Motif Investing has seen a lot of success over the past few years and it’s probably because it offers a unique service. It isn’t completely a broker but it provides a solid platform for buying and selling stocks. It also isn’t completely a robo-advisor but it offers automated investing and rebalancing of a personalized stock portfolio. It offers something called motifs, which are composed of up to 30 stocks or ETFs that all fall under a specific theme. Want to invest in companies that are trying to cure cancer or that align with your political beliefs? Well there’s a motif for that! You can trade these 30-stock bundles for under $10 per month and you can buy single stocks for less than $5 per month.
Investing in companies that match your personal values; Investors who want access to IPOs
Fewer investment tools than other robo-advisors; Fewer tax-optimizing services than other robo-advisors; Several potential fees to keep track of
Pricing: How Much Does Motif Investing Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|Motif Impact||$9.95 per month for every $100,000 in assets||$1,000||Fully automated portfolio; automatic rebalancing|
|Blue Starter||$4.95 per month||$300||Auto-invest and auto-rebalance one motif|
|Blue Standard||$9.95 per stock month||$300||Auto-investing, one commission-free trade per month, access to market insights|
|Blue Unlimited||$19.95 per stock month||$300||Three commission-free motif trades per month, unlimited, free next-day market trades|
In the past couple of years, Motif Investing has focused on creating an automated investing service that is similar to the services offered by other robo-advisors. This automated service is Motif Impact.
Robo-advisors typically charge an annual management fee when you invest with their services but this robo-advisor charges a flat monthly fee instead. Its portfolios cost $9.95 per month with a minimum required balance of $1,000. This fee is for your first $100,000. You will pay another $9.95 per month for every additional $100,000. So if you have $70,000 invested, your monthly fee is $9.95. If you have $170,000 invested, your fee is $19.90. If you have $270,000, your monthly fee is $29.85 ($9.95 x 3). This fee is not pro-rated so you will pay the additional $9.95 whether you have $100,001 or $199,999.
You can also open a trading account. There are three subscription trading plans. Blue Starter is the cheapest with a monthly fee of $4.95. With Blue Starter you can auto-invest and auto-rebalance one motif.
Blue Standard is the next step up. This plan has a monthly fee of $9.95 and a few additional features. You can trade one stock or motif each month with no commission. You can auto-invest in an unlimited number of motifs, but you can only rebalance one professional motif. Professional motifs don’t cover all possible themes, but there are over 150 to choose from. Blue Standard also gives you access to market reports with exclusive insights and commentary on the stock market.
The most advanced trading plan is Blue Unlimited. For $19.95 per month it includes everything in Blue Standard, plus two additional commission-free stock or motif trades per month (for a total of three). Stock quotes are all in real time. Blue Starter and Blue Standard only give you real-time quotes on trade pages. Blue Unlimited also allows an unlimited number of commission-free next market open trades. These are trades that you submit after the close of the trading day and that will transact as soon as the market opens again. This is a useful feature, but remember that there is a risk that prices will change between the time the market closes and opens the next day.
The three trading plans offer low fees but are optional. You can also open a trading account and pay as you go. The cost to buy or sell any motif is $9.95, but there is a minimum payment of at least $250. Trading an individual stock or ETF costs $4.95 per trade. There is no minimum payment for buying stocks. IPOs have no fee or commission but require a minimum investment of $250. Each IPO will also have a maximum value that you can trade. The maximum will be specified for each individual IPO.
There are some additional fees to be aware of. There is a $95 fee to close an IRA account. You can pay a partial fee of $65 if you transfer money out of a Motif Investing IRA but leave at least $100 in your account. There is a fee of $65 to transfer all of the securities (e.g. stocks) in your account to another brokerage without selling the securities. For people without a subscription trading account, there may be a semi-annual Platform Fee of $10. If you have less than $10,000 of combined securities and cash in your account and if you have not placed a trade in your account within six months, you are subject to this fee. This fee applies to Impact accounts and pay-as-you-go trading accounts.
Motif Investing's Investing Strategy
One of the big selling points is the ability to invest in companies based on specific themes and values. These themes could be certain job sectors, companies with certain values or companies that work with a certain concept (e.g. cyber security).
There are two types of accounts. The first, Motif Impact, lets you create a fully automated portfolio. Your portfolio is created based on your investing goals, your risk tolerance and your personal values. You can select one of three values: sustainable Earth, fair labor and good corporate behavior. You are not required to select a value.
Your portfolio is created using stocks or ETFs from seven asset classes: U.S. Stocks, Developed Countries Stocks, Emerging Countries Stocks, U.S. Real Estate Stocks, Commodities Stocks, U.S. Bonds and International Bonds.
Only picks stocks that match your chosen value are included, and you can see which stocks have been included or excluded based on the value you chose. Over time, as you get closer to reaching your goal, the company will automatically change the allocation of assets in your account to favor lower-risk and more conservative options like bonds (instead of higher-growth and higher-risk stocks).
