Schroders-Nutmeg: Analysis

Pie chartThe investment in the Nutmeg business announced yesterday makes sense for Schroders in diversifying its business streams.

Schroders has a wealth management business aimed at high-end customers. Nutmeg is at the other end of the spectrum meaning Schroders’ investment in Nutmeg offers exposure to the mass market.

Nutmeg invests only in exchange-traded funds and for customers with as little as £1,000.

Schroders last investment in its wealth management business was the July 2013 acquisition of Cazenove Capital. Like Schroders, Cazenove is often described as a “blue-blooded” wealth manager.

The UK’s retail distribution review has prompted financial advisers and wealth managers to seek clients with larger pots to invest. With its shake-up of adviser charging structures, the review means less well-off clients are much less profitable. This is exactly the market that Nutmeg and competitors – who offer discretionary, online wealth management – stand to pick up.

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