Northern California-based Motif Investing is an online brokerage that offers a range of products, including community-built portfolios as well as robo-advisor managed portfolios that are the focus of this review. Motif launched its Impact Portfolios in 2017, culminating in three portfolios that can be guided by an investor’s interest in sustainable industries, fair labor practices, or ethical practices. If an investor prefers not to apply one of these impact themes, there is a fourth standard automated portfolio that applies Modern Portfolio Theory (MPT) principles to create diversification across asset classes through direct fractional share purchases of stocks and exchange-traded funds (ETFs) to bonds.
CEO Hardeep Walia would prefer that these portfolios not be thought of as robo-advisories, though they offer automated investing, including an algorithmic selection of assets and allocations, regular deposits, rebalancing, and tax minimization. His vision for Motif is to allow clients to express their views through their investments, such as, “I’d like to invest in drones” or “I want to buy beaten-down stocks.” Adding impact-focused motifs is an extension of the offerings the firm has already made available through its data-driven approach to creating thematic portfolios. Given the automation, however, Motif’s Impact Portfolios are a robo-advisory held inside the larger digital brokerage. So, for the purposes of this review, we will be looking primarily at the Impact Portfolios as a robo-advisory offering on its own merits – no doubt skipping many innovative features Motif offers as an online brokerage and portfolio manager in other areas of its business in the process.
Low-cost impact portfolio investing
Portfolios are visible prior to account funding and are extensively customizable
Asset models are updated to ensure companies on the list pass MSCI ESG screens
The equity portion of the portfolio is invested in individual stocks
Currently only three possible impact portfolios available
Separate brokerage application required to open an impact account
Very little in the way of goal-planning capabilities
You must have a separate account for each impact motif
Getting started with Motif’s Impact Portfolios is simple—you type in your age, your investing target, and risk tolerance. The next step is to select a value from the three choices of sustainable planet, fair labor, and good corporate governance. There is also the option of skipping this step, which puts you into the standard Motif portfolio with no socially conscious filtering of companies. All the portfolios are previewed with an allocation donut and a percentage breakdown that you can click to see a full list of equities. There is also a projection tool that allows you to adjust your starting deposit and monthly deposit to see how it affects the outcome.
If you select an impact value, you are shown an additional section that provides details on which companies are removed and added. Companies that don’t align with your chosen value are removed in favor of similar companies that pass MSCI screens. Once you are happy with your proposed portfolio, you can begin the account setup with by providing your email and choosing a password. Motif Impact Portfolios can be used in an individual taxable account, individual retirement accounts (IRAs), and joint accounts.
It is worth noting that you’ll need a separate account (be it taxable, IRA, etc) for each value or goal in which you want to invest. The terminology here is a bit confusing, as you have a single Motif account with a login, but your holdings are referred to as accounts as well rather than as portfolios. So you have a retirement account and a general wealth account rather than a retirement portfolio and general wealth-building portfolio. Simply put, each of your accounts/portfolios can only ascribe to one impact value at a time. You can view a summary of all of your Motif accounts/portfolios on the dashboard. Motif also states that it will add more values to the Impact Portfolios offering based on customer demand over time.
The Motif platform does not have planning tools beyond the projection tool that helps guide your initial and monthly deposit amounts. If you are looking for guidance on how much you’ll need for specific life events based on your income and so forth, you will have to look for relevant content in blog or, more likely, use the planning tools provided elsewhere.
Automatic deposits are easily set up in the “Transfer” section of the platform. You can fund your account via ACH transfers and set up the recurring deposits the same way. The disclosure states that Motif has a minimum of $250 for recurring deposits to Impact Portfolios, but it later says that the cash balance must exceed $250 before additional investments are made in your portfolio. Margin is available to brokerage clients, but not for the automated Impact Portfolios. There are no banking services (checking accounts and debit cards) available from Motif at this time, and no interest is paid on the cash balances in your account.
The marketing materials for Motif’s Impact Portfolios also mention tax-aware auto investing rather than outright tax-loss harvesting. The disclosure goes to great length to make clear that taxable events are the client’s responsibility, so the assumption here is that rebalancing is done in a way where new deposits are prioritized for areas where allocations are trending lower than is ideal. Doing rebalancing through addition like this can help to minimize taxable events, but a rebalancing triggered by a withdrawal would obviously override this ability.
