Saturday, 31 October 2020

Motif Review 2019

Motif Review 2019
08 Apr
10:39

Part broker, part robo-advisor, Motif specializes in thematic investing, an investing practice that focuses on how long-term trends will impact growth and performance across sectors. For example, instead of individually choosing to invest in certain big box retail chains, Motif offers investors the opportunity to invest in a portfolio named Discount Nation, which includes stocks and ETFs representing 20 or 30 retail chains.

Investors may choose pre-built portfolios based on themes and trends (top performing Motif portfolios include Repeal Obamacare, a portfolio that includes Quest Diagnostics, and Software as a Service, a portfolio that includes customer relationship management company Salesforce). Custom-built portfolios are also built around IPO’s, and “impact portfolios” are created around personal values like fair labor and sustainability.

In addition to professionally built portfolios, investors also have the option of creating their own portfolios, fittingly called motifs. Once a portfolio is created, an investor can buy and sell securities within their motif for $4.95 per trade, and can modify or rebalance their portfolio for a $9.95 commission. The minimum to invest is $300, which may include fractional shares.

These custom-built motifs can then be shared with other platform users. In addition to individual investing accounts, Motif offers the opportunity to use the platform to open an IRA, Roth IRA and trust.

Who should consider Motif

Motif isn’t a traditional brokerage, and may not appeal to a “traditional” investor. From the quippy names of the professionally-curated portfolios (Caffeine Fix, Too Big To Fail, Tablet Takeover) to the creative control offered in self-designing a portfolio and making it available to the community, Motif may appeal to the investor who intuitively looks past numbers or performance to focus on a company’s story.

To be clear, a creative investor can also be a serious investor. Motif may appeal to an investor who wants more control than a robo-advisor allows, an investor who wants to dip their toe into managing their own portfolio, or an investor who wants to add more buzz and movement — in terms of IPOs and name-brand companies — to their investment strategy, without investing a lot of capital.

Motif fees and features

Account minimum
Management fees
  • 0.50% annual fee for thematic portfolio
  • 0.25% for impact portfolios ($1,000 minimum investment)
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $95 full account transfer fee from IRA accounts, $65 from non-IRA accounts
  • $0 partial account transfer fee
  • $40 inactivity fee per year, charged in quarterly installments, on accounts with less than $10,000 if the account has no commission trades, is not an Impact account holder or Motif blue subscriber
Current promotions

Get three months free access to Motif BLUE when you use a friend's referral link.

Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Trust
Portfolio
  • Motif offers 7 asset classes.
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detail Motif investments contain individual stocks. Pershing LLC, Motif's clearing partner, provides investors with cost basis and proceeds documentations prior to trades. Each year, investors receive a 1099 based on any stock sales that year.
Offers fractional shares
Ease of use
Mobile app iOS, Android
Customer support Phone, Email

Strengths of Motif

  • Unique concept. While the concept of thematic investing isn’t new, the way Motif professionally curates portfolios based on theme makes it stand out from other brokerages.
  • Low annual fees on professionally built portfolios. Portfolios selected from the catalog can be automated by dollar-cost averaging and rebalancing. Annual fees on Motif thematic portfolios are 0.50% and annual fees on impact portfolios are 0.25%.
  • Focus on the investment community. As a Motif customer, you can build your own motif, buy a professionally selected one, or browse motifs made by other investors. You can also opt to share your personal motif through the Motif Creator Royalty Program. Every time someone buys or rebalances a motif you create, you’ll get $1 as part of the program.
  • Beginner friendly. It’s easy for new investors to get lost in a sea of jargon. By focusing on themes and impact, Motif reaches investors who may be more comfortable with words than numbers — but backs up their portfolio suggestions with data-driven analysis to drive portfolio allocation.

Drawbacks of Motif

  • Small platform with limited types of accounts. With 350,000 customers, Motif is still relatively small compared to other online brokerages and robo-advisors. Investors who want a one-stop shop for all their investing needs may feel confined by Motif. While Motif offers IRA accounts, it does not offer 529 plans or specialty investment accounts, which may turn off some investors.
  • Limited investment product options. Only Stocks and ETFs. Does not offer Bonds, Mutual funds, Futures / commodities or Options.
  • Less accessible customer service than other brokerages. Because Motif is growing, their customer service team may be more limited than larger brokerages. Right now, Motif offers 24/7 email support, with the caveat that responses may take longer outside regular business hours. During business hours, customer service reps are available via text and phone.

Is Motif safe?

All investments carry risk, and that may be especially true for thematic investing, which taps into the intuition, values and even personal preferences of the investor. Motif tries to reduce that specific risk by relying on data science to create professionally built thematic portfolios. Motif asks for an investor’s financial goals to assess risk value before offering portfolio suggestions.

Motif is a member of the Securities Investment Protection Corporation (SIPC), which means every Motif account is insured up to $500,000. This includes a maximum of $250,000 for cash claims. On the site, encryption algorithms are used to safeguard the information and data of customers.

Final thoughts

Motif’s strong point of view stands out among other brokerages. The ability to invest in trends and values, coupled with the strong focus on the investor community among Motif customers can make investing seem exciting and relatable — and can make beginning investors feel welcome and empowered to create their own portfolios.

With the low account entry minimum, Motif thematic portfolios can help guide investors who have always wished to own individual stock, but haven’t yet had the opportunity to research history and performance. For some investors, a thematic portfolio can be a halfway step toward gaining confidence to trade stock on another platform. Motif charges $19.95 for every real-time trade, and $9.95 for a next market open trade, so an investor who’s frequently trading may be better served by a lower-cost brokerage like Robinhood, TD Ameritrade or Charles Schwab.

For now, Motif may be more of a boutique brokerage than a one size fits all option. Where it shines is offering access to thematic investing. The laser focus on this style of investing may captivate all levels of investors. Investors who may want a more traditional approach to investing, or investors who want to open multiple accounts for different goals, may be better served by a larger brokerage or robo-advisor.

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Anna Davies
Anna Davies |

Anna Davies is a writer at MagnifyMoney. You can email Anna here

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Source: https://www.magnifymoney.com/blog/investing/motif-review-2019/

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