Britain’s do-it-yourself investing industry is poised for a shake-up after the American giant JP Morgan Chase set out plans to enter the market and challenge the likes of Hargreaves Lansdown and Interactive Investor.
The move by the New York-based bank marks a significant expansion of its ambitions in the UK and will add another heavyweight player to an already competitive market.
It will also involve the scrapping of the Nutmeg brand, four years after JP Morgan turbocharged its plans to build a consumer business in the UK by acquiring the British digital wealth manager for about £700 million.
The American group will start its revamped wealth management and investment business, which will be called JP Morgan Personal Investing, in November, with its new DIY platform to follow next year.
The self-directed service will allow clients to trade shares, bonds, funds and other assets, putting JP Morgan in direct competition with Hargreaves, which operates Britain’s biggest DIY platform, as well as Interactive Investor — which is owned by the FTSE 250 company Aberdeen — and the London-listed AJ Bell.
James McManus, Nutmeg’s chief investment officer, said the venture was “a real statement of intent from JP Morgan Chase”.
He said: “This is about doubling down on the UK retail investor market. The ambition is to become a market leader in the UK.”
The emergence of a new player comes at a crunch moment for Hargreaves, which oversees about £155 billion for 1.9 million customers. Previously listed on the London Stock Exchange, when it was a member of the FTSE 100 index, the wealth manager was taken private this year in a £5.4 billion deal.
It is now owned by the private equity firms CVC Capital Partners and Nordic Capital, as well as the buyout division of the Abu Dhabi Investment Authority.
They are embarking on a turnaround that involves investing in its technology in an effort to improve its offering to clients, amid criticism from some customers that its service is expensive.
The acquisition of Hargreaves has been followed by a series of senior departures from the business, including that of Dan Olley, who was its chief executive, as well as the exits of the finance director, chief client and commercial officer, and general counsel.
Nutmeg has grown from managing £3.5 billion for 140,000 investors when it was acquired by the American bank in 2021 to more than £8.5 billion for over 265,000 clients. It currently focuses on offering managed investment portfolios made up of exchange traded funds through Isas, personal pensions and general investment accounts.
The revamped service will offer a new digital “wealth planner” feature that will provide “tailored suggestions” to customers, as well as relationship managers for clients with more than £250,000 invested with the business, the bank said.
It will be run in parallel with JP Morgan’s Chase branded retail banking service in Britain. Chase customers will have access to JP Morgan Personal Investing through their app.
JP Morgan is making its UK push at a time when ministers and regulators are seeking to breathe new life into Britain’s moribund investing culture, as part of efforts to boost the economy and the domestic stock market and improve household finances.
A government-back industry campaign to encourage more people to invest was unveiled by Rachel Reeves in July and is being led by Sasha Wiggins, a top Barclays executive. The aim is to stimulate an investing culture akin to that of the United States. In the UK, only 11 per cent of households own shares.
The Financial Conduct Authority has also set out plans to significantly widen the provision of financial advice in Britain. This new “target support” regime will allow firms to send suggestions to customers without undertaking a full assessment of their individual circumstances. At present, financial advice is expensive and is only received by 9 per cent of UK adults.
McManus said this reform “certainly feeds into” JP Morgan’s plans and that Nutmeg had advocated for the regulatory changes.