Custodial firm Folio Institutional, a division of online brokerage Foliofn Investments, has launched a new online marketplace called Model Manager Exchange that allows advisors working with the McLean, Va., based firm to access an initial 150 model portfolios from 35 financial professionals.
“The Model Manager Exchange was designed to provide an easy way for advisors using the Folio Institutional platform to interact with one another and take advantage of a peer network that provides access to a collection of great thinking,” says Folio Institutional President Greg Vigrass. “Every advisor on our platform has access to an enhanced universe of innovative portfolio models created and managed by other advisors and institutions.”
Vigrass told AdvisorOne that Folio Institutional’s online exchange is ideal for advisors “on both sides of the fence: those that are looking to distribute their models, and those [advisors] that are looking to find other advisors on our platform who have specialties and expertise they can take advantage of.” Model Manager Exchange is also peaking the interest of firms that do not currently do business with Folio Institutional, Vigrass says, but “who are looking at the [online exchange] and saying, ‘I might want to start custodying some of my business at Foliofn if it means I can get access to some of these other portfolio managers.’ ” Other advisors are asking: “ ‘How do I get my models up there,’ ” Vigrass says.
Folios are customized baskets of securities which can be bought, sold or rebalanced in a single transaction. The Folio Institutional platform, the company says, “allows trading in fractional shares, so any dollar amount can be invested into a portfolio and spread across all of the holdings according to pre-set weights—regardless of per-share prices.”
Folio Institutional says it is initially offering Model Manager Exchange as a free service for all RIAs and broker-dealers who use its platform. Currently, there is no fee for advisors to display their models on the Exchange. However, the firm says that advisors who offer portfolio models are required to have a minimum level of assets on the Folio Institutional platform, with those funds invested in one or more of their models. Negotiations of licensing fees are conducted directly between the sellers and buyers of the investment strategies, Folio Institutional says.
Once a model is licensed for use, the firm says, “trades are executed via the Folio Institutional platform, which handles all back-office transactions between the licensor and licensee.”