iWeb is impossible to beat if you only make a handful of trades a year but I’d wager most people using it during accumulation would probably be making 12 regular trades a year. Any extra trades would then take the fees over £60/year. The even cheaper platforms (e.g. Trading 212 and Freetrade) limit themselves to stocks and ETFs. Dozens Black could end up being extremely compelling from a cost perspective for those interested in OEIC funds who are making regular monthly contributions. That’s without even factoring in other features of Dozen’s Black. Dozens only has Vanguard Lifestrategy and Blackrock Consensus OEIC funds at the moment, but they’re very popular funds.
I’ve just started using Invest (due to the current Dozens Black promotion). Will be interesting to see how it develops over the next year or so at the end of which I’ll decide whether or not to use long term and move other funds over. Certainly various improvements will need to be made to usability.
But I don’t use Spend or Track. Main reason being I’m happy with my existing current account (Monzo). But even if I weren’t happy, I wouldn’t consider using Dozens as it doesn’t make data available via open banking. I’m no longer considering any current or spending account that doesn’t support open banking.
I’ve just been equating the Dozens Black fee to a fixed investment platform fee - for me personally the Invest aspect is the interesting bit. But I’m sure Dozens would argue there’s more value to it than just the Invest aspect.
That’s exactly one of the reason why I use multiple platforms at the same time. I make my regular trades on percentage fees platforms, and then move the sums to flat fees platforms once in a while.
Dozens Black’s £60 annual flat fee and zero commission trading could save an investor the trouble of selling, moving and re-buying investments annually (other than moving from GIA to ISA), but they must address the other issues first to actually get those investors onboard.
Furthermore, perhaps an “expert mode” switch on the app is also required for this type of customer. For example, an experienced investor would rather see jargon (e.g. “ETF”, “OCF”) than guess the meaning of some words currently used in the app (e.g.: “strategy”, “strategy fee”), and they would also like to be able to search funds by their ticker, ISIN and name, than just filtering them by risk level.
BTW, at the moment Dozens is certainly not targeting at individuals with moderate to large amount of financial assets. So the £40k breakeven point isn’t going to help them much. This is a market positioning decision, do they want to be the execution-only stock broker who also offers some banking services, or the banking service provider who also offers some fund trading functions?
Yes, we can. As you can see from the table below, only 10% or less people switch their savings accounts or current accounts regularly, so we aren’t the regular type customers for sure.
This is all really interesting stuff - if I worked at Dozens it’d be essential reading.
My take on the Dozens mission is that it is looking to bring together all aspects of an individual’s financial life in one place so that you can make better decisions and reach better financial “wellness”. I think this involves two key things: a) showing everything in one place (not there yet), b) helping folk move from being spenders, savers then investors. Dozens would then make money through three routes: subscription fees (à la Black), introduction fees to other services (the marketplace model, and the one that price comparison sites rely on) and their own products (primarily the investment products, but possibly mortgages and other long term investments funded by the Dozens balance sheet as deposits grow).
For the above reasons, this would seem to be a false binary. Dozens, played right, would be the place where unbundled services come together.
A few other observations from the excellent insights in previous posts:
Why not Freetrade? Is it lack of stocks? Or a more fundamental concern?
I think we’re probably in the minority, as we’re online talking about personal finance. That’s a self selected group that has a certain interest already!
This probably describes me, too. My interest in Dozens isn’t so much the product set, or even the bonds, though. I think I’m hankering after a proper financial control centre. A hub and spoke model where I can a) orchestrate most of my financial life (I often express this by wanting rules: when I receive my salary automatically send money to savings accounts elsewhere, for example) and b) see, track and forecast in one place.
This is interesting. Could you expand a bit of the tax treatment please? I assumed that when an ISA you wouldn’t really need to faff with self assessment.
(Cue lightbulb moment: if Dozens becomes a financial control centre could it do my self assessment for me?)
This is a biggy. A senior UX specialist - at least - plus a UX audit is urgently needed. Anecdotally this is the biggest concern with Dozens from folk I’ve spoken to. And is usually offered unprompted.
I wouldn’t look at Curve as a template though. Something between Monzo and Starling would be good, in my view. But take time, a step back, and really strip the thing back from first principles. It isn’t so much about what’s out there already as finding that distinctive Dozens style, visual voice and approach. It isn’t so much about losing functionality as making it super clear how the app works - and it being a joy to use.
It looks like Dozens does support open banking,. I imagine it’s just that there’s no one interested in adding it yet given limited user demand. I think Dozens 2 will also bring external accounts in. I use Monzo happily as my main account at the moment - but would be very keen to run that data across the Dozens spend and track functionality. And if the Dozens product moves faster, then I’d consider moving.
