Motif Investing Review 2017

September 9, 2017

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.

Motif Trading Account

If you decide to open a free motif trading account, you gain access to all of the brokerage services discussed below.

Trade Individual Securities

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.

Trade IPOs

Motif Investing is the first discount broker to provide full access to initial public offerings. Here are the steps required to participate:

  1. Create a free IPO trading account
  2. Browse and select any IPOs you’re interested in
  3. 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.

Motif Investing Review

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.
Motif Investing Reviews

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:

Horizon motif review

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:

  1. Open a motif trading account and opt into the royalty program.
  2. Build a custom motif and make it publicly available.
  3. Every time someone purchases or rebalances your motif, you earn $1.
  4. 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.

motif impact portfolio review


You can select the each category to view the investment recommendations. For example, the U.S. stocks category includes the following investments:

motif impact portfolio details


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:

Account BalanceMotif Impact Annual FeeM1- Finance Annual FeeWealthfront Annual FeeBetterment Annual Fee
$75,000$119.40$185.00$150.00$187.50
$150,000$238.80$223.50$337.50$375.00
$250,000$358.20$373.50$587.50$625.00
$450,000$597.00$673.50$1,087.50$1,125
$750,000$955.20$1,123.50$1,837.50$1,875
$1,500,000$1910.40$2,248.50$3,712.50$3,750

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.

Betterment charges a flat 0.25% of the account balance annually and offers up to one year of free service with qualifying deposit.

Wealthfront charges a flat 0.25% of the account balance annually and offers Cash Cow readers the first $15,000 managed free.

Motif Investing Fees

ActionFeeDetails
Trade Stock or ETF$4.95No minimum investment
Trade/Rebalance a Motif$9.95$300 minimum investment
Purchase IPOs$0$250 minimum investment
Sell IPOs$4.95N/A
Motif Impact Portfolios$9.95/month$1,000 minimum investment
Platform Inactivity Fee$10See details below
IRA Account Termination$95Full IRA account closure

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
Summary
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.
Pricing9.1
Features9.1
Ease of Use8.8
Customer Support7.5
Investment Options8.8
Strengths
Excellent pricing
Direct IPO access
Motif royalty program
Weaknesses
Lackluster Impact Portfolios
No cash dividend reinvestment
8.7
Overall
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37 Comments on "Motif Investing Review 2017"

avatar
Tyler
Tyler

Is there a fee when you go to withdraw your money?

Don
Don

No Fee. You can ACH funds from Motif to your bank account for free

Robert Katz
Robert Katz

If I want to put up a fixed dollar amount allocated over several stocks at given percentages each, obviously the number of shares of each positions will not be integers. Do I get fractional shares?

Thank you,
Robert

Don
Don

Yes Fractional Shares. You can also directly purchase fractional shares of an ETF

Kevin
Kevin

I know Motif will easily take your money for entry in to your account but if you want to withdraw money for any reason is there a charge or holdup?

Don
Don

In my experience no hold up of funds. Standard ACH transfer delay to your bank account 1-3 days.

clay
clay

J.- A few scenarios you might can help me with the cost of. I want to add a lump sum to the 23 stock Motif I created.
1.) can I add the total amount to just 6 of these stocks and what would that cost (Motif charge fee)?
2.)If I add it equally to all 23 stocks, what would that cost?
3.)I know to buy 1 stock is 4.95. If I wanted to add 4 stocks is it 4 X 4.95 or 9.95 for all 4?

Robo
Robo

Thanks for the write up and the additional info in the comments. But i gotta ask, have you or anyone else made any money off Motif? If so, care to share percentages over time range? I’d be interested if anyone made money off of the site’s mentioned high performing Motifs.

clay
clay

Jacob-New to investing…Not quite clear on receiving dividends. I do understand if it is a stock dividend it is added to that individual stock. I also understand if it is a cash dividend you have to reinvest that yourself with an additional charge by Motif. My question is are there tax implications as to these cash dividends received if 1) I reinvest them in a Motif or 2) Leave them in the cash account? Are there capitol gains on dividends and is this true in any type of brokerage account, not just Motif?

BJ
BJ

If I buy 30 different stocks for $10. (example: apple, ibm etc) and I decide to sell just one (say…apple); can I do that or will I have to sell all 30?

Scott
Scott

You can sell just the one or more for $4.95 per stock, or you can sell the whole Motif (or parts of it) and replace it with new stocks for $9.95. You can also change the weights of each stock in the Motif for no charge as often as you like!

Cheryl
Cheryl

How does it work when you want to cash out? How do you sell everything and leave? What are the terms of leaving?

Rhonda
Rhonda
As a new investor and motif fan, I am learning so much about designing my own motifs, etc. My question is how profitable it is for me to own – say – 3.5 percent of Apple within a motif. Or if I have a motif with mostly etfs or mutual funds, how does it profit with an allocation so small within the motif? Even if it were a motif of just 5 etfs, thats a $50 investment each in a large index of stocks. Also – am I better off as a small investor with $3,000 or so to invest… Read more »
JC
JC
Jacob, good review, thanks. My question is about buying and rebalancing a motif. Assume in January I create a custom motif with 30 stocks and buy it. In Feb I decide that I don’t want to invest in 10 of those stocks I chose in Jan going forward so I delete them from the motif. In Feb, do I have the option of buying this changed motif and NOT rebalancing? Rebalancing would involve selling the 10 stocks I no longer want. What I want is to buy the motif in Feb without the 10 stocks I deleted, but keep the… Read more »
Rose
Rose

Thanks for the nice review. It looks like an interesting concept. Any info on ask bid spread? How does that compare with other brokers?

Devin
Devin

Great review. Thanks! one item I thought needed clarification. The Disruptor 50 is companies whose innovations are revolutionizing the business landscape, not just the investing landscape. Motif is #4 on that list, but the top company innovating in the investing space.
Except for not reinvesting dividends at this time, Motif is completely awesome. I want to move everything there, but am a little concerned about their sustainability at those prices. Hopefully they have other revenue sources and aren’t supposed to be funded by endless rounds of their investors’ money.

Jon
Jon

Motif Investing is probably the best discount broker available today. Have been nothing but impressed with the company and the value added to investors like myself.
Thanks for the review.

CashRebel
CashRebel

Great review Jacob. Most of my portfolio is just simple index funds, and I have no plans of changing that. However, I’d love to invest in a few stocks of my own choosing, but I’ve never gotten around to it simply because it feels too complicated. A tool like this looks right up my alley. Thanks for pointing it out.

Done by Forty
Done by Forty

Even though this service doesn’t fit the kind of passive investing we do, I’m all for any service that lowers costs for consumers. Buying 30 different stocks for $10 is preposterously cheap. If you had a lot of money you wanted to move into the market at once as an active investor, this is a great option.

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