Robo-advice is an "abject failure" after JPMorgan retires software-only wealth management Nutmeg brand

EXPERTS have branded robo-advice an “abject failure" as JPMorgan announced it was retiring the software-only wealth management Nutmeg brand.

In a highly symbolic move, JPMorgan said it will migrate its clients from Nutmeg, which it acquired in 2021, to a new platform under JPMorgan Personal Investing. 

Many robo-advisers have faced difficulty scaling profitably, experts claimed.

Scott Gallacher, Director at Leicester-based Rowley Turton, claimed JPMorgan’s move to phase out Nutmeg’s separate identity is an admission: the pure robo model may not survive in isolation.

He said: "Robo-advice may have been an abject failure so far, but I wouldn’t bet against it in the long run. AI could yet be its redemption. While clients still tend to prefer the reassurance of human advice, robo platforms may prove a natural stepping stone for younger or lower-value investors. 

"It’s not hard to imagine a future where Alexa asks how you feel about retirement, runs an instant analysis of your income and spending, and produces a cashflow forecast – all accompanied by gentle nudges to save more and spend less. 

“At that point, AI won’t just be managing portfolios; it will be acting as a proactive financial guide living in your pocket or on your kitchen counter.”

Antonia Medlicott, Founder & MD at Stonehouse-based Investing Insiders, claimed Nutmeg's “higher end” fees may be to blame.

She added: "Nutmeg's fees, like those of most robo-advisors, are at the higher end of the spectrum. Whether you see them as fair really depends on how much you value the service. 

"Robo-advice can be the perfect middle ground for someone who doesn't have the budget for a financial advisor but also doesn't feel confident creating an investment strategy or picking shares independently. 

"What's interesting is that, on paper, this should have been a boom time for robo-advice brands. The proportion of the UK population who invest has doubled over the past four years - and first-time investors are the ideal audience for robo-advisors. 

"The fact that Nutmeg hasn't worked out for JPMorgan suggests those growing numbers of UK investors may be looking for something else - quite possibly more choice or better performance and, almost certainly, lower fees."

David Kimberley, Founder at TradeInformer, said “standalone roboadvisory firms are just not great businesses”.

He continued: "Roboadivsory start ups have faced the same problem as new commission-free stockbroking platforms. They require a huge volume of assets under management to generate meaningful revenues, something none of them have been able to achieve, in large part because they tend to attract low value customers. 

"This is only compounded by the fact that the high value clients, who could bring in more Assets Under Management (AUM), are more likely to want a high touch service, which goes against the entire roboadvisory model. 

"To top that off, roboadvisory products have really been outflanked by Exchange-traded funds (ETFs), which have become the default investment product for retail investors that want a simple, pre-packaged product to hold for the long term. 

“Overall it's hard to see how you could make the product work well in any scenario given these dynamics. Roboadvisory might be offered as one of many products by investment platforms moving forward. But standalone roboadvisory firms are just not great businesses.”

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said the “human element” of advice is vital.

He added: “Tech alone can’t replace human advice. The Nutmeg rebrand is less about one brand failing and more about the limits of pure robo-advice. The economics have always been brutal: low fees, modest account sizes, and high technology spend mean scaling profitably is incredibly hard. 

"If Nutmeg couldn’t make the model work inside JPMorgan’s global machine, it’s a warning sign for the whole sector. Vanguard’s retreat from UK financial planning tells the same story: even with brand strength, low-cost funds, and hundreds of thousands of platform users, it couldn’t make a restricted, retirement-focused service viable. 

"The lesson is clear: investors don’t just want a slick digital interface; they want personalised guidance that adapts to their lives. Without that human element, robo-only advice struggles to win trust and even more to make money.”