This is very much essential. The app looks thrown together at the moment. The switch over to the new system has also created weirdness, ideally that switch over should be unnoticeable in the app. Instead the app now has things like this
A business model like Fineco Bank? They offer full fledged multi-currency international banking service, and treading service for stocks, ETFs, futures, options, CFDs, and many more. Although the disadvantage is a complex user interface and had to answer a lots of questions (required by regulators) to open an account with them.
Then, why am I not banking & investing with Fineco Bank? First is because they are new to the game in the UK, and they aren’t very UK focused at the moment. That means they don’t have OEICs, ISAs and SIPPs. Two is because they are an EU regulated bank, so the EU’s PRIIPs regulations applies to them, and that renders the futures and options trading function unusable (funny enough, CFDs are still available). Two things put together makes it a crippled product for any UK customer.
Will Dozens be able to do things differently? Yes, of course. Will it be easy? Hell no! Will they try? Let’s see.
I don’t mean to criticize Freetrade’s business model here, but since you asked…
Irresponsibly marketing & advertising
They encourage people to trade things they don’t fully understand, such as individual stocks (there’s no risk premium for taking on the additional risk of individual stocks). They never mention the currency exchange rate markup in any marketing materials. Which leads to the next point.
It’s not technically hidden, because they clearly writes the cost on their website. But how many people understands the meaning of “FX Rate: Spot rate + 0.45%”? How many people actually think this is a part of the cost? Let me explain it to you. “FX Rate: Spot rate + 0.45%” means when you buy a stock or ETF that’s not priced in GBP (the jargon is denomination, but I won’t use it here), you will have to pay 0.45% of the purchasing price as a cost, and when you sell the stock or ETF, you will have to pay another 0.45% of the selling price as a cost. So the cost of buying and then selling anything not priced in GBP is 0.9% (for comparison, most index tracking ETFs have an annual cost between 0.1% and 0.3%). But on the bright side, it seems that all their ETFs available at the moment are priced in GBP, so only the people who trades individual oversea stocks will suffer from this. Remind you, they encourage their users to trade individual stocks.
Funds availability and the freemium business model
Large and mid cap funds are available for free, but the whole of market funds that contains small cap companies aren’t. To get that, you will need to pay ~£120 per year.
OEIC, ISA and the freemium business model
As I said earlier, holding ETFs outside a tax wrapper is undesirable for people who doesn’t do Self-Assessment tax returns. Freetrade doesn’t offer OEICs, and the ISA is a paid for feature charging £36 per year, yet only comes with a limited choice of funds (see the point above). To gain access to whole of market funds in ISA, the cost is ~£156 per year. A two platforms (flat fees & percentage fees) approach is much cheaper for the monthly buy and hold type investors.
That’s actually a brilliant idea. But having said that I’m not the regular type customer, I have to say that I want something that’s full featured, more like a programming language than simple “if this then do that” rules.
An example use case: I rent my place, the rent includes bills, but I need to top up the meters and get reimbursed by deducting it from the rent. Because the top up aren’t always the same amount and not exactly monthly, so I had to modify my standing order for the rent very often. It would be greatly helpful if I can have something like this:
global and persistent variables:
rent = 300
topup = 0
monthly on the last working day:
record top up:
amount: prompt="How much did you top up?", type="GBP_value"
topup = topup + amount
if (topup < rent):
rent_to_pay = rent - topup
result = faster_payment(from=my_account, to=landlord_account, amount=rent_to_pay)
topup = 0
show_notification("Successfully paid " + rent_to_pay + " rent to the landlord")
show_alert("Failed to pay " + rent_to_pay + " rent to the landlord, reason: " + result.message)
topup = topup - rent
show_notification("Top ups costed more than the monthly rent, not paying rent this month, I need to tell the landlord about this")
I don’t need to say it again that I’m not the typical customer, and please don’t be surprised that I have strange ideas and needs. Whoever offers a “programmable bank account”, I will be the first one to sign up for sure.
I use a software to do all of that at the moment, plus some additional features, such as analysis, reporting and scripting (yes, I love customize things to the way I wanted them to be). It’s the only way I’ve found that allows me to get a holistic view of my financial situation. It has the numbers for my savings, investments (including quotes), debts, incomes, expenses, taxes, even physical assets all in one place. I can’t imagine how will I feel if a product can do all of that for me, without me actually typing in all those numbers manually (other than quotes, that’s automatic). But on a side note, if the product exists, and I choose to use it, I will need a peace of mind by exporting my data in a readable format regularly, just in case if something happens to the company or the data stored in their data centre.
