While Hargreaves Lansdown is best known for providing a platform for do-it-yourself investors to buy and sell funds and shares, Nutmeg is an online discretionary investment manager (sometimes known as a robo-adviser or digital investment manager) that builds and manages a portfolio of suitable investments on your behalf. Both firms offer tax-advantaged savings plans and offer plenty of guidance to help people learn about investing. And they both offer access to financial advice if you need it. Costs will be important in making your choice, but you might also be swayed by differences in the services.
What is Hargreaves Lansdown?
Hargreaves Lansdown is based in Bristol and is a constituent of the FTSE 100 Index of the largest companies listed on the London Stock Exchange. Founded in 1981, it has over 1.7 million clients and £120 billion of assets. Its platform offers investments and savings, individual savings accounts (ISAs), and self-invested personal pensions (Sipps). But the firm also offers a wider range of financial services, including an investment arm that manages a range of in-house funds, financial advice for customers who don’t want to make their own decisions, and annuity and currency brokerage services.
What is Nutmeg?
Based in London, Nutmeg is an online discretionary investment manager (sometimes known as a robo-adviser) that was founded in April 2011 by Nick Hungerford and William Todd. ‘Discretionary’ means that it makes investment decisions on behalf of its customers, building and managing diversified portfolios for them, rather than providing a platform for people to buy and sell investments. Nutmeg claims to set up your portfolio in under 10 minutes and uses technology to keep charges low and show where you’re invested. The company was bought by US bank JP Morgan Chase in 2021 in a deal valuing it at £700 million. It now has over £5 billion in assets under management on behalf of 230,000 investors.
Hargreaves Lansdown v Nutmeg – product on offer
Both firms are regulated by the Financial Conduct Authority and covered by the Financial Services Compensation Scheme (FSCS).
With both firms you can invest using tax-efficient wrappers such as Individual Savings Accounts (ISA), Junior Individual Savings Accounts (JISA), Lifetime ISAs, Pension and general investment accounts.
Hargreaves Lansdown allows you to get started investing with as little as £25 a month. Nutmeg’s minimum investment is £500 for ISA, general investment and pensions. But Nutmeg lowers this to £100 for Lifetime ISAs and Junior ISAs.
Hargreaves Lansdown’s product range also includes Cash ISAs. Plus, the Bristol-based firm has partnered with sixteen banks and building societies to create a standalone savings platform called Active Savings. This allows you to hold your cash savings in one place and pick and mix between easy access and fixed-rate bonds.
There are also big differences in the types of investments available. Nutmeg only offers portfolios, which are almost entirely made up of low-cost exchange traded funds. ETFs are a type of investment fund, listed on stock exchanges, which replicate the performance of a pool of investments or an index.
Hargreaves Lansdown offers a very wide investment choice of funds, plus UK and overseas shares, corporate and government bonds, ETFs and investment trusts. In fact, it offers 3952 funds, 1379 UK shares, 6995 overseas shares, 1514 ETFs and 401 investment trusts. Customers select their own investments but there’s plenty of guidance on the website to help them do it.
For investors who want easy solutions, Hargreaves Lansdown also offers four ready-made portfolios to choose from which offer different levels of investment risk. These are perhaps what you should be comparing with the portfolio service offered by Nutmeg because they are run by investment experts, who make the day-to-day investment decisions, choosing a diversified mixture of portfolio holdings from among all the funds available on Hargreaves Lansdown’s platform.
Nutmeg’s portfolios offer more risk levels and investment options than the Hargreaves Lansdown ready-made portfolios. Plus, the Nutmeg’s range is based on five investment styles, that also use ETFs to diversify across stocks, bonds, industries and countries. Just as with Hargreaves Lansdown, you have to choose a portfolio by yourself.
Nutmeg’s Fully Managed and Socially Responsible portfolios are monitored on a daily basis, while its cheaper Fixed Allocation portfolios are designed to perform without the intervention of Nutmeg’s investment team. Nutmeg’s more recent launches are Smart Alpha portfolios, managed by parent company JP Morgan using a unique set of ETFs, and Thematic investments, targeting the growing trends shaping our future.
Within the Nutmeg Fully Managed and Socially Responsible options you choose between 10 risk levels. Thematic investing is only available for risk level 5 and above. Fixed Allocation and Smart Alpha both offer 5 risk levels.
Nutmeg offers a 10-page detailed pdf guide to explain how to choose between all of this but, even so, you might find it difficult to choose if you’re an absolute beginner and lacking confidence. Even the Nutmeg guide states “We know this is a lot of information to digest”.
The firms have very different charges too.
Hargreaves Lansdown charges 0.45% on the first £250,000 invested in collective funds in its ISA and Sipp. The fee reduces to 0.25% for amounts invested between £250,000 and £1 million and to 0.10% on amounts between £1 million and £2 million, with no fee on amounts over £2 million.
