If you’re looking for a truly unique investment platform, look no further than Motif Investing. We’ll discuss the fees, go through the pros and cons and let you know if it’s right for you in our Motif Investing review.
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Motif Investing offers a diverse combination of self-directed investments, but with all the benefits of robo-advisor management. You have the option to either invest in pre-built mini-portfolios, or to create new ones of your own design. You can even earn some money if other investors on the platform invest in your portfolios. Plus, Motif Investing offers socially responsible investing, initial public offerings, and soon, cryptocurrencies.
Based in Rancho Cordova, California, and founded in 2010, Motif Investing is part online brokerage firm–in that you can choose your own investments–and part robo-advisor, since it manages your holdings for you. And that makes it one of the most unique and innovative investment platforms available.
But that’s only the beginning. Motif allows you to invest in pre-designed portfolios, called motifs, or to create your own. You can do this using a mix of stocks in exchange traded funds (ETFs), and build your motif around any investment theme or objective you choose.
However, in recent years, Motif Investing has been steadily expanding their product menu. They now enable you to invest in socially responsible investing, initial public offerings, and soon, cryptocurrencies and other digital assets.
There are a lot of innovative investment platforms available today, but Motif Investing is near the top of that list. The platform currently has more than 350,000 customers, including heavyweights such as Goldman Sachs, J.P. Morgan, a U.S. Bank.
Motif Investing has a Better Business Bureau rating of B+ (on a scale of A+ to F), though the company is not BBB accredited.
Motif has become such a diversified investment platform that you have several choices for how you can invest. You can start by opening a Trading Account, which requires no initial investment. You can use that account to trade individual stocks and ETFs, but also invest in what the company calls motifs.
Motifs are both the operative word in the company’s name, as well as the most basic investment methodology the platform provides.
A motif is actually a portfolio that contains up to 30 investments. Those investments are a mix of stocks and ETFs. The company offers dozens of pre-built motifs for you to choose from. But if you decide you have an idea to create your own motif, you can do just that. You can build a motif theme around just about any investment idea you have.
Once you invest in a motif, or create one, it will be fully managed for you by Motif Investing.
In addition to opening a Trading Account, you can also invest in any of the other portfolios available through Motif Investing. The company has branched out into a variety of different investment areas, and promises to develop even more.
Minimum initial investment: Since Motif Investing has several different investment models, it also has individual minimums for each:
- Trading accounts, $0
- Motifs, $300
- Motif Impact Portfolios, $1,000
- Margin accounts, $2,000
Available accounts: Individual and joint taxable accounts; traditional, Roth, and rollover IRAs; trust accounts.
Available investments: All U.S. exchange listed stocks, ETFs and American Depositary Receipts (ADRs).
Account clearing agent and custodian: Funds invested with Motif Investing are held with Pershing, LLC, one of the largest financial institutions in the world, with nearly $1 trillion in assets under administration.
Margin accounts: Motif Investing offers margin trading. It requires a minimum account balance of $2,000. If your balance drops below this level, a margin call will be issued, and you’ll have to deposit additional funds. Current margin rates vary from 8.25% for balances in excess of $500,000, to 10.75% for balances under $10,000.
Margin investing is available only for direct stock and ETF purchases. It cannot be used in conjunction with motif portfolios.
Portfolio rebalancing: Yes.
Fractional shares: Motif Investing allows you to trade as little as .01 shares of stock. That will give you the ability to build a portfolio of fractional shares with a small investment.
Mobile app: In addition to the web version, Motif Investing can be downloaded on iOS (9.3 or later) at The App Store, and on Android devices (4.4 and up) on Google Play.
Customer service. Motif can be contacted by either phone or by e-mail, 9:00 AM to 6:00 PM, Eastern time, Monday through Friday.
Account security. Your account is covered by SIPC, which protects against broker failure (not market losses). Your account is protected for up to $500,000 in securities and cash, including up to $250,000 in cash.
For protection of information, Motif uses firewalls and security technology, including secure socket layer (SSL) technology.
This service is available for $19.95 per month, and offers the following benefits:
- Three monthly real time trades, commission-free
- Unlimited commission-free next market open trades
- Real time quotes
Motif offers seven different portfolios, including four for individuals, and three for institutional investors. In this review, we’re going to focus only on the portfolios for individual investors.
