Online broker Motif Investing is closing its doors about 10 years after it opened them in Silicon Valley. The fintech firm, which offered advisors and investors build-your-own portfolio platforms, sent a note to users late Friday about its closure.
“At this time, we’ve made the decision to cease operations and transfer your account to Folio Investing,” it said in a statement shared on Twitter.
“First major investing #fintech to hit the dust?” asked Scott Salaske, CEO of the investment and advisory firm Firstmetric, on Twitter.
“One of the largest in terms of funds raised in my recent memory, $126M according to @crunchbase,” replied Bill Winterberg, CFP, a fintech consultant.
Motif is led by Hardeep Walia, a former Microsoft executive. (Requests for a comment on the closure were not returned.)
“I think the Friday night announcement was probably by design. It’s a bummer though, Motif’s offering was very well done and had a unique spot in the investing space. It was/is a very good service,” tweeted Kip McCauley, an investor, minority owner of the New York Knicks and a microblogger.
At least one advisor said the firm didn’t get the notice sent to investors: “Heres a fun fact – I’m on their advisor platform and found out about it by seeing this tweet. No email sent to the advisor community. No idea if my clients were notified,” explained Bill Nelson of Pacesetter Planning on Twitter, in response to McCauley’s tweet.
The movement of accounts is set for the evening of May 20, Motif said in its email, which noted that Folio offers fractional shares and portfolio customization options.
Folio CEO’s Views
“I have always had great respect for Motif and what they built and offered their investors,” said Folio CEO Steve Wallman in a statement sent by email to ThinkAdvisor.
“Bottom line, we are sad that Motif is closing its doors, but are grateful to have the opportunity to serve their clients and perhaps even offer them more than what Motif was able to provide,” explained the former SEC commissioner.
Folio’s platform, Wallman added, is “designed to promote better and smarter investing and the one that aligns best with the Motif experience. We expect the Motif customers will be delighted … as we continue to invest in additional solutions and services that satisfy customers and set us apart from the competition.”
The firm let clients invest as little as $300 in a Motif portfolio. Margin trading required $2,000 or more. For those wanting Direct Index accounts, a balance of at least $10,000 was needed, while Impact accounts required $1,000 or more.
In November, Motif — which was a FINRA-registered broker-dealer and an SEC-registered RIA — said it had some 350,000 clients.
Motif focused its efforts on letting advisors and investors build portfolios around specific investing themes and economic trends. Its investors included Goldman Sachs, Ignition Partners, Foundation Capital and Norwest Venture Partners.
Some of its board members have been former SEC Chairman Arthur Levitt, JP Morgan Private Bank CEO Kelly Coffey and former Boston Consulting CEO Carl Stern.
Could Motif’s closure be a harbinger of more fintech closures?
“The virus is a catalyst, but this also the end of a credit cycle where many firms that were marginal in a good environment, will go out of business,” said Lynn Alden, founder of Lynn Alden Investment Strategy on Twitter about the news. “Some jobs will V-bottom upon virus resolution, but others will take years.”
The planned shutdown comes about a year after Goldman Sachs Asset Management launched five ETFs based on benchmarks created by Motif Capital, a unit of Motif Investing. The funds focus on trends in data, finance, human evolution, manufacturing and consumers.
The Goldman Sachs Motif Finance Reimagined ETF (GFIN), for instance, was up 18.70% for the past month as of Monday vs. 12.7% for the Financial Select Sector SPDR Fund (XLF); for the year so far, GFIN was down about 14.5% vs. -27.3% for XLF.
– Melanie Waddell contributed to this report.