Oops, I just realized I made a terrible typo there. I meant “outside tax wrapper” / “inside GIA”. Basically, foreign capital gains (e.g.: gains from selling an ETF) outside a tax wrapper needs to be reported to HMRC by completing a Self-Assessment tax return. So you can hold ETFs in ISA/SIPP, and hold OEICs in GIA to avoid doing the SA. But for people who is already doing SA (e.g.: self-employed), this doesn’t add much more work to it.
I have accounts with Monzo and Starling, but never really used them. All my expenses are going to my 0% credit card by default, and current account is just something to bridge the gaps between my salary, savings accounts, investment platforms and the credit card companies. Fintech companies are too focused on current accounts and savings, not many have dipped their toes into the waters of the lender side of business. They are not of much use to me, because I usually have exactly £0.00 balance in my current accounts (and occasionally dip into the free overdraft buffer) Those are signs for good money management skills, but apparently mortgage lenders don’t like it
Off-topic a bit, mortgage lenders don’t like people with moderate amount of employment income and a lots of savings & investments. It’s virtually impossible to get a mortgage valued more than 5x annual employment income, even though you have demonstrated that you’ve managed to save more than 60% of your after-tax income for years, and only asking the bank to offer you a 80% LTV mortgage, 4 times of the deposit they get from a typical first-time buyer with a 95% LTV mortgage. What a strange world.
No. Quite the opposite. Banking and financial services are becoming commoditised and specialised. The days of taking all services from one institution are either over, or on the decline, depending who you talk to. What I mean is a place to bring together all these different (unbundled) services. There’s a niche for a good provider to provide the customer interface, an overview of your total financial picture - and to introduce you to other specialised players where appropriate. That’s what I mean.
All valid points, and will depend on your needs, but I’d still baulk at paying excess fees per trade. If you’re just building up a long-term portfolio, then something like Vanguard would seem to be the most cost effective option.
Just one point of fact, I understood that an ISA is included in the Freetrade Plus fee. So you’re looking at ~£120, rather than £156.
I think the FT+ costs are a bit on the high side, but can’t really begrudge making revenue somewhere!
By your own admission, I think that it’d be unlikely to find something that does that - it feels a bit too niche (although ask me to tell you about my app store for fintech concept some time). For the purposes of this conversation, I’d like Dozens to pull out something with mass market appeal, and which is simple and has an elegant user interface. Even something small - like specifying a time to pay a standing order - would be innovative. The amount of times I’ve got confused about what time money is sent from different places and ending up sending stuff a day or two later, just in case…
This is all truly fascinating stuff, and I am very grateful to @Roman, @Peter, @o99 and everyone who has put such thought into it.
I have moved this to a dedicated thread so it is not lost in conversations about bonds as we are specifically looking at Invest ideas here.
I will not respond here now as I am keen to hear YOUR thoughts and feedback not to influence you at all, but I can assure you that we read this and consider it very carefully and with huge respect for the expertise and experience you share.
As many of those who have taken part here have said, “you are not ‘normal’ consumers” (!) and in fact we are hoping to create something that introduces many more individuals to the benefits of investment who’ve not tried it before, but we also want to cater for those who have more complex needs.
I’m looking forward to a very exciting 2021 working with you all to make our futures a bit brighter and more secure
Yes, others here would appear to have far deeper knowledge however for me the beauty of the Dozens proposition is the simple one stop shop which enables you to do all your day to day banking stuff whilst encouraging the journey to save and invest. In this case it doesn’t have to win in all categories but deliver a rounded experience which will be good enough for most and for those like myself wishing to de-clutter their life. As a parent I see this as particularly useful in encouraging a healthy relationship with money for my children (18/20) for whom the here and now is all too attractive but for whom the ‘gamification’ of save / invest and the accessibility of the offers might prove attractive. Once the offer has stabilised I would look to recommend but to date the maturity and stability of delivery have not been sufficient to give me confidence that someone without the desire to ‘play’ or in search of a primary account would be a good match. As stated previously love the intent, am in for the journey, and am very interested in much of the discussion above. I am also very interested in the business proposition when it is exposed.
Here are some observations and suggestions I’ve mentioned in some other threads that may be worth repeating in this dedicated thread:
Allow users to opt out of the hand holding when investing (risk assessment and requirement to choose goals). I know its well-intentioned and designed for those who may not be experienced with investing, but for most of those who are comfortable investing I suspect it’s really annoying (I know it is for me). Maybe have a standard mode (with the hand holding) and an advanced mode without. Perhaps to access the advanced mode you have to self certify as a sophisticated investor.
