooth.

Nutmeg offers two services for non-residents: a traditional robo service and a cheaper fixed portfolio service. They also have ISA accounts, pensions, etc. but as non-residents we are not eligible for these.

Nutmeg fees.

The traditional robo service seems fairly normal, although they do boast about how their team ‘adapts to an ever-changing world‘ (which actually seems like a bit of a downside to me as this is trying to predict the future). Basically I don’t really see how this service is worth the extra cost.

The fixed portfolio service gives you most of the benefits (diversification, rebalancing, reinvesting dividends) for a much lower fee. This option seems clearly superior.

​However, unlike THEO in Japan, neither seems to offer tax-loss harvesting, which means you might end up with a hefty capital gains tax bill in the future.

I actually applied for a Nutmeg account last year, but didn’t finish opening it and hadn’t funded it. The initial application is your standard online risk test, where they ask you questions to figure out your financial situation and attitude to risk. The questions were less annoying than some I’ve had in Japan -I’m looking at you, Raku Wrap.

A couple of weeks ago, I went back and finished the application (basically gave them my address and Japanese tax info). This was very quick and painless.

I funded the account with an initial 500 GBP (the minimum), then arranged a standing order of an extra 100 GBP per month, basically to experiment with the platform. I chose the fixed portfolio service, and changed my allocation to the ‘adventurous’ level. It’s basically all in equities.


The interface and website are pretty good, easy to understand and without too many options. My one complaint is that the site is a bit slow sometimes, but it’s not a huge problem and doesn’t affect the user experience too much.

There are two important caveats before you invest in Nutmeg from Japan.

Nutmeg is a relatively new company, which looks good but is basically unproven. I would recommend not committing a large amount of your investments to them.

Also, I have been told that having investment accounts like Nutmeg in the UK could result in you being determined resident for tax purposes (this was from a lawyer in the Middle East). Now, I don’t quite see it myself, and I’m pretty sure they wouldn’t bother with non-high wealth individuals, but it is something you may want to keep in mind, particularly if you are wealthier or have more of the ‘ties’ than I do.

So if you are eligible to open a Nutmeg account it could be a way to diversify your investments or invest in the UK.

Anyone else trying Nutmeg? How are you finding the service so far?

24 Responses

  1. I just asked them directly about the ‘resident for tax purposes’ in the UK issue, but they said I would be better of contacting the Inland Revenue in UK directly. The service looks good, and I might give it a go, but I hate complicating tax stuff so need to look into that first!

    1. Thanks for doing that! Keep us posted if they get back to you.
      My understanding (according to that website I linked to) is that as I live in Japan, work here full-time, and spend almost no time in the UK I am probably okay.
      I think it gets greyer if you have a house, spend a lot of time over there, etc.

    1. Hi Nick
      Yes, I just typed in my Japanese personal identification number (My Number). There was no verification, so presumably you could just type in any number with the correct number of digits (although this might be more trouble than it is worth when they give the list to Japan and the name and number don’t match).
      The second point is somewhat worrying. There are two risks: that they go bankrupt and you lose money (seems unlikely given their backers and what they say on their website):
      https://www.nutmeg.com/faq#how-secure-is-it
      The other risk is that they go bankrupt and you have to wait to recover your money, or you can’t use the service any more. This one wouldn’t affect me too much, as I am not planning to invest sizable amounts with them so could afford to wait.
      Quite a few people are predicting that robo-advisors will not survive as standalone entities, but will be absorbed into larger financial companies: http://www.moneytalksnews.com/are-financial-robo-advisers-already-doomed/
      This may happen with Nutmeg. For me it’s worth experimenting with, but not with enough money to make a difference 🙂

  3. In Andrew Hallam’s second book he recommends HSBC for UK expatriates who want to have UK-based index funds. Has anyone tried this?

  4. I’m interested in Nutmeg too. However I’ve also read that they’ve been losing money year after year. I wonder if their business model is sustainable without more people investors. If they ever were to go bust, would your money be protected as a non-UK resident?

    1. They’re a startup so losing money for years is fairly normal. They’ve got some big investors.
      They also seem to be set up properly (i.e. client funds are held separately by intermediary bank, protected by government guarantee, etc.).
      Ultimately it’s a judgement call. I’m happy to invest small amounts with them as part of a diversified portfolio. Would I put all our money in there? Probably not.

      1. Ben,
        Thanks for that. My main worry was that as a non-UK resident my investment wouldn’t be protected by the FSCS. It looks like it is, so I might give it a go myself.