Hargreaves Lansdown’s headline fee of 0.45% works out as £450 per year on £100,000, and has stayed the same for many years. But its charges for customers who only invest in shares are capped at £45 a year in the ISA and £200 a year in the Sipp.
Hargreaves Lansdown doesn’t charge for buying and selling funds. But it has additional trading charges when you buy and sell shares, ETFs and investment trusts: share trades are usually charged at £11.95, with reductions for more frequent traders.
Nutmeg’s management fee is 0.75% up to £100k and reduces to 0.35% on the portion beyond £100k. But if you choose its Fixed allocation investment style, the management fee starts at 0.45% on the first £100k and is 25% on the portion beyond.
On top of these management fees, you have to pay the ongoing fees attached to the funds. Nutmeg’s start at 0.21% for Fixed Allocation, rising to 0.36% for Smart Alpha. With ongoing charges of 0.88 to 0.99%, Hargreaves Lansdown’s ready-made portfolios are relatively expensive.
So on management/platform fees, Nutmeg is more expensive on the first £100,000 invested, while its portfolios are less expensive than Hargreaves Lansdown’s ready-made portfolios. (You need to add management/platform fee together with the portfolio fee.)
On an investment of £100,000, in Nutmeg’s Fully Managed portfolio, the annual cost would be £1,010. By contrast, £100,000 invested in Hargreaves Lansdown’s Moderately Adventurous Managed portfolio would cost £1,400 a year.
Nutmeg also offers a financial advice service for a one-off fee of £575 (including VAT), that will create a financial plan to help meet your goals. However, this is restricted advice its own range of portfolio services and investment and pension products, rather than whole of market advice that looks across the whole investment market. Nutmeg’s financial advice service is designed to identify which Nutmeg products and investments might be appropriate for you given your financial circumstances and goals. You can also book a free 30-minute call with an expert before you sign up for this.
Hargreaves Lansdown offers two types of financial advice. Investment advice, which costs 1% of your investments on the first £1 million invested, is dedicated to selecting investments that suit you, tailored to your goals. Financial Planning, which costs 2% of your investments on the first £200,000 and 1% on investments between £200,000 and £1 million, is more comprehensive, designed to help you with a range of goals and situations, including retirement, tax planning, budgeting, and passing on wealth.
Hargreaves Lansdown v Nutmeg – research, tools and features
Hargreaves Lansdown offers daily market insights and investment ideas and inspiration, written by its large team of in-house experts. It also produces video and podcast content and hosts live events.
Nutmeg also has a good blog covering a range of financial topics and lots of guides for beginners, though its team of experts is smaller.
Both firms offer a range of tools and calculators, allowing you to calculate compound investment returns, plus returns from ISAs and pensions, and see how tax affects your investments.
Hargreaves Lansdown also offers its Wealth Shortlist, a selection of 74 funds that its analysts have identified as having the potential to outperform their peers over the long term. The Wealth Shortlist includes active and passive funds, plus responsible investing options. All of the information from both firms is available for free to customers and non-customers.
Hargreaves Lansdown v Nutmeg – user experience
Customer reviews on consumer website Trustpilot can be useful in comparing customer service. Hargreaves Lansdown has a TrustScore from Trustpilot of 4.1 (based on 9,101 reviews) vs Nutmeg at 3.8 (based on 1,851 reviews). While Hargreaves Lansdown asks their customers for reviews, Trustpilot says it has no records of Nutmeg asking customers for reviews. Overall, businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that don’t, which may account for some of Hargreaves Lansdown’s higher score.
On the App Store, Hargreaves Lansdown’s app has a 4.7 rating (based on 52,800 ratings), while Nutmeg’s app has a slightly higher 4.8 rating (based on 16,200 ratings).
Hargreaves Lansdown v Nutmeg – quickfire advantages & disadvantages
Hargreaves Lansdown advantages
- Wider investment choice.
- Offers Cash ISA.
- Standalone cash savings service.
- Lower platform fee.
- Access to financial planning.
Hargreaves Lansdown disadvantages
- High ready-made portfolio fees.
Nutmeg advantages
- More portfolio risk levels to choose from.
- More portfolio investment styles to choose from.
- Lower portfolio fees.
Nutmeg disadvantages
- Higher management fee on first £100k.
- No access to shares or active funds investing.
- No cash products.
- Only offers restricted financial advice.
Our conclusion
Hargreaves Lansdown’s cash product features – Cash ISA, plus Active Savings – make it a convenient one-stop shop for people who want to save and invest their money. Hargreaves’s broader investment range might also sway sophisticated investors. In fact, investors who only want to hold shares in their ISA or Sipp account might find that Hargreaves is best value due to the fee cap applicable to shares only investors in those accounts.
On the other hand, if you’re a beginner, you might prefer the broader range of portfolios from Nutmeg, and their lower costs.
Before making a decision use Compare and Invest to find out what you’d potentially be charged for your type of investing style (products and tax-wrappers held). But don’t just focus on the amount saved over one year as the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums.