Motif Thematic Portfolios
These are the portfolios (“motifs”) that Motif has been known for since the beginning. They provide theme-based portfolios, based on investment objectives they create. Each portfolio is made of up of a basket of up to 30 individual stocks and ETFs. But Motif has more than 150 prebuilt portfolios, and you also have the option to create your own.
Motif identifies trends, and then analyzes data sets using advanced algorithms to determine the companies that represent the drivers in a particular trend. From there, they construct a portfolio based on a given theme.
The portfolios have a serious objective, even though they’re often given cute names. For example, one motif is called Repeal Obamacare. The portfolio emphasizes companies likely to gain in the event Obamacare is repealed.
Some other pre-built motifs include Online Video, Shale Oil, Casino Gambling, Deflation, Precious Metals, and Cyber Security. Each motif is constructed around the basic theme, and includes investments that match the objective.
Once again, Thematic Portfolios require a minimum of $300 per motif. You can buy or build up to 250 individual motifs. And once you create a unique motif, you can make it available to other Motif investors.
Bonus: Under Motif’s Creator Royalty Program, you’ll get $1 each time another investor buys or rebalances a motif you’ve built. Royalties earned will be paid approximately 15 days after the end of the quarter.
These are Motif Investing’s socially responsible investing portfolios. These are fully automated portfolios designed to align with both your personal values and your investment objectives.
Each Impact Portfolio is comprised of stocks and ETFs from different asset classes, including:
- U.S. stocks
- Developed market stocks
- Emerging market stocks
- Real estate stocks
- Commodities stocks
- U.S. bonds
- International bonds
They also employ tax-aware auto investing to minimize asset sales, reducing capital gains taxes. Each portfolio requires a minimum of $1,000 to invest. There are currently three portfolios in this group:
- Sustainable Planet. Includes stocks of companies that actively practice sustainability to reduce their carbon footprint.
- Fair Labor. Invests in companies promoting job security, safe working conditions and fair wages.
- Good Corporate Governance. This portfolio is invested in companies that demonstrate strong ethical track records toward accountability, fairness, and transparency.
You can also change the asset allocation in any of the above portfolios, based on your own personal preferences.
Initial Public Offerings
Motif Investing enables you to open a Motif account that will allow you to participate in an initial public offering (IPO). You select an investment amount, place a conditional offer, then receive your IPO shares.
One of the major advantages of the Motif Initial Public Offering is that it gives the small investor an opportunity to participate in one of the most profitable investment activities there is. Historically, IPO investing has been available only to institutions and the very wealthy. But you can now participate in IPOs with as little as $250. And that initial investment is commission-free.
Since IPOs are fairly infrequent, you can sign up for notifications, giving you an opportunity to participate as they become available. Motif has previously given individual investors access to more than 100 IPOs, including Redfin, Trivago and ADT.
This portfolio option will be rolled out soon. In the meantime, you can put your name on a waitlist to reserve your spot when it becomes available. Since the portfolio is not yet available, the web site provides little information. However, it looks like it will provide an opportunity to add “Bitcoin and digital assets” to your portfolio.
You’ll have to stay tuned for this one, or add your name to the waitlist.
Motif Investing has two management fee plans:
- Motif Thematic Portfolios, 0.50%
- Motif Impact Portfolios, 0.25%
Build Your Own Portfolio trading fees are as follows:
Notice that there are two sets of fees. The first is for trades executed on the next market day. But if you opt for immediate, real-time trades, the fees are much higher. For example, if you want to purchase a stock or ETF in real time, the fee is $4.95 per trade. But if you wait for the next market open, the fee is $0. Also, broker assisted trades are a steep $29.95 if executed in real time.
The fee to buy into or create your own motif will double if you want to execute the order in real time. This can make motif fees prohibitive on minimum investment amounts, like $300.
IRA fees. Motif Investing charges a fee of $10 per quarter, unless your account has any of the following:
- A Motif Blue subscription
- A balance greater than $10,000
- You’ve made commission trades in the last three months
There is also an IRA termination fee of $95.
To open an account with Motif Investing you must be at least 18 years old and a citizen or permanent resident of the U.S.
You’ll start by entering your email address then creating a password. You’ll be required to enter the typical information needed to open a brokerage account, including your physical address, full name, Social Security number, and driver’s license. You may also be asked to verify your employment and income.
