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Profile: why a friendly robot could be the poster child of the RDR

Profile: why a friendly robot could be the poster child of the RDR
If the retail distribution review (RDR) can be considered a failure in terms of public awareness – 15 months on from its launch, the majority of the British population has either simply never heard of it or have no idea what it means, according to a survey for the Chartered Insurance Institute – perhaps what it lacked is a public face.

Step forward Doughbot. A lovably retro ‘robot’ with vacuum tube arms, painted-on suit jacket and tie with a single wheel beneath and a crumpled aerial emerging from his domed head, Doughbot is the public face of free-to-use, automated financial advice website Money on Toast.

The brainchild of Chichester-based discretionary management business CPN Investment Management, behind his family-friendly smile and googly eyes Doughbot is the vehicle for imperial ambitions; the company is targeting a landgrab on otherwise unadvised assets across the UK.

‘We were looking at how the internet has changed the music industry, changed the retail industry, and the associated shift to technology, and the financial sector remains a long way behind the curve,’ says Charlie Nicholls, Money on Toast founder and partner at CPN, pictured centre below.

‘We are well positioned to be at the forefront of that change. We were initially focusing on younger users, but one of the biggest surprises for us was the cross section of people we were seeing use it, lots of silver surfers, really across age demographics, which has become a big factor in what we do.’


Formerly involved in what he describes as ‘a number of tech start-ups’, Nicholls joined his father Chris Nicholls at CPN, which Nicholls senior founded in 1986, in 2010. Alongside his brother and group accountant Sam Nicholls and Kay Ovendon, head of corporate development at Money on Toast and portfolio manager at CPN, he is one of the people targeting an aggressive expansion.

Regulated as a provider of restricted advice, Money on Toast offers users a guided pathway through a series of questions on tax wrapper allowances, risk tolerance and financial aspirations to arrive at a suggested financial plan – like a financial version of a Choose your own Adventure book.  

Accepting the outcome assigns users to either external funds via Fidelity Funds Network or one of CPN’s three portfolio models, invested via appropriate tax wrappers. While investment advice is central to the website, parallel questionnaires offer advice on protection, equity release, mortgages and inheritance tax.

Users can also choose to speak to a financial adviser via phone or Skype, at which point something like the actual market value of financial advice kicks in, with a £35 charge for every 20 minutes. 

Slightly disappointingly, the telephone number credited to Doughbot goes through to a real-life human rather than a robotic answering service.


Probably indicative of the kind of clients using the service, Nicholls says a second major surprise of the development stages has been how few choose to actually talk to one of the company’s five advisers.

If the site has a comparatively lower profile than other low-cost, direct-to-consumer web platforms such as Nutmeg, this is because CPN funded the (undisclosed) development and start-up costs itself, without any venture capital – putting Nutmeg’s large advertising and press budgets out of reach.

Since launch in September 2012 in what Nicholls describes as a beta version (it has been subject to a rolling programme of revision and development), the company will say only that ‘several thousand’ people have used the site, although obviously not all of these will have actually executed a transaction.

In addition to laudatory reviews in the money pages of the national press and an Innovation award from Aberdeen’s platform awards in 2012, the service has also caught some flak from IFAs and financial distribution technology specialists – probably unsurprising for a new tech site.

Possibly more surprisingly, the company has actively engaged with its critics and taken on board their points. While the site’s user experience is a long way from the slickest of its competitors and tends toward the functional, the breadth and depth of its optionality feels much greater than, for example, Nutmeg.


From a regulatory perspective, Nicholls says he was extremely impressed by the eight months he worked with the then-FSA, and the evidence suggests that the Financial Conduct Authority is keen for increased innovation to serve savers and investors unable to afford traditional advice. Appearing before the Treasury Select Committee in February, FSA chief executive Martin Wheatley said it was possible to provide regulated financial advice without any human intervention.

While the RDR has provided a following wind of opinion pieces and national newspaper coverage about the unadvised public (even if it remains unclear how much money the company has actually made on its investment, if any) Nicholls says the reorientation of the industry is just beginning.

‘We are just at the start of a very long process – there are various regulatory changes on the horizon which are going to continue to drive change.

‘[The biggest of these] will be platform charging when cash rebates are turned off in 2016 when large numbers of people are going to be faced with upfront charges… and also RDR is happening gradually, it has not been a one-off change.’

CPN declined to specify by how much its assets had grown since the launch of Money on Toast, which could be read by a sceptical observer as a suggestion the company is not yet taking money into its own models hand over fist.


The company currently manages around £150 million on behalf of around 2,500 clients. Over the 12 months to the end of February, the company’s balanced portfolio has returned 9.79%, versus the ARC Sterling Balanced return of 5.11% and the FTSE WMA Stock Market Balanced return of 4.62%.

The company invests entirely via collectives, is not afraid to tactically use cash – currently the balanced portfolio is running close to 10% – and has a higher than average turnover, for a private client fund, actively trading passive beta exposure around a core of actively managed funds.

‘On the whole, we think equity valuations will continue to rise in the medium term,’ said Ovenden, who joined the business in 2012 following a career at Baring, JP Morgan and ABN AMRO.

‘We are currently impressing on our clients not to expect a smooth ride however. With the markets at record highs, investors will be jittery and any incident could spark fears of a correction. Any number of unwelcome surprises lie just around the corner, so we are wary of being too bullish with our equity exposure.

‘That being said, as long as nothing particularly unexpected occurs we think that pullbacks, although inevitable, are likely to be short-term and an upward trend will continue.’

In terms of UK exposure, the company is currently heavily weighted toward Citywire A-rated Giles Hargreave’s Multi Cap Income and AAA-rated Andrew Jackson’s Ecclesiastical UK Equity Growth funds.


‘We are currently fairly UK-centric with our core holdings but are starting to sell down our mid cap exposure in favour of larger cap holdings,’ adds Ovenden. ‘We think the bigger companies will be at the forefront of the next phase of UK growth and we expect them to be returning profits to investors through more generous dividend flows.’

While the distribution might not yet have been transformative for the company’s portfolio management business, Nicholls says this is really only one of the potential prizes on offer.

‘We launched at a similar time to Nutmeg and we consider them a rival alongside a handful of other companies operating in this sector, but we are very aware that one start-up can’t change a market by itself, and ultimately this market is big enough for all of us.

‘We have already been approached by a number of big institutions to enquire about partnering, from supermarkets to financial service businesses and the national [advice] networks. We have had approaches from South Africa and Australia, which are places that historically have looked to the UK for market leadership. There is a huge amount of interest in what this technology is capable of.’

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