M and A

JP Morgan Chase Pushes Into UK's "Robo" Market, Agrees Nutmeg Deal

Tom Burroughes, Group Editor, June 18, 2021

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Launched in 2012, Nutmeg was designed to shake up conventional wealth management by automating parts of the wealth and financial planning value chain. It has not yet made a profit.      

JP Morgan Chase has agreed to buy UK robo-advisor Nutmeg as the US firm aims to push into the UK retail banking and investment space, pitting it against a number of rivals.

The bank will compete with Goldman Sachs’ consumer brand Marcus, which was launched in Britain in 2018. Nutmeg has more than 140,000 clients and more than £3.5 billion ($4.89 billion) in assets under management. It will form the basis of JP Morgan Chase's retail digital wealth management offering internationally.

The financial terms of the deal were not disclosed.

“Nutmeg, one of the UK’s leading independent digital wealth managers, will complement the digital bank that is planned for launch in the UK later this year under the Chase brand,” the bank said yesterday.

Launched in 2012, Nutmeg was designed to shake up conventional wealth management by automating parts of the wealth and financial planning value chain. However, it hasn’t made a profit (Reuters, June 17). 

The robo-advisor space has been more challenging than some of the original hype might have suggested. A theme this publication has heard is that clients prefer hybrid rather than purely digital services.

In 2018 UBS shut down its SmartWealth digital wealth management platform and sold off the technology to US robo-advisor SigFig, little over a year after setting it up. 

Interest in digital platforms was boosted a decade ago when the UK’s Retail Distribution Review reform of financial advice resulted in some advisors hiking their client minimums, producing an “orphan client” problem and an audience for, hopefully, less expensive digital options. 

From scratch
“We are building Chase in the UK from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us. We look forward to positioning their award-winning products alongside our own, and continuing to support their innovative work in retail wealth management,” Sanoke Viswanathan, CEO of International Consumer Growth Initiatives at JP Morgan Chase, said.

The bank intends to offer a range of products, launching at first with a “new take on current accounts.” The offering is being piloted in an internal testing phase, prior to public release.

Neil Alexander, CEO of Nutmeg said: “Nutmeg’s customers can expect the same level of transparency, convenience and service that helped make us a leading digital wealth manager in the UK. I am truly impressed with the digital experience that Chase is building for the UK, and this new chapter in our story will see Nutmeg’s customers benefit from a wider range of products and services in the future, and allow us to expand into new markets.”

JP Morgan Chase was advised by JP Morgan Securities as financial advisor, and Freshfields Bruckhaus Deringer LLP as legal counsel. Nutmeg was advised by Arma Partners LLP as financial advisor, and Taylor Wessing LLP as legal counsel.

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