This account option includes individual accounts, joint tenant accounts, Roth IRAs, traditional IRAs and rollover IRAs. There is only one flat rate fee of $9.95 per month on your first $100,000. For each additional $100,000 your fee goes up another $9.95 per month. So if you have $70,000 invested, your monthly fee is $9.95. If you have $170,000 invested, your fee is $19.90.
The second kind of account offered is a trading account. There are three subscription trading plans: Blue Starter, Blue Standard and Blue Unlimited. These plans charge a monthly fee for a varying number of free motif trades and rebalances and stock or ETF trades.
If you don’t want to pay a subscription fee, you can also open a pay-as-you-go trading account. All trading accounts give you access to IPOs. There are over 150 professionally made motifs and thousands more created by other investors. Don’t see one that matches your goals? Create your own! You can also customize motifs to your interests. You earn a $1 commission every time someone decides to buy or rebalance your creation.
- Individual and Joint accounts
- Roth IRA
- Rollover IRA
Motifs are the company's biggest feature, but what exactly are they? A motif is a bundle of up to 30 stocks or ETFs. These stocks are bundled based on a specific theme, trend or strategy. For example, you could create a bundle that only includes the stocks of companies that promote environmental sustainability. Then, instead of going through the trouble of investing in 30 individual stocks or bonds, you can just buy your motif, which includes all of those stocks. The company has over 150 professionally built bundles available, and you can also access those built by other customers. Themes include everything from online gaming to music concerts to cyber security. When you create a new bundle, the company will also tell you how it would have fared over the past year compared to the S&P 500.
The company gives customers access to IPOs (initial public offerings) with no trading commission or fee. IPOs are often difficult to find and afford unless you are a high-net-worth individual. Many brokers also require you to buy a minimum number of shares (e.g. you need to buy at least 10,000 shares to invest in a certain IPO). Motif Investing handles all orders by dollar amount, not by shares, and the minimum is only $250. You can buy fractional shares with IPOs just like all other stocks you buy through the company.
Another useful feature is that you pay a monthly fee to trade motifs. With automatic investing services, it costs just $9.95 per month to trade a motif. This may not sound very exciting but consider that you would normally pay a commission fee over $5 to buy one stock through the average broker. A motif consists of as many as 30 individual stocks. Between the professionally-built and community-built bundles, there is an option for everyone – if not, you can build your own.
Who Motif Investing Is For
There's a lot of flexibility in where you invest and is great for people who want to take an active role in customizing their portfolios. A single motif can include up to 30 stocks or ETFs. Having so many stocks in one bundle allows you to invest in a wide range of companies. There are many professionally-created motifs, but you can also create your own based on any theme you want. This feature makes the service good for people who only want to invest in companies that align with their values.
At the same time, Motif Investing allows you to buy fractional shares. Fractional shares are particularly useful for people who don’t have a lot of money to invest but still want to invest in diversified stocks or just in stocks of high value. The company handles all trades by the dollar and not by number of shares.
Investors looking for IPOs will be pleased. IPOs can be difficult to find with some advisors or brokers unless you have a high-level plan or status. Motif Investing gives you access to all IPOs led by JP Morgan for no fees or commissions. You can also browse upcoming IPOs and set alerts for the ones that interest you.
- Automatic Rebalancing
- Fractional Shares
- Tax-Loss Harvesting
- Direct Indexing
- Human Advisors
How Motif Investing Works
You can open an account through the company's website or a mobile app. When you open an account, you can choose from two types of accounts: a Motif Impact portfolio or a trading account.
You're able to create a fully automated portfolio. You select what your primary objective is (e.g. save for retirement, save for college or to increase wealth) and how long you plan to invest to meet that goal. It will ask for your risk tolerance from the categories of low, medium or high. There is a short, three-question quiz that will help you decide if you aren’t sure of your risk tolerance. A big factor in your portfolio is also the value you care most about, which you select from the choices of sustainable Earth, fair labor and good corporate behavior. You are not required to select a value.
Then, a diversified portfolio is created to meet your goals. Your portfolio will include stocks from seven asset classes, and it will only include stocks from companies that align with the value you selected. You can customize the allocation of the asset classes according to what you want. As you get closer to reaching your goal, the company will automatically change the allocation of assets in your account to favor more low risk and conservative options. The minimum balance requirement is $1,000. You pay a flat rate fee of $9.95 per month but there is no fee for your first month.
The company also offers something called Horizon Motifs. These are commission-free and composed of ETFs. You can trade and rebalance them for no fee. However, you cannot customize them or change the asset allocation. If you do make changes, you will pay the same $9.95 per month as you do with other motifs. Horizon Motifs are meant for long-term investing similarly to retirement portfolios with other robo-advisors.
The second kind of account offered is a Trading Account. This is the account type for people who want to get down and dirty with their investing. There are three subscription trading plans and a pay-as-you-go plan that all let you trade stocks, ETFs and motifs. Some plans only allow you to auto-rebalance professionally-made motifs (without incurring an additional fee) but luckily there are over 150 to choose from. If you want to trade a motif but can’t find one that matches your goals, you can create your own. You can also customize any motif to your interests. When someone buys or rebalances one that you created, you will earn $1. All trading account plans will give you access to IPOs. If you have a subscription trading account and want to cancel it, you can end your subscription at any time. Be careful though because you won’t be able to re-enroll for at least a couple of months.
