Motif Investing, a pioneer in ideas-based investing, announced Thursday that it has received a new injection of $35 million in funding and is launching a series of motifs as well as a flat-fee offering to help advisors compete with their automated competition.
The new Horizon motifs were released Thursday, and Motif plans to launch in June a series of smart beta motifs exclusively for advisors who use the Motif Advisor Platform.
Silicon Valley-based Motif, launched by former Microsoft executive Hardeep Walia, says the Horizon motifs provide advisors and self-directed retail investors with simple, commission-free allocation models and rebalancing as well as no added management fees, which runs counter to “robo-advisors,” which can be accompanied by management fees ranging from 0.15%-0.35% of total assets per year.
“Motif Horizon is a six-asset-class allocation model in a single motif,” Walia told ThinkAdvisor. It’s “great for DIY investors and advisors that want to wrap an advisory fee around a free product.”
Walia said that “a lot of our advisor clients say ‘how do we compete’” with robo-advisors. But a “robo-advisor is a robo-allocator, they don’t really give advice. We want the advisor to give advice, and now they have zero-cost” smart beta products to use.
The smart beta motifs will offer 23 asset classes through multiple motifs.
Motif also announced that it is offering a “cost-effective flat-fee offering that will empower advisors to compete more effectively against robo-advisors and fully serve clients for a fraction of the cost of many current alternatives.” The service starts at $20 per customer per month.
The flat fee includes unlimited trading and rebalancing, access to the Motif Advisor Platform, and access to all motifs including the soon-to-be released smart beta models.
Motif says that the new Horizon motifs are also “fully customizable asset allocation models,” which Motif says is “another differentiator from robo-advisors, which allow investors to choose from one of several predefined, unalterable asset allocations models that can include overlap of asset classes.”
Motif says that customers who elect to customize their Horizon motifs to meet their unique investing needs can do so and pay the same total commission, $9.95, as they have for motifs they have already built or customized.
Motfi raised the $35 million in funding from JPMorgan Chase & Co., Wicklow Capital and Balderton Capital. Previous investors Goldman Sachs, Foundation Capital, Ignition Partners and Norwest Venture Partners also participated in the round.
Balderton Capital, a prominent U.K. fund, will help drive Motif Investing’s international expansion.
Motif board members include former SEC Chairman Arthur Levitt and former Wall Street executive Sallie Krawcheck.
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