  5. Good to hear. I have heard concerns expressed about Nutmeg’s (and many robo-advisors’) future, so definitely worth considering the potential downside as well as the upside.

    1. This all sounded great, so I tried to open an account a few weeks ago. However, Nutmeg have told me that I need to provide copies of three documents (proof of identity, proof of address, proof of the source of funds) certified as genuine by the British embassy. I was just wondering whether you had to do the same thing, as it’s not mentioned in the blog.

      1. Wow, no I didn’t. I wonder if they have changed their policy.
        Do you have a UK bank account? I funded my account from my NatWest current account, so that might be the source of funds thing?
        Certified by the British Embassy sounds a bit ridiculous.

      2. The website copy hasn’t changed:
        “Can I use Nutmeg if I’m not a UK resident?
        You do not have to be a UK resident to use Nutmeg but you must have a UK bank account, be over 18, and resident in our list of accepted countries. If you are not a UK resident but would still like to open an account, please contact us at support@nutmeg.com or on chat for further information.
        US citizens who are resident in the UK can still sign up — we just have to gather a bit more information from you during the sign up process. ”
        Might be worth reaching out to them to see if there is any flexibility in the certification requirements.

  6. Yep, have an account at Barclays which I was planning to use. I guess the policy must have changed. This is an extract from the email I got from them:
    “To be eligible as a non-UK customer of Nutmeg you must be a passport holder of one of the countries listed in Appendix 2 on the form attached to this message. You will also need to hold a UK bank account and provide additional information as set out on page 2 of the attached form.
    Please complete the attached application form and return this to us, all of your documents will need to be certified by an authorised professional.
    To verify these documents you will need to have them certified as genuine copies. To do this, please take the copies and the original documents to:
    a) A solicitor (or equivalent) if you are resident in your home country
    b) Your embassy if you are resident outside your home country”
    Maybe an anti money laundering thing perhaps? While I can do it, and probably will, it’s a lot of hassle!

    1. Eeek. I must have sneaked in under the radar somehow.
      Lucky escape for me!
      Let us know how you got on if you go through with it. Might make a good guest post (hint, hint).
      cheers

      1. Looks like I won’t be going through with it. I’ve just checked the British embassy website and found that the consulate in Osaka doesn’t offer this service and I’d actually have to go to Tokyo in person. Also, they seem to only certify UK issued documents, which means I can’t get proof of either address or the source of funds.
        Maybe I’ll write to Nutmeg and see what they say, as this policy seems to make it pretty much impossible for anyone in Japan to open an account. I’ll keep you posted if I do.
        Matt

  7. Yes, please do keep me posted!
    I would definitely get in touch with them and see if you an explain things. I find a lot of people don’t really understand the reality of living abroad and what UK embassies actually do.
    Perhaps they can work out a better way of checking all the boxes without unduly inconveniencing people.

  8. Thanks for your review of Nutmeg. I also found it after reading Andrew Hallam’s first book. I think your investment strategy is good and it was useful that you highlighted the potential risks of investing a large amount (as it’s a fairly new and unproven company). These things weren’t mentioned in Hallam’s book.

    1. Thanks, James!
      One other caveat since I wrote the post is that they seem to be cracking down a little in terms of paperwork.
      One RetireJapan member has been asked to come into the Nutmeg office in London in person to do the document checks! 😉

      1. In the end I decided to do this too (my suggestion not theirs, as getting docs certified here just seemed too much hassle). I’m going into the office next Friday, so fingers crossed it all goes smoothly.

  9. So, I went into the office in London a couple of weeks ago as planned. Everything went very smoothly – the staff were friendly and professional and the whole process took no more than 15 minutes. The documents I took were as follows:
    1) passport
    2) proof of address (letters form HMRC and UK Civil Service Pensions, as this was all I had in English)
    3) most recent payslips. I was a bit concerned about these, (a) because they were in Japanese and (b) because I’ve been getting payslips online for the last 6 months, so they weren’t actually that recent.
    4) gaijin card & employers ID card. These were not listed as requirements, but it wouldn’t do any harm to take them just in case.
    The guy who dealt with me copied all these and confirmed that there was nothing else I needed. Later that day the account was up and running. I even got a cup of coffee while I was waiting.
    Of course, none of this helps anyone who is not planning a trip to London in the near future!

    1. That’s great to hear, Matt 🙂
      A bit of a convoluted solution, but good to see that they are flexible about it…
      There shouldn’t be any reporting requirements to Japan until you sell either, unless you amass over 50 million in overseas assets!