Finally, a question. To what extent does Dozens want to increase the number of funds available in the Invest section? If there is a desire to increase, perhaps a dedicated thread for making fund suggestions would be useful?
Personally, I’d like to see a GBP-hedged world equity tracker added, perhaps IGWD
This is all very interesting, responses are much as I suspected. Difficult to win over seasoned investors in any situation. Is attracting new investors the better path?
The fee comparison above isn’t entirely fair - for non-black members, 0.5 is the maximum fee - because no fees on loss making days, right?
If I’ve understood correctly, can anyone (@robert might not be allowed due to rules about how rates are advertised) give an indication of the true rate they’ve experienced? I guess 0.25% (ie 50% of days end up, 50% end down?) is overly optimistic - I’m guessing things generally drop quicker than they come back up?
I’ve think you may have misunderstood the fee structure. You don’t get charged if your portfolio value is less than what you invested. So if you invested £1,000 you won’t get charged for days when portfolio value is less than £1,000. You will still get charged if portfolio value drops on a particular day (relative to previous day’s value) as long as the portfolio value remains above the value you invested (i.e. above £1,000 in this example).
First, it’s a good idea to split this discussion to a dedicated thread. It might sound like I’m saying this in hindsight, but I was long expecting this to happen.
Good to know. I think it’s essential to have an “expert mode” switch on the investment section if you really want to serve both new and experienced investors. Perhaps the expert mode will also switch between a handful of selected funds (what we have right now) and most funds available on the market (like a regular investment platform).
The risk assessment is an one-off process, I’m not too bothered by it. And, THB, a part (but not all questions) of it is actually a regulatory requirement, so you can’t really skip it. But I’m totally agree with you about the goal setter. Dozens, please allow us to turn it off.
BTW, since you mentioned the risk assessment, I remember the the income/net asset/etc. boxes all accept at most 5 figure numbers, so anyone has more than £100k income/net asset/etc. won’t be able to enter the real number, and is forced to enter something else instead. This needs to be addressed urgently, as those numbers are actually a part of FCA’s KYC requirement, which means those affected customers were forced to give false information to Dozens. This is a very serious issue. Once you fixed this issue, you will need to ask everyone to fill in that form again.
I have the same question. But honestly I don’t think a fund suggestions thread is the way to go. If you want to have experienced investors using Dozens invest, the fund universe shouldn’t be made selective. All funds do not violate certain criteria (e.g.: non-UK reporting fund, dirty class fund) should be made available.
Out of curiosity, may I ask why do you want a currency hedged equity fund? I’d totally understand your reason if you were asking for a currency hedged bond fund. But you are asking for an equity fund, and equity movements are a lot more volatile than major currency pair’s movements. What’s the point of avoiding the small currency risk but take on a big equity market risk? Or is it the other way around, that you are actively managing your portfolio and switching between the hedged and unhedged versions of the same fund to take advantage of predicted currency movements? If that’s the case, perhaps trade on margin or forex futures is a better way to do it, as you will be able to use a leverage to amplify your gains (and losses too).
Hmm, that perhaps is from a different view than @o99 . I want to hear your side of the story too. Would you mind explain to me why do you think a currency hedged world equity fund is the “most reliable” investment?
In fact, it’s a lot easier to attract the former than the later. The former already have the expertise, knows what they are looking for, and ready to switch if anything fits their need better and/or is cheaper than what they have at the moment. You would be surprised to find out how many people with a small pension pot switched to the Vanguard SIPP when it first became available. On the contrary, “new investors” (i.e. “soon to be investors”) don’t know what they are looking for, are confused by the choices of funds and platforms, mentally put an equal sign between investing and gambling, and between risk and losing money. It’s much harder to educate them, take the equal signs away from their minds, and encourage them to make their first step.
I wish, but that’s not true. @o99 has explained it how it works, and in reality (hopefully) your investments will grow over time, so depending on your choice of fund, only the first few days or months you may enjoy some nil-fee days, and after a while you will certainly be paying 0.50% per year until you sell the funds. Therefore, ignoring the first couple of months, it is a fair enough comparison.
The time horizon for when I want to access my ISA funds will probably be years rather than decades. Over this time period I’d prefer to avoid currency risk on the equity portion (not just the bond portion). Particularly due to potential for Brexit to drive movements in GBP.
For my SIPP (time horizon in decades) I’m not bothered by currency risk and am using 100% unhedged equity.
The problem is it can reduce choice of funds available and locks you in to that reduced choice for 12 months. This is undoubtedly done with novice investors in mind, but for those already comfortable with making their own choices it’s off-putting.