The news: AJ Bell, which runs one of the UK’s largest investment platforms, AJBell Youinvest, will launch an app in H1 2022 called Dodl by AJBell that offers commission-free investing services.
More on this: Dodl will charge an annual fee of 0.15% of the value of a portfolio but won’t take tax wrapper charges. Users buying into funds will also have to pay annual costs for the underlying fund. Dodl’s offerings will include:
Trendspotting: Offering free trades isn’t enough to launch a trading platform anymore.
Startups and incumbents alike are engaged in a race to the bottom in terms of prices to stay competitive—older digital trading platforms like TD Ameritrade and incumbent heavyweights like Fidelity have slashed their fees and are consolidating to bolster their digital capabilities. Dodl’s digital competitors are now differentiating their brands through other means.
The big takeaway: Dodl will face an uphill struggle in the crowded UK market. It’s counting on attracting new investors—even as competitors pivot and adopt strategies more appropriate for a maturing market: focusing on increased engagement, expanding to less tapped-out markets, and creating product differentiation.
But the wild card is whether the retail trading slowdown is about to end. The discovery of the omicron coronavirus variant could restore conditions more favorable to new entrants and increased trading volume. If lockdown restrictions are reimposed, consumer confidence plummets, and economic volatility increases, investors’ interest in trading platforms could be revived.
Dive deeper: Need more insights on how we expect digital brokers to adapt to falling trading volumes? Click here.
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