Investing with Dozens and ideas for the future

Can I ask @robin99 and @afreeb (who took out bonds with sums large enough to take out an investment with Dozens) why you didn’t chose to invest some or all of your capital? Would anything have persuaded you?

@dan_g Personally I have a stock portfolio held with another provider… This is more like the cash element of my diversified portfolio but at a better rate than I would get anywhere else at the moment.

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Basically the same as @afreeb, investments held elsewhere and this is (sort of) cash, in addition to actual cash I have in a normal bank.

The ability to get this out fairly quickly if I really needed combined with a fixed rate faaaaar above anything else makes this a really great product.

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I did the same thing. Allow me to explain the situation.

Let’s start with a bit of background information. I own many funds in the structure of OEIC and ETF. The investments are held in SIPP, S&S ISA and LISA tax wrapper accounts and plain GIA accounts. I have accounts with many investment platforms.

Why many investment platforms? That’s because their fee structure and the tax wrapper availability. Flat fee platforms are more suitable for holding high value and infrequently traded assets, and percentage fee platforms are better for holding small to moderate value but frequently traded assets. LISA is only available on very few platforms, and they are often more expensive than platforms that doesn’t offer LISA.

However, although I have investments on many different platforms, I have to admit that I don’t have any on the Dozens invest.

What’s putting me off from investing with Dozens? I will answer this honestly and directly, and they may sound like cold blooded criticism. The content may upset some Dozens users, investors and employees. Please skip the rest of this post if you think keeping on reading may negatively affect your feelings or mood.

1 . Fees

Dozens invest is a percentage fee based platform, charging 0.50% p.a. with the exception of 0% on the days when the value of investment fall below the cost basis. That makes it a competitor of other percentage fee platforms.

For comparison, below is a list of some big brand, zero trading commission, percentage fee platforms, and their standard (i.e. ignoring discounts) annual custody charges on GIA and/or S&S ISA:

  • Vanguard: 0.15%
  • HSBC Global Investment Centre: 0.25%
  • Fidelity: 0.35%
  • Charles Stanley Direct: 0.35%
  • Hargreaves Lansdown: 0.45% (zero commission for OEIC only)

As you can see, Dozens invest is more expensive than the most expensive platform Hargreaves Lansdown in the list if the investment is not losing money.

2 . Funds availability

Dozens invest lacks of many important building blocks for a diversified portfolio, such as long duration gilts, REITs and unhedged US equities. Acc vs Inc funds is also a problem, as I strongly prefer Inc funds outside tax wrappers.

3 . Usability issues

The GIA and ISA separation has always been problematic; the goals setter is useless and annoying for buy and hold investments; the minimal £1,000 per fund (“strategy”) entry requirements is problematic for managing a portfolio. I haven’t used it, but I’d imaging the order history / statements are going to be a problem too, because the transaction history in the Grow section never worked for me before the Wildcard migration and has disappeared altogether after the migration.

4 . Tax reporting concerns

Holding non-UK domiciled funds (basically, all ETFs) outside GIA is undesirable for people who doesn’t currently complete the Self-Assessment tax return. The funds availability issue made this worse, because everything other than those multi-asset funds are non-UK domiciled ETFs.

The shortage of income class funds may also become a problem for people who invests in GIAs if the consolidated tax certificate is not issued at the end of each tax year or is inaccurate (yes, I’ve seen some companies issue inaccurate CTCs to their customers). Combined with the usability issues around order history and statements, this may make it virtually impossible to correctly and accurately report capital gains, dividend and interest income to HMRC.

Why do I hold Dozens bonds?

For the record, Dozens bonds is a low risk investment product, not a zero risk fixed rate savings account. It fits nicely into a diversified portfolio to partly replace the short duration gilts. It has a higher yield, and isn’t exposed to the interest rate risk, but instead it is exposed to higher credit risk and counterparty risk which are something I’m willing to take on.

Would anything be able to persuade me to invest with Dozens? Yes, of course. If other investment platforms all raised their fees to higher than 0.50%, or Dozens invest reduced its fees to 0.25% or lower, I will check on the status of the other 3 issues again, and then decide which platform to use in the future. Before the fee change, as a customer, not an investor in Dozens, I don’t have any legitimate reason to consider invest with the Dozens invest platform.

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May be worth adding though that if you have Dozens Black it essentially becomes a fixed fee platform @ £60/year (since platform fee is zero with Dozens Black). This is pretty good in comparison with other fixed-fee platforms. Once you have more than £40k its cheaper than using the cheapest percentage fee platform (Vanguard), and that’s without considering other benefits of Dozen’s black.

It’s also free in 2021 if an investment is by the end of 2020.

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Without first addressing the other 3 issues to some degrees, even it’s a free service, I’d refrain from using it. There’s other free (freemium) platforms suffering from some of the same issues, and some additional problems too, such as bad practices in advertising and marketing (encourage inresponsible treading, hidden forex costs, etc.), and I’ve chose to not use them. Cost is an important factor, but not the only factor. High costs will put me off for certain, but lower cost (even free) doesn’t automatically make me to choose it over other low cost platforms.

