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AJ Bell makes investing a Dodl

AJ Bell announced it is launching a brand new, low-cost, app-only platform aimed at younger people called Dodl. It’s due out next summer but has already caused a stir in the market. As well as competing with low-cost giant Vanguard, AJ Bell has ruffled some feathers in the trading app market too as it will offer commission-free trading. So what’s Dodl?

Dodl has two main objectives: keep things simple and low cost. AJ Bell wants Dodl to help savers move from slowly whittling away the value of cash in low-interest savings accounts to stepping into investing.

The app features a little monster that helps you navigate the world of investing, which you’ll either love or hate, with simple tips that aim to encourage you to ApplePay some cash over into an ISA investment, for example. Whatever you think of the little monster, it’s a refreshing design from a traditional provider.

Not just for the young

AJB has said Dodl is aimed at younger people, and that’s easy to understand as it’s an app-based product complete with trendy brand name missing a few letters, but the likelihood is that it’s going to appeal to many more investors. Many in their 40s and 50s could find Dodl a lower-cost solution that is perfectly suitable for their needs.

Hargreaves Lansdown’s more traditional customers are in this bracket, but Hargreaves Lansdown is a premium service and comes with that cost. At 0.45% its fees are up to three times as much as Dodl’s.

How cheap are the chips?

Dodl’s main headline is its low charges, which are an easy-to-understand 0.15% of your total investments. That’s a charge of £15 a year for a £10,000 ISA investment, or just over a quid a month – which is pretty darn cheap. It’s essentially the same as Vanguard’s charging, which is also 0.15% but capped at £375 a year.  Dodl’s charges are the same as Vanguard until your portfolio goes over £250,000, when it becomes more expensive.

Often the trade-off for low pricing is that you won’t get much by way of choice. At Vanguard you can pick from a trimmed down list of only Vanguard funds, but Dodl will have a much broader range for the same price.

There will be 50 blue chip stocks and 30 funds from the off, including AJ Bell’s range of six passive multi-asset funds and its Responsible Growth fund. Even the top three Vanguard funds will be available and international trading will be added in future too.

You’ll also have a wider range of products to wrap around your investments with ISA, general investment account (GIA), Lifetime ISA and Self-invested personal pension (Sipp) available from day one. Typically, new entrants (and especially app-based platforms) just provide ISA, GIA and maybe a Sipp, but Dodl comes stocked.

Trading charges

Commission-free trading is common in the trading app area with the likes of Freetrade, but Dodl will have it too, though on a small scale initially. Trading apps often leave you to pick stocks and build your portfolio yourself and don’t provide access to funds, but you can do both on Dodl if you want.

Though you won’t have nearly as many stocks available to invest in, you can also have a bit of your money in a ready-made investment, run by professionals too, which will be the best of both worlds to some people.

Commission-free trading apps tend to have fixed fees for accounts like ISAs and Sipps as a way to generate revenue. Fixed fees can be good as they have a lower impact on your returns as your investment grows. But Dodl’s charge of 0.15% still stacks up well on price with the trading apps, especially for lower-balance investments.

Freetrade, for example, will be more expensive than Dodl for accounts up to £24,000. Freetrade will obviously provide access to many more stocks, but not any funds, whereas Dodl has a short list of both.

What about YouInvest?

AJ Bell has had a D2C platform for years called YouInvest, but Dodl is supposed to complement it rather than replace it, and customers can open and hold accounts on both. That said, Dodl’s likely to be a good choice for many currently on YouInvest, which offers a much broader range of options but for a higher charge (0.25% up to £250,000).

However, if you’ve got an investment on YouInvest with a lot of shares but aren’t looking to trade much, it might be better to leave them with YouInvest. That’s because Youinvest’s trading charges are capped at £42 a year, which could be less than 0.15%.

Is Dodl for me?

We don’t know the full picture of what Dodl will look like yet as it’s still being built, but Dodl could be a good fit if low charges are important to you and you don’t want to invest in more niche investments. Though Dodl could and almost certainly would expand the investment range if the demand was there.

Image from AJ Bell


About the Author:

Rich joined Fundscape after 11 years at Old Mutual Wealth/Quilter in Southampton, where most recently he provided platform analysis and market insight to inform its distribution and platform strategy. Rich’s career at Old Mutual Wealth (then Skandia) began in its contact areas, before moving into the training department where he wrote and implemented a training accreditation scheme for his colleagues. He then moved to managing the delivery of new platform enhancements in the businesses before finally moving to its UK platform marketing team where he provided insight into platform propositions and, using data from Fundscape, measured Old Mutual’s place in the platform market.

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