Motif Investing Review – A Robo-Advisor Brokerage Hybrid

About Motif Investing

Motif is an investing platform that straddles the line between robo-advisor and full-fledged brokerage, offering a huge range of options for investors. Unlike most other robo-advisors, Motif doesn’t fit your investments into a pre-defined box. Instead, the platform allows you to invest in a huge range of assets that fit your values, your insights into the market, and your risk tolerance. That said, Motif’s wide range of investment products can be somewhat confusing for beginners and trading is notably more expensive than with standard brokerages, so the platform is ideal only for experienced investors looking for highly curated investment products.

Company History

Motif was founded in 2010 by CEO Hardeep Walia and has since attracted more than 350,000 investors. The platform partners with institutional investment firms including JP Morgan and Goldman Sachs to offer some of its more advanced products, such as IPO access, which increases its credibility and reach. Currently, the company has nearly $1 trillion in assets under management.

How Motif Works

Motif has a number of curated investment products that go far beyond what simplified robo-advisors like Wealthfront or Betterment offer.

Thematic Portfolios

Thematic portfolios are at the heart of Motif. These portfolios are built around specific sub-industries, commodities, services, emerging technologies, and more, with each portfolio honing in on a specific niche. There are more than ten thousand thematic portfolios available on Motif, all searchable according to industry, risk tolerance, and performance. Currently, about 139 portfolios are designed professionally by Motif’s staff and nearly 12,000 are contributed by the Motif community. If you can’t find what you want, Motif even allows you to build your own thematic portfolio and contribute it to the community.

Thematic portfolios typically consist of individual stocks, just like an ETF. But unlike ETFs, you won’t find Motif’s thematic portfolios listed as officially traded on any exchange – when you purchase a thematic portfolio, Motif automatically purchases proportional shares of each of the stocks in the portfolio for you. While you can track, purchase, and sell thematic portfolios just like an ETF, keep in mind that these portfolios are not actively managed after you purchase them so your portfolio can eventually become unbalanced.

Motif highlights a special class of thematic portfolios called the Next Wave of Innovation portfolio. This portfolio consists of five ETFs that were specially built in partnership with Goldman Sachs to focus on emerging technologies like AI, precision medicine, 3-D printing, and others. Motif is offering this portfolio free of commissions to its investors, although fees apply if you purchase the constituent ETFs individually.

Impact Portfolios

Motif’s Impact portfolios are akin to the portfolios you’ll find in robo-advisors like Wealthfront and Betterment. With an Impact portfolio, Motif automatically invests your money in stocks and ETFs across five different asset classes based on your savings goals and risk tolerance. Like other automated portfolio managers, Motif Impact automatically rebalances your holdings and minimizes your tax liability at the end of the year.

What sets Motif Impact portfolios apart from other robo-advisor offerings is that you have a direct say in what companies you are investing in. You can choose from portfolios that reflect values such as sustainability, fair labor, and corporate governance, and see exactly what companies you are investing in with these portfolios. 

IPO Investing

Motif is one of only a few brokerages that offer individual investors access to invest in upcoming IPOs before their opening days. This service is only available on occasion, as Motif picks and chooses with its partner underwriters which IPOs investors will be given access to – to date, only around 100 IPOs have been offered.

Crypto Portfolios

Not yet available, Motif is planning to roll out cryptocurrency portfolio options in 2019. Details on how this will work are scarce, but you can sign up on Motif to reserve a spot when this service becomes available.

Stock and ETF Trading

Motif also serves as a brokerage for investors who want the ability to trade single stocks and ETFs. This can be useful if you want to add specific investments to your long-term portfolio, although Motif is not always the least expensive brokerage option available.

Account Requirements

While there is no minimum to open an account with Motif, trading portfolios requires at least $300 in your account. Impact portfolios require at least $1,000 and investing in IPOs requires at least a $250 investment.

Currently, Motif only accepts investors in the US.

Motif Pricing, Fees, and Account Minimums

The pricing structure of Motif’s many offerings is confusing, which makes it important for investors to understand what they are putting their money into and how they will be charged for it.

Thematic portfolios carry a 0.50% annual fee, although there are no additional exchange fees or other commissions levied beyond this. In addition, the annual fee is waived for the Next Wave of Innovation portfolio. The trading fee you’ll pay at purchase and sale depends on the type of thematic portfolio you are trading. Professionally curated portfolios trade for free if you wait until the next market open or for $9.95 for real-time trades. Community-contributed and build-your-own thematic portfolios cost $4.95 to auto-invest over multiple days, $9.95 to trade at next market open, and $19.95 to trade in real-time.

Impact portfolios carry an annual account fee of 0.25%, in line with robo-investors like Betterment and Wealthfront. Better yet, since Motif invests at least partially in individual stocks in Impact portfolios at no commission, the exchange fees levied on your account are typically lower than other platforms.