Also, let’s not compare Dozens to the flat fees platforms, because iWeb’s £25 account opening, £0 custody, £5 commission is really hard to beat. After the first year you would have to make 12 trades in a year to break even with £60/year on the Dozens Black, very unlikely to happen for an annually rebalanced buy and hold portfolio consist of a handful of funds.

I’ll be honest with you. No, I’m not using any other feature at the moment.

But please take into consideration that I’m not the regular type of customer any bank or fintech company would have expected. I regularly switched my non-main current accounts for the free cash (until they stopped offering it), frequently moved savings around for better interest rate, and never renewed an insurance policy or mobile contracts without comparing the price first.

So, yes, I do tend to go where the market leads, but it’s not the whole picture. For an example, I’ve kept my main current account with the same bank when I’m fully aware that their service is very bad, in fact a lot worse than my other current accounts used for getting the switching bonus. Why do I keep using it as my main current account? It’s only because their fraud detection system is less sensitive (or more accurate? or just doesn’t work most of the time? I don’t know), so I can move very large sums without triggering it. Try move £20,000 from some fintech banks in one go? I’m sure your transaction will get blocked, and if you are unlucky you may even get locked out of your account for hours or days. Definitely not something I’d like to try.

Let’s go back to Dozens. The bonds is a marketing cost. It will bring onboard some average users, but unavoidably attract some people like me. This doesn’t make it a bad marketing strategy, just need to ensure the cost of marketing is justified by the amount of engaged and retained users. AFAIK, so far they’ve managed to keep the balance in check by utilizing the bond bidding process.

I guess the real question is, does Dozens want to convert the not-so-average users to regular customers? or just let them gradually and naturally leave when the bond is becoming increasingly harder to bid for larger sums?

Remind you, the not-so-average users need bank accounts and debit cards too. They just have a different need, and often falling through the cracks of main stream products, and ends up using some unpopular products that looks pretty bad in average users’ eyes. However, do those products really need to look bad in average users’ eyes? I doubt about it. For example, if a bank would allow me to temporarily turn off the fraud detection system for one specific transaction without the need of back and forth explaining and reassuring to the bank that I know what I’m doing and having to listen five minutes long warnings and answer tons of security questions from the tired and bored customer service lady/gentleman over the phone, I will definitely consider move my main current account to it.

BTW, another reason I’m not using the rest of the app is I often find it too cluttered. Currently there’s way too much not-so-important information, and way too many interactive elements on most pages. Yet some important information, such as my total account balance, or the total value of all my bonds, are hard to find. Some clean up and rework of the app’s UI is definitely needed. I consider myself a tech savvy person, and it took me a good few minutes to figure out how to bid on the bonds on the day I opened my account. I quite like the Curve app’s design, it took me no time to figure out how to add my first card, a single big blank card with a big “+” sign on it and a short description right below it, all of that on a otherwise pretty much empty page is very hard to miss. After I started to use it, other UI elements gradually showed up as I use (Timeline and Wallet were empty with just a description of them before the first transaction is made, Send was a short description and a big button to turn it on before first use, etc.), so I’m not overwhelmed by the complexity of it on the first day. I’m sure there’s something Dozens can learn from the Curve’s design.

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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.

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I’d seen the same breakpoint. It seems somewhat out of kilter - ie quite high - within the Spend Grow Invest flow. Surely dozens is scrambling to get transfers sorted!

It will be interesting to see what gets added to Grow in particular, as it may mitigate the fees issue eg by adding value to Black and filling in some of the gap between the bonds and Invest

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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.

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You’ve literally just described me as I do exactly all there things :joy:, we can’t all be the non-regular customer!

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.


Source: https://www.fca.org.uk/media/financial-lives-survey-2017pdf

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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.

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You’re right. I actually knew about that back in April and suggested Emma get in touch to integrate, but completely forgot about it!

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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

It would be good to know whether addressing the UI/UX is in the near term plan…

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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…

  1. 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.
  2. “Hidden” cost
    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.
  3. 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.
  4. 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

triggers:
  calendar:
    monthly on the last working day:
      run: pay_rent()
  manual: 
    record top up:
      parameters:
        amount: prompt="How much did you top up?", type="GBP_value"
      run: record_top_up(amount)

functions:
  record_top_up(amount) {
    topup = topup + amount
  }

  pay_rent() {
    if (topup < rent):
      rent_to_pay = rent - topup
      result = faster_payment(from=my_account, to=landlord_account, amount=rent_to_pay)
      if (result.success):
        topup = 0
        show_notification("Successfully paid " + rent_to_pay + " rent to the landlord")
      else:
        show_alert("Failed to pay " + rent_to_pay + " rent to the landlord, reason: " + result.message)
    else:
      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 :confused:

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.

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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…

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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 :slight_smile:

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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.

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Good idea to have a dedicated thread.

Here are some observations and suggestions I’ve mentioned in some other threads that may be worth repeating in this dedicated thread:

  1. 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.

  2. Don’t hide pending investments from summary views/info about the Invest section

  3. Publish the ISA terms & conditions document on website. At the moment you have to contact support to access it.

  4. Publish ISA transfer policy. It’s not in the ISA T&C document.

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

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I think this is essential! Thoroughly boring, of course, but probably the most reliable investment.

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