Funding your account. You can transfer money to your account by ACH once you link your bank account. But you can also move funds from another financial institution by wire transfer.
If you fund your account by check, you will need to make it payable to Pershing LLC, the account clearing agent and custodian.
On balance, Motif is an excellent investment platform, but like any other, it isn’t perfect. For example, though it offers trading of individual stocks the ETFs, it doesn’t offer the support and tools that you’ll find on more established trading platforms.
One example is TD Ameritrade. Though its trading fees are higher than Motif’s at $6.95 per trade, it’s a full service trading platform, that allows you to trade in real time. As well, it also offers its Essential Portfolios robo-advisor, if you also want a managed option for at least some of your portfolio.
But an investment platform similar to Motif in many ways is M1 Finance. Similar to Motif Investing’s motifs, M1 Finance offers investment “pies”–both are custom made mini-portfolios but M1’s pies are commission-free.
Meanwhile if you’re looking for a full-on robo-advisor to manage your money at a very low fee (like 0.25% per year), plus a socially responsible investing option, check out Betterment, Wealthfront or Swell Investing.
- Select pre-existing motifs (portfolios) built around very specific investment themes, or create your own.
- The ability to create your own motif gives you an opportunity to create very specific investment opportunities, with no more than 30 securities.
- Once established, motifs and other portfolios will be fully managed for you, as a robo-advisor. Your only responsibility is to fund existing or new motifs and portfolios.
- Motif Impact Portfolios can offer you an opportunity to participate in socially responsible investing through predetermined portfolios which you can then customize.
- You can open an account with no money, then began investing in your first motif once you have at least $300 in the account.
- Next day stock and ETF trades can be executed for free.
- Motif Initial Public Offering allows small investors to participate in IPOs with as little as $250. This is one of the most profitable investment areas, historically available only for large investors. But Motif is making available for the masses.
- Though it isn’t out yet, the Crypto Portfolio will enable you to invest in Bitcoin and other digital assets. Up to this point, the ability to invest in cryptocurrencies directly remains a bit of a mystery to most investors.
- The fee structure of $9.95 per motif for Thematic Portfolios is a lot to pay for a portfolio as small as $300.
- Fees for real-time trading are even higher, and not competitive with other brokerage firms that trade in real-time as a regular practice.
- Though Motif Investing now allows you to trade individual stocks, the platform is fairly limited compared to more established brokerage firms when it comes to trading.
- Customer service is limited to regular business hours. You won’t be able to contact the company if you have questions or concerns after hours, or on weekends or holidays.
- Motif Investing does not pay interest on uninvested cash.
- You can invest with stocks and ETFs, but not mutual funds, options or other investments.
Question: Does Motif reinvest dividends?
Answer: Yes. If the dividend is paid in cash, it will be held in your cash account. Once the cash balance reaches $250, it will be automatically invested toward your target allocation.
Question: How can I withdraw money from my account?
Answer: You can transfer money in or out of your account to and from your linked bank account by ACH. You can also request a check be issued from Motif Investing by contacting customer service.
Question: Can I set up recurring deposits to increase my account balance?
Answer: Yes. From the Motif dashboard, you can go to “Account” and click “Transfer Money”. You can select either “Deposit Funds” or “Withdraw Funds”, then click “Set as a recurring deposit/withdrawal”. You can then set the amount and the date of the recurring deposits or withdrawals.
Motif has the kinds of investment opportunities that will likely be of interest to most investors. You can trade individual stocks and ETFs, but it’s not necessarily the best platform for that purpose. But more importantly, you’ll have an opportunity to invest in a multitude of theme oriented portfolios, called motifs, where you can build a portfolio based on a particular investment strategy or concept.
You also have the opportunity to invest in socially responsible investing and initial public offerings. As well, the cryptocurrencies portfolio that’s in the pipeline will enable you to take at least a small position in one of the most exciting asset classes of the 21st century.
There may be other investment platforms that do certain things better than Motif. But very few offer the combination of unique investment opportunities Motif provides, particularly among robo-advisors.
At a minimum, Motif Investing seems like the kind of investment platform where you’ll want to have at least a small portion of your portfolio, to take advantages of opportunities like IPOs and cryptocurrencies, as well as building your own portfolios–complete with all the benefits of robo-advisor management.
If you’d like more information, or if you’d like to sign up for the investing service, visit the Motif Investing website.Topics: Investing