Nutmeg is adding a human touch to its robo-advisory service

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Nutmeg is adding a human touch to its robo-advisory service

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Nutmeg, the UK's largest robo-advisor with assets under management (AUM) exceeding £1.5 billion ($1.9 million), is piloting a phone-based financial advice service, reports The Financial Times.

Business Insider Intelligence The service will allow customers to have an initial conversation with an advisor for free, though they will be charged £350 ($446) if they want to receive personalized investment advice and recommendations on Nutmeg's investment portfolios. The startup has said the service, which begins with an online questionnaire about a client's finances, will not be restricted to its existing investors.

The move highlights customers' demand for a human touch in digital wealth management. A substantial number of potential clients reach up to a point on the online registration to invest in Nutmeg, but then abandon the process, Lisa Caplan, the startup's head of financial advice, told This is Money. This, according to Caplan, is because potential clients want a knowledgeable voice to get them over the fear of investing.

Nutmeg is not the only automated investment platform to have discovered that customers want human interaction when it comes to managing their money. In January, Scalable Capital, the BlackRock-backed robo-advisor, launched phone and face-to-face consultation services following high demand from clients. The launch of these services is a move away from the strictly automated robo-advisory propositions championed at the outset by these startups.

In addition to reducing signup friction for Nutmeg, the hybrid model will add a new revenue stream. The startup, which has 60,000 clients, has struggled with profitability as it continues to scale its operations — it reported £12.4 million ($15.8 million) in losses for 2017, a 32% increase from the £9.4 million ($12 million) posted the previous year.

This offering, which presents a brand new source of revenue, could help it to achieve long-term sustainability. We'll also likely see more platforms adopt this strategy, as they look to diversify their revenue and establish themselves as genuine alternatives to traditional advisors.

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