Snappy name with a few letters missing? Check. Quirky mascot and attractive colour scheme? Check. The promise of a smooth, easy-to-use app with rock-bottom fees? Check. Dodl certainly ticks all the boxes when it comes to millennial marketing.
The investing app, which launched late last month, is offering a “simplified journey” for anyone new to the stock market, whittling down the often overwhelming universe of assets and vehicles to just a few core choices.
In return, investors pay an annual account fee of 0.15 per cent. The only other investing service that’s as cheap and clear as this is Vanguard, which just offers its own tracker funds and doesn’t (yet) have an app.
So, I can see why the folks behind Dodl have identified a gap in the market. Yet this is no plucky start-up launched by outsiders.
Dodl was created by one of the UK’s biggest execution-only brokers, AJ Bell, in response to a glut of cheap trading apps now nipping at the heels of established platforms, as well as a new sector of more accessible digital wealth managers, bizarrely known as “robo-advisers”.
According to Boring Money’s Online Investing report from March, the share of customer accounts held by the big five platforms (including AJ Bell) has slipped from 41 to 36 per cent over the past five years.
It seems all platforms now want to capture the young investing market, which exploded during the pandemic as lockdown boredom, economic disillusionment and forsaken Spain-and-Sangria funds got seriously channelled into investing for the first time.
The more outrageous manifestations of this trend have grabbed plenty of headlines, from blatant gambling on so-called “meme stocks” like Gamestop to the financial hopes being pinned on ownership of ghastly digital artwork (most of which you couldn’t pay me to look at).
But our generation represents new long-term opportunities for platforms, since older customers won’t be around forever.
And data from platforms often shows we put together portfolios that are more balanced and sensible than our critics give us credit for.
Dodl, or more accurately, AJ Bell’s head honcho Andy Bell, has no truck with the more extreme aspects of young investing culture that have emerged in recent times.
He implies in interviews that competitors such as Freetrade promote reckless day trading and says they have “unsustainable pricing models”.
In response the founder of Freetrade Adam Todds is on the record as saying that Dodl’s branding is “juvenile” and symptomatic of “some boomer trying to create a product for young people”.
Miaow! This kind of commercial cattiness was bound to be unleashed as Dodl tries to do something new – offer three different investing experiences that are equally accessible.
It’s offering ready-made portfolios based on risk profiles in the vein of robo-advisers, a range of low-cost tracker funds like Vanguard and access to recognisable shares such as Greggs – not dissimilar to Freetrade’s offering, the only difference being that they’re sorted into themed collections such as “Travel”, “Shopping” and “Raw Materials”.
I don’t know whether Dodl has come up with a winning formula or not. All I’ll say is that deciding to launch at this moment is… brave. For starters, investors rarely switch platforms, not just because of apathy and busy lives.
The process often becomes a pain in the backside. While exit charges are (finally) being phased out, I am not alone in having experienced delays, tussles with customer service and annoying, costly time out of the market whilst I tried to get a better deal elsewhere.
So Dodl will be primarily trying to reach young people who are completely new to investing. But the cost-of-living crisis could make investing pie in the sky for large chunks of the young population, at least for the foreseeable future.
AJ Bell recently reported a £200m drop in inflows to its platform in the first quarter of this year compared to the same period in 2021.
On top of this, the tech and crypto thrill ride that got so many young people hooked on investing may be running out of steam. Netflix recently saw its market value plunge by almost $60bn amid a shock drop in subscribers.
Last Friday, Amazon shares fell by 14 per cent, its worst one-day stock market performance for nearly 16 years. The valuations of Bitcoin and Ether are considerably off their all-time highs (down 15.8 per cent and 22.8 per cent respectively).
A steadier proposition rooted in commodities and consumer durables might not have that same ‘wow’ factor.
Investing is a bit like marriage. If you want it to succeed you have to commit to it in good times and bad, long after the initial excitement wears off, and be prepared to evolve with it. But it’s tough being faithful to the stock market right now: Dodl had better hope that enough young investors will be prepared to stay the course.
Iona Bain is the founder of Young Money blog and author of Own It!