IPO investing with Motif is free and does not carry any commissions. Stock and ETF trading is free if you wait until the next market open for your trade to execute. Real-time trading costs $4.95 per trade, which still makes Motif a relatively low-cost brokerage.

Note that there is a potential hidden cost to Motif. The platform charges users with less than $10,000 in investments and cash balance (but more than $0) $10 every three months. However, this fee is waived for Impact portfolio accounts and for investors who have paid commission on a trade within the past three months.

Motif Blue

Frequent investors may also be interested in Motif Blue, which is a $19.95 per month subscription service. With this subscription, investors receive three commission-free real-time trades per month (for stocks, ETFs, or portfolios) and five commission-free next market open trades per month. Motif Blue subscribers are also free from the $10 quarterly platform fee.

Motif Platform and Tools

Motif offers both web and mobile platforms. Unlike other robo-advisors, Motif has a lot of functionality and a lot of ways to investigate your holdings. However, the many different investment types available within Motif and the many holdings within each thematic portfolio make the user interface something of an eyeful. 

The web interface allows you to look at holdings either according to portfolio or according to industry sector. While the tabular format is nowhere near as pretty as what other robo-advisors offer, it is informative and allows investors to quickly see what stocks within a portfolio are overperforming and which is underperforming. Plus, a basic chart allows investors to compare individual thematic portfolios and their overall holdings to the S&P 500.

The same functionality is available in the mobile app, although it’s a bit harder to get the same level of detail in such a small space. The best use of the mobile app is really for exploring new thematic portfolios, since the app allows investors to quickly check their performances over time and what stocks are included.

Motif Investing Performance

It’s hard to put an exact number on Motif’s performance since there are so many different investment offerings – including thousands of thematic portfolios. However, Motif does make it easy to gauge the performance of individual portfolios compared to the S&P 500 and displays top gaining (30-day and one-year) and top losing portfolios on the main page of the portfolio search. The top 30 professionally designed thematic portfolios have gained between 13-35% over the past year.

Keep in mind that these performance figures are for thematic portfolios. Motif, like many other robo-advisor services, does not publish much information about the historical returns on its Impact portfolios. However, this is more justified for Motif given that even Impact portfolios can be highly customized. 

Comparison to Alternative Investments

It’s hard to directly compare Motif to other investments in terms of performance since Motif is far from a single investment. There are plenty of examples of thematic portfolios that have outperformed the S&P 500, as well as plenty of portfolios that have underperformed it. What really sets Motif apart is the level of customization that investors have to choose the companies and values they are investing in and to diversity their own portfolios. 

Key Differentiators

Motif is an interesting hybrid platform that gives investors the option to choose between automated portfolio management, curated portfolios, and self-directed stock and ETF investing. This fluidity itself is a reason for experienced investors to opt for Motif, since they can do everything in a single place for relatively reasonable costs. That said, the huge range of investment product offerings and thematic portfolios can be overwhelming for beginners who simply want to save for retirement without thinking too much about it. The complexity is a major differentiator between Motif and other robo-advisors, such as Betterment, Acorns, Wealthfront, and Twine.

The thematic portfolios, the vast majority of which are community contributed, are a huge draw for Motif. Few other trading platforms have this depth of portfolio offerings and the performance metrics to back them up. Better yet, investors can fully customize thematic portfolios with a build-your-own option.

Compared to traditional brokerages, Motif stands up well. The platform offers free trading for investors who are willing to wait to the next market day, and relatively inexpensive $4.95 trades for real-time investing. The low portfolio trading costs are also an advantage for traders who want to trade multiple stocks at once – and build-your-own portfolios can be used to take this low-commission multi-trading to the extreme. 

Trustworthiness

Motif has been around for nearly a decade and has partnered with numerous major financial institutions. Users should feel comfortable investing their money with Motif as long as they fully understand the company’s pricing structure – which is transparent but complicated.

Who is Motif Investing Best For?

Motif is best for experience medium- to long-term traders who want a high degree of customization in their investments. Motif’s thematic portfolios are more appealing to many investors than individual stocks because they allow risk to be spread while still investing in a single theme or goal, and the option to purchase individual stocks or ETFs and to invest in IPOs complements the thematic portfolios nicely.

Less experienced investors may have difficulty using Motif since there are so many options available within the platform and it takes some work to keep a balanced portfolio. While Motif Impact portfolios can be used by long-term, beginner investors, this audience will find a cleaner user interface with less complex options and a similar cost structure at Betterment or Wealthfront.

Pros

• More than 12,000 thematic portfolios to invest in
• Build-your-own option allows fully customizing thematic portfolios
• Impact portfolios offer robo-investing based on values that are important to you
• Relatively inexpensive portfolio investing and individual stock and ETF trading
• Access to IPOs before opening day

Cons

• Difficult for beginner investors to begin investing quickly
• Pricing structure is transparent but complex
• User interface is well thought out, but crowded and somewhat confusing