Regardless of which value you choose – or even if you choose to skip the value assignment – Motif creates an initial asset allocation that follows Modern Portfolio Theory (MPT). The portfolio contents are made up of actual company stock for the equity allocation, and ETFs shares from iShares, SPDR, Vanguard, and Van Eck for the fixed income portion. Motif’s particular promise is to take MPT to the next level with the ESG screening. As already mentioned in the account setup, the value chosen has an impact on the portfolio. That said, it doesn’t actually change the asset allocations, which are done along MPT lines with your risk tolerance, age, and time horizon being the main variables. You can edit these variables and see the changes to the asset allocations before funding a portfolio or even registering an account. The allocation percentages shift, but the underlying assets only undergo a noticeable change when an impact investing value is changed or removed entirely.
When you assign a value to your portfolio, the MSCI ESG screens come into play and filter out certain companies for better-aligned substitutes. The key issues that are used for the MSCI screens change according to the value represented by the portfolio. For example, the fair labor portfolio uses the MSCI ESG ratings for companies on the key issues of labor-management, health and safety, and supply chain labor standards. Companies that do not score well in those areas are removed from the portfolio in favor of those who do. There is an entertaining graphic that shows the non-compliant firms being removed from your portfolio.
Motif also allows you to take control of your portfolio and remove specific stocks. In the disclosure, however, Motif states that doing so will result in your account converting to a standard trading account on the Motif platform. Although we didn’t test this, the assumption is that you would lose the portfolio automation features once you trigger the conversion.
Motif’s Impact Portfolios disclosure states that your portfolio is rebalanced quarterly, or more often if it drifts significantly from the target allocations. You can specify a drift threshold to exert some control over the frequency with which an account is rebalanced. Reinvestment is triggered any time there is $250 cash in an account, which can happen due to a deposit or an accumulation of dividend payouts. You’re notified in advance that your portfolio is eligible for a rebalance. If you don’t cancel or adjust the order, then it is assumed that the rebalance has been authorized. You can also request a rebalance, which is a rare feature.
Motif Impact Portfolios also allows you to tweak the asset allocation within a portfolio. The default asset allocation can be updated in the account interface and, unlike customizations at the stock level, the portfolio will continue to operate automatically. If you do this, all future rebalancing will be done to the new target allocations. Even if you don’t tweak the allocations, they will shift naturally over time. Motif calls this the “glide path” and it is basically the MPT principle that a portfolio needs to get more conservative (read: more fixed income) as the investment timeline grows shorter. So as your stated target date approaches, Motif takes care of stepping down the risk exposure for you.
Motif’s mobile investing app give you all the functionality of the website. Motif supports Apple and Android, and the apps have high ratings on both platforms. There are also apps for tablets that take advantage of the additional space available. The website itself is mobile-enabled, so you can log into it using a browser on your mobile device.
Motif’s easy, elegantly-designed website has just a few drop-down menu choices that can take you anywhere within the platform. From time to time, a new browser window pops open unexpectedly - most frequently when accessing the FAQs – and some links in the blog and newsroom fail to load. Overall, however, the experience is as smooth as the purpose-designed mobile apps.
The primary method for contacting Motif customer service is a phone call; they are available 9 a.m.–6 p.m. Eastern time, Monday through Friday. You can also send an email. There is no online chat available, but the FAQs are thorough and well-written.
Education & Security
There is little offered in terms of general investing education other than the blog. The part that constitutes the robo-advisor service doesn’t offer much in the way of content beyond the marketing pitch. That said, the methodology behind the Impact Portfolios is covered in a blog post and the disclosure is in the footer of the page with a clearer explanation of offering, if not the methodology.
The website and mobile apps are encrypted and Motif provides Securities Investor Protection Corporation (SIPC) and excess insurance.
Commissions & Fees
Motif’s fee for managing an Impact Portfolio is 0.25% of assets under management. This is charged monthly according to the disclosure. The firm also offers a wide range of no-fee portfolios.
Is Motif a Good Fit for You?
Though Motif does not precisely fit the robo-advisory mold, it’s a good fit for you if you’re familiar with the stock market and have a precise idea of how you want to invest your money. It’s not a set-it-and-forget-it type of investment platform. If you like keeping an eye on how your portfolio is progressing and having the tools to make a few personalized tweaks, you’ll like Motif.
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