Online brokerage Motif introduces flat fees for advisers

Silicon Valley startup also raises $35 million in funding from venture group.
FEB 20, 2014
Online brokerage startup Motif Investing Inc. announced Thursday it is introducing flat-fee pricing on its trading and re-balancing platform for advisers, now that the platform has come out of beta. “We came into the adviser space faster than we wanted because we were pulled,” said Motif chief executive Hardeep Walia. The Motif adviser platform offers unlimited trading at a cost of $20 to $50 per customer per month, depending on the size of a firm, Mr. Walia said. Motif's adviser platform was voted as a best-of-show winner at the technology conference FinovateSpring 2014 in San Diego last month. It was one of eight companies that reaped the highest number of votes among 68 tech demos at the show. In addition, Motif announced Thursday that it has raised $35 million in funding from JPMorgan Chase & Co., Wicklow Capital Inc. and Balderton Capital. Previous investors the Goldman Sachs Group Inc., Foundation Capital, Ignition Partners and Norwest Venture Partners also participated in the round. The new funding will be used to help further Motif's services and expand into international markets, according to the firm's press release. Next month, Silicon Valley-based Motif plans to launch a new family of smart beta “motifs,” or customized model portfolios made up of individual securities, for advisers. The company's platform lets users create, share, buy and sell baskets of stocks or exchange-traded funds, called “motifs,” which comprise a group of ideas-based investments. For example, the “Frack Attack” motif gives investors exposure to companies with hydraulic fracturing operations, while the “Vanity Flair” motif focuses on the consumer beauty and personal care market. Users can earn $1 in royalties every time someone buys their motif.

Hardeep Walia on how Motif lets investors invest in ideas

The company's customers have so far built 35,000 motifs, Mr. Walia said. He said the platform, which is available in both adviser and retail versions, hosted 10 registered investment advisers as of May 2, and another 100 RIAs were in the process of getting on board the platform. Prior to the adviser platform launch, he said, advisers were using the retail product. The investment strategies used by many online managed-account platforms, sometimes called “robo-advisers,” are based on questionnaires that create asset allocations for investors. Mr. Walia argued that those platforms don't offer true guidance and that their recommendations can vary based on whether markets are performing well or poorly. “I want to stop calling robo-advisers robo-advisers; I want to call them robo-allocators, because they don't give you advice,” Mr. Walia said. “We're announcing a family of allocation models that are in fact better than any of the traditional robo-adviser models out there, but we're offering them completely free.” Current Motif board members include Sallie Krawcheck, former head of Merrill Lynch Global Wealth Management, and Arthur Levitt, former chairman of the Securities and Exchange Commission.

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