Financial Management Solutions

Nutmeg boss has pension plans and an eye on abroad

Since founding his company Nutmeg nearly four years ago, Nick Hungerford has become a star of the UK tech and finance scene. His online wealth management service has been lauded for its ease of use, has picked up about $50m in funding and now has about 40,000 users. Hungerford was previously a stockbroker for Barclays Wealth, but when I speak to him by phone, he sounds the antithesis of the swaggering “City boy” cliché.

“I had a feeling we weren’t doing the right thing,” he says, speaking with traces of a West Country accent (he was raised in Bath and went to university in Exeter).

“Clients weren’t asking the right questions but my dissatisfaction was more on the personal side. I didn’t feel I was being the most useful person or making the greatest contribution to society or being the nicest person I could be. I was being carried away with the self-importance of being a stockbroker.”

His answer was to get away from London’s banking epicentre of the ‘Square Mile’. In 2008 he took an MBA at Stanford University in California, home to so many future tech entrepreneurs.

“I didn’t have this revelation that we could build this better product but my friends asked me to help them with their money.”

Those requests led Hungerford to create a site so individuals could manage investments without any of the unnecessary jargon and add-ons used by the big institutions to justify their costs. The premise was for customers to set their goals and preferences for risk, then let Nutmeg assemble a portfolio and manage it over time. The watchword is “transparency”: rather than be deluged by paperwork and clutter, users get a simple overview of what’s going on and the ability to change what they don’t like. In return, Nutmeg takes a cut of the money invested.

Pushed for a role model, Hungerford has a ready answer.

“Amazon is always my first example because they took a model [bookselling] with really high-quality services and made it even better.”

“If you walk into a bookstore and they don’t know your name or the books you like, the justification for having a face-to-face relationship is not there. And in wealth management, bankers change companies all the time so the benefits of a one-to-one relationship are not there. It’s a noble industry but the excuses for the old guard are running out. They create all these fancy acronyms and then charge fees to translate them, and that’s not fair.”

Hungerford becomes animated when it comes to changes regulators are pushing through to improve transparency.

“It’s going to be 2017,” he says, emphasising how far off that date is, “and the industry is kicking up a fuss! I think that’s complete rubbish.”

A very British attitude is to consider it vulgar to talk about money but Hungerford detects a shift in attitudes.

“Owning stocks and talking about money has always been treated differently across the pond but its changing very quickly here with crowdfunding and peer-to-peer lending. It might not be cool to talk about your BP shares going up 2p but it is cool to talk about what young people invest in.”

Hungerford’s vision is one where more people think about their financial assets and invest smartly for their families’ futures. “Wealth management” might be off-putting for those who think it a category for the very rich but Hungerford thinks about it being far broader.

The site is simple to use but Hungerford is also keen to stress the importance of service, even manning the customer service phones himself at times for customers that don’t want a purely automated, self-service transaction.

“Some people went all guns blazing for automation and some people retreated completely,” he says of changes in financial services afforded by technology. “We offer face-to-face too but only seven people have ever come in to see us...”

Even on the phones a lot of callers are just checking that the service is for real, he says, but Hungerford says reassuring customers that there is a human element to Nutmeg is important.

“I actually like being on telephone sometimes. I’m a sucker for using phones for booking flights because they don’t provide enough information on the sites.”

Today, Nutmeg is “knocking on the door of the largest wealth management organisations” in the country and Hungerford wants to become a top 10 player by June.

Usability will be an ace in the hole because, Hungerford says, think of the person who has made pension contributions with three different employers “and the thought of bringing it all together is horrific”.

If Nutmeg can make that a 10-minute job – as it plans to in a forthcoming pension product - it will win customers and word-of-mouth regard. To that end Nutmeg recently signed up Scott Eblen, a former Google engineer who is working on making Nutmeg and smartphones a winning combination.

Other efforts include attracting charities’ investment portfolios and international expansion.

“We want to delight people so they tell their friends about it. We want to open up the industry so you feel like the experience you have when you’re on Amazon.”

If Amazon is the company to emulate, and Nutmeg is similarly speculating now in anticipation of future profits, the hero is John Bogle, founder of The Vanguard Group and author of the bestseller Common Sense on Mutual Funds, Hungerford owns up to having made mistakes in the past and of being suspicious of jargon and obfuscation.

“It’s really not rocket science,” he says, adding that the long-term plan is to build a strong, respected company.

Nutmeg has become a well-known brand very quickly but Hungerford believes the investment management sector needs more of the same and less customer inertia – and less faith in the idea that customer service is having an annual round of golf.

“A lot of people say we’re doing the right thing but that this style or approach won’t work in their own organisations. That’s a tough thing to hear. We’d like to see more Nutmegs. By behaving in the right way in the long term we’re going to win and if people feel they can pull the wool over customers’ eyes, they’re going to be smoked out.”


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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