In an effort to further democratise wealth management, digital investment manager Nutmeg has streamlined its fee structure and reduced costs for more than two thirds of its customers.

Martin Stead, CEO of Nutmeg.

Doing away with the previous structure of four fee brackets, ranging between 0.3% and 0.95% depending on customer investment levels, Nutmeg will adopt a simpler two-fee-bracket system for its actively managed portfolios, constructed exclusively with exchange-traded funds.

Customers will now pay 0.75% on the first £100,000 of investments, and 0.35% on all investments above £100,000. The fee-structure captures all relevant costs to the investor including setup fees and transaction charges. Nutmeg does not charge exit penalties on customer accounts. Customers will still need to pay underlying fund charges however, which average 0.19% per annum.

Nutmeg has increased the fees charged on investments above £100,000 from 0.30% to 0.35%; however, existing Nutmeg customers will only be moved to the new fee structure if these new fees are lower than their current management fees.

Martin Stead, CEO of Nutmeg, said: “Fees are the only part of your investment performance that you can control. The fees you pay can make a significant difference over time. Even a tiny reduction can make a massive saving over 20 or 30 years. Our technology enables us to serve our customers with high quality investment portfolios at a much lower cost than traditional wealth managers, and we are pleased to be able to make our fees even more competitive as we enter the New Year and ISA season.”

Coinciding with the change in fee structure, Nutmeg plans to launch a range of fixed allocation ETF-based portfolios with charges of 0.75% below £100,000 and 0.25% on investments above that amount. Unlike the existing actively managed portfolios, the fixed allocation portfolio will not receive on-going strategic intervention but will benefit from dividend reinvestment and automated rebalancing.