What’s the Catch?
Motif Investing offers great trading prices and can even help bring some fun to your investing. If you’re looking for a robo-advisor, be aware that this isn’t completely a robo-advisor. It provides a platform for you to buy and trade stocks or ETFs, but it doesn’t have the tools or structure of a typical robo-advisor (or for that matter a human financial advisor).
Robo-advisors usually build well-diversified portfolios from ETFs. Because of that, many robo-advisors charge no commission to buy or sell ETFs. Motif Investing has low trading fees but does charge a commission for all ETF trades. Many robo-advisor customers are investing for retirement or for long-term goals. Motifs allow you to invest in things that interest you but aren’t necessarily designed for long-term investing. You can invest in diversified motifs but you wouldn’t capitalize on all of the benefits. Other robo-advisors also have more research and analytical tools for you monitor the progress of your portfolio. Robo-advisors typically have more advanced features like tax-loss harvesting, direct indexing or access to human advisors.
Another thing to keep in mind is that this company has a lot of plans, options and fee structures. If you are looking for the simplest, most straightforward investment plan, this might not be the best choice. Just about every plan has some fine print or exception. There are a number of possible fees. You can find explanations for everything on the company's website, but it could take a bit of searching.
This option is probably best-suited for investors who are financially secure and already have portfolios designed for their long-term retirement goals.
Competition: How Motif Investing Stacks Up?
Motif Investing offers some of the lowest trading fees. With a pay-as-you-go trading plan, you can buy or sell an individual stock for just $4.95. Most robo-advisors and brokers would charge well over $5. You can also buy motifs for just $9.95. These bundles can consist of up to 30 individual stocks or ETFs so the price per stock is even lower than $4.95. Investors who want to trade individual stocks or ETFs should take note of these low fees.
You should consider other advisors if your primary interest isn’t trading. If your goal is long-term investing through a diversified portfolio, Motif Investing’s portfolio options are not very competitive with other robo-advisors. Other robo-advisors offer more tools for monitoring your portfolio, increasing your returns and decreasing you tax bill. There may be some trade-offs though. Most robo-advisors create portfolios with ETFs and no individual stocks. This one uses individual stocks in its portfolios. This doesn’t necessarily make its portfolios more diverse but it’s a nice feature. Robo-advisors also have mostly automated services that don’t allow for the same level of customization that Motif Investing gives you.
One common management practice you will find from robo-advisors is tax-loss harvesting. Tax-loss harvesting helps minimize the taxes you owe on your stock market gains. As an example, Wealthfront offers tax-loss harvesting on all accounts. It charges a flat-rate, annual management fee of 0.25% of your assets, which is among the lowest for robo-advisors. You also get a service called direct indexing if you have at least $100,000. Direct indexing is an advanced form of tax-loss harvesting that analyzes the movements of individual stocks (not just an ETF as a whole) in order to find trades that maximize your returns while still minimizing taxes.
Some robo-advisors also give you access to human financial advisors. Betterment offers a management plans that give you unlimited access to an advisor over the phone. The plan requires you to have at least $100,000 of investments and charges an annual fee of 0.40%. The minimum for this plan is higher than the minimum with Motif Investing but Betterment also offers a more basic plan with no minimum and an annual fee of 0.25%. This plan doesn’t give you access to a human advisor but still gives you features like tax-loss harvesting.
One thing to keep in mind is that Motif Investing isn’t completely a robo-advisor or a broker. It offers features from both and is well-suited as a secondary platform for investing. You can create a portfolio with a more traditional robo-advisor, like Wealthfront or Betterment, to take advantage of their investing resources. Use that portfolio to save for retirement and then use Motif Investing to trade individual stocks or ETFs that interest you.
Bottom Line: Should You Use Motif Investing?
Motif Investing is a great choice for hands-on investors who want invest in companies that align with their personal values. Trade fees are low, especially when you consider that a motif, which costs $9.95 to buy, can hold up to 30 individual stocks or ETFs. These trading fees could turn out to be even lower with some of the subscription trading plans. However, you may want to consider other robo-advisors if you’re more interested in passive investing than hands-on trading. Other robo-advisors will provide more tools for analyzing your investments and for minimizing your tax bill. People who are new to investing or prefer a simple, straightforward plan should look for other robo-advisors. This option is less user-friendly than some competitors and can be complicated with its many plan types and fee structures.
Tips for Finding an Advisor
- Sometimes, a robo-advisor with occasional human guidance doesn’t quite make the cut. If that’s the case for you, let us help you find a traditional financial advisor. With SmartAdvisor, you’ll take a short quiz and we’ll do the rest. We’ll pair you with three advisors in your area who fit your preferences and financial needs. Then we’ll put you in touch with these advisors to help you find the right one.
- When choosing a financial advisor, keep your goals and needs in mind. Are you putting a child through college while also saving for a new home? Find an advisor who can help you with that. It helps to ask advisors questions about their credentials and experience to better determine whether they’re right for you.