Motif Investing offers a unique combination of brokerage services and managed investment portfolios.
A Motif trading account allows you to trade individual securities, participate in select IPOs, build customized 30-stock portfolios (called a motif), or choose from a catalog of professional and community-built motifs.
A Motif impact portfolio is a fully-automated investment portfolio aligned with your personal values. It’s similar to the managed portfolios offered by other robo-advisors, with a few key differences that I highlight later in this review.
This unique strategy landed Motif Investing a top position on CNBC’s recent “Disruptor 50” list, which includes the 50 most innovative firms in finance.
The Motif trading account allows you to trade any publicly listed stock or ETF for $4.95. Although this is the same service provided by all discount brokers, Motif offers competitive pricing and fractional shares.
Fractional shares allow you to trade securities using dollar amounts rather than shares. For example, if you have $500 to invest in any stock, Motif Investing will allow you to purchase exactly $500 of stock, regardless of the share price. The vast majority of other brokerage services require that you trade using whole shares. If you don’t have enough money to purchase the exact number of shares that you want, your money will not be invested.
All brokerage-related services provided by Motif Investing (listed below) allow you to invest using fractional shares.
Motif Investing is the first discount broker to provide full access to initial public offerings. Here are the steps required to participate:
Place a conditional order. The minimum investment is $250 and the maximum varies by IPO.
There are no commissions or fees for IPO purchases. To sell your IPO shares, you pay the standard $4.95 fee. Motif Investing is the first discount broker to offer IPO investments directly to retail investors.
Create, Modify, and Trade Motifs
In addition to individual securities and IPOs, you can trade motifs for a flat $9.95. You can create your own motif using any combination of 30 stocks and ETFs, or you can select professional motifs designed by the Motif Investing team or community motifs designed by other investors.
There are thousands of different motifs available now. You can browse by name, theme, investment performance, popularity, dividend yield, and more.
Every motif is fully customizable. You can start from scratch using your ideal combination of 30 stocks and ETFs, or you can customize a professional or community designed motif. You can replace any of the pre-selected individual securities or change the weighting if you want to own more or less of an individual company.
Commission-Free Horizon Motifs
Motif Investing recently introduced commission-free Horizon Motifs. All Horizon Motifs are free to trade and free to rebalance if you keep the preset asset allocation. If you change the rebalancing parameters or preset asset allocation, you will pay the standard $9.95 motif commission.
These motifs are comprised of index ETFs and behave similarly to retirement target date funds. After selecting your investment time horizon and risk tolerance level, Motif Investing suggests a customized index portfolio.
For example, here is the asset allocation and investments offered in the most aggressive, long-term horizon motif:
These asset classes are actually very good for the average investor. They are utilizing most of the same low-cost index ETFs offered by other robo-advisors. You won’t receive any additional features, but these are completely free to trade.
Motif Royalty Program
One of the distinguishing factors that sets Motif Investing apart from other brokerages is the community. Thousands of investors participate by creating and sharing Motifs.
You can get paid to share your personal Motif through the Motif Creator Royalty Program:
Build a custom motif and make it publicly available.
Every time someone purchases or rebalances your motif, you earn $1.
Track your royalty earnings through an easy-to-use and dynamic dashboard.
Motif Impact Portfolios
In addition to all of the brokerage services discussed above, Motif offers automated Impact Portfolios for $9.95/month. The minimum required investment is $1,000.
The asset allocation of each Impact Portfolio is determined by your risk tolerance and time horizon. The underlying investments differ according to your chosen values, such as planet sustainability, fair labor, and corporate behavior.
The stock, real estate, and commodities portion of your Impact Portfolio is determined by the corresponding value-based MSCI stock index. Each Impact Portfolio uses a different MSCI index corresponding to sustainability, fair labor, corporate behavior, etc.
Instead of investing in the entire MSCI index, Motif opts for direct stock ownership in the largest companies within each index. The disadvantage of this approach is less diversification in your Impact Portfolio. The benefit is that direct stock ownership avoids all expenses and fees.
The bond portion of your Impact Portfolio is comprised of diversified ETFs. These are the standard index ETFs used by all robo-advisors, offering massive diversification and low fees.
To illustrate, here is the recommended asset allocation in the “fair labor” Motif Impact Portfolio.
You can select the each category to view the investment recommendations. For example, the U.S. stocks category includes the following investments:
How Motif Impact Portfolios Compare
First, the Motif Impact investment recommendations are inferior to those provided by Wealthfront, Betterment, and M1 Finance. The Impact Portfolio includes direct stock ownership (so does M1 Finance), but the overall diversification is weak. More importantly, Motif Impact Portfolios provide none of the advanced tax and financial planning features offered by competitors.
The value-based investing approach is the only distinguishing investment feature. If you are interested, you can recreate each of the Impact Portfolios without paying any monthly fee. First create a free Motif brokerage account, then navigate to the Impact Portfolio of interest and review the portfolio recommendations (as I demonstrated earlier in this review). With the list of companies in hand, simply copy the recommendations using your own motif for $9.95.
Beyond the portfolio, there are pricing concerns. Motif charges $9.95/month per $100,000 invested. There are no pro-rated charges. If you have $50,000 to invest, you pay $9.95/month. For every $100,000 breakpoint, you will pay an additional $9.95/month.
Using hypothetical account values, here is how that fee compares to competitors:
Motif Impact Annual Fee
M1- Finance Annual Fee
Wealthfront Annual Fee
Betterment Annual Fee
M1 Finance offers the first $1,000 managed free, and charges 0.25% annually on account balances less than $100,000 or 0.15% annually on balances above $100,000.
It’s worth noting that you can trade individual securities within your motif. You will pay the standard $4.95 commission per sale or exchange, which means two individual trades will cost as much as exchanging your entire motif.
The inactivity fee only applies if you meet all of the following conditions:
Have less than $10,000 in combined securities and cash in the account but more than $0
Have not placed a commission trade in the account within the last 6 months
Are not active Motif Blue subscribers or Impact account holders
Motif Investing Drawbacks
Dividend Reinvestment – If a stock in your motif pays a stock dividend (unlikely), the additional stock shares are automatically reinvested in your motif. If the dividend is in cash (likely), the money will be credited to your account balance. Motif does not offer cash dividend reinvestment at this time.
Motif Impact Portfolios – The features do not justify the fee, and you can find better managed investing solutions elsewhere.
Fees – I’m not a big fan of the account inactivity fee or IRA closure fee, but these fees are fairly standard at discount brokers.
Motif Investing Review Summary
I can’t recommend the automated Motif Impact Portfolios. When compared to the competition, the fee is not justified. There aren’t enough valuable features to recommend Motif Impact Portfolios over Wealthfront, Betterment, or M1 Finance.
With that said, the brokerage component of Motif Investing is superb. If you purchase a motif for $9.95, you are paying roughly $0.33 per security ($9.95/30). Even the $4.95 individual trades match the lowest pricing offered by other discount brokers.
Throw in free direct IPO access, and you are looking at the best value among all discount brokers.
Motif Investing Review 2017
If you are looking to trade stocks or ETFs, Motif Investing offers far better pricing than other discount brokers. If you are looking for an automated investment solution, the Motif Impact Portfolios fall short of the competition.