Theme park? New offering lets advisers build portfolios around motifs

The do-it-yourself revolution marches on. Financial advisers, however, can take advantage of this particular bit of DIY innovation.
Hardeep Walia, Motif Investing’s co-founder and chief executive stopped by a couple weeks ago to show me the new features and I’ve been anxiously waiting to write about them since.
The firm today announced a new product set, ostensibly for anyone, but that I think will find a place among some financial advisers.
While termed a “new class of products” in their prepared statement I’m thinking of them more as a set of features (I liken setting it/them up to, well, a setup wizard).
The features allow individuals (and “organizations or brands”) to create their own sets or groupings of individual stocks and exchange-traded-funds that are based on or around a particular category, theme or idea.
The folks at Motif are calling it the “Build Your Own” feature.
I first wrote about Motif a little less than a year ago when the firm launched out of beta and I was impressed with the offering both as it was and for its potential.
The new set of features are a step toward building something that I think will be more compelling to advisers.
When the site/service/platform originally rolled out users had to choose from among pre-built Motifs.
Starting with rollout of these new features anyone joining and opening an account can build his or her own motifs.

ADVISER POTENTIAL

I go into more depth on how a couple of advisers are actually using it or intend to use it in next week’s column so I won’t expand on that too much here.
I will say that while young or tech-savvy advisers are going to be okay with the new features as they are being marketed, meaning to everyone, those advisers that have been in the advisory business a long time are not.
My experience over the last five years suggests that most advisers expect that the technology they will employ in working with clients will firmly place them front and center.
In other words I know that advisers like to be in the pilot or driver’s seat.
I think few established advisers with assets under management in the $25 to $50 million or more range will want to adopt this in quite the format it is now.
Slick as it is it is still a little too consumer-looking for some advisers methinks (check out the accompanying screenshots).
I have given this some thought since Hardeep stopped by and between that and looking at the screenshots they have sent me the answer, at least as far as advisers will be concerned is simple.

Cloning the site and providing advisers a tailor-made separate entrance for them to in turn introduce to clients, well that would be a whole other ball game.
A dedicated Motif for Advisers offering in other words (I think Mr. Walia may be thinking about that for the future already anyway but maybe this will reinforce the notion).
Even more importantly, from an adviser perspective anyway, is something that is already built and in use with Motif’s client service folks, a co-browsing capability.
In other words someone calls in who is logged in to the webiste and the service rep can follow them or vice versa.
Hardeep said that an adviser-version of that feature is under construction now.
Also under construction is the ability for users or advisers to keep a motif they have created locked down and enable sharing with a select set of folks, clients for instance.

THE EXCITING PART

All quibbling aside, the main point here is that individuals can create their own motifs (be they individual investors or advisers doing so for clients).
And that is exciting.
It is something new.
Something that, if you are an investor, fits comfortably between buying into the often opaque contents of a fund you think or guess might mesh with your interests and and willy nilly purchasing of individual stocks via a discount brokerage platform.
For advisers it could be a neat point of entry for introducing younger prospects to the markets, especially those potential clients that are totally intimidated and/or that have particular areas of interest (socially conscious investing, mobile technology, biotech etc.).

SOME NUTS AND BOLTS

Pricing is very simple and straightforward. You pay $9.95 to buy or build a motif or to trade one, which can contain up to as many as 30 stocks. There is not an account minimum in the terms most advisers or investors usually think of but you need to invest at least $250 in a motif to get started.

When building their own motifs, users can easily search for and select listed individual stocks and ETFs. Even better they can then easily and fairly intuitively adjust weightings for each stock in the motif. And users can “match their portfolios against the performance of a benchmark index; and then decide the dollar amount they would like to allocate toward the purchase of their customized portfolios of individual stocks” (that bit’s from today’s prepared statement).

BYO motifs created by users will soon be added to and featured on Motif’s site in a catalog they liken to an online app store.

In a few months Mr. Walia said that Motif will begin allowing users to buy the BYO motif creations of others as well, which will in turn allow a motif’s creators to be eligible for compensation through a royalty payment program.

I have no idea just yet how that will be organized or the levels of compensation.

Stay tuned.

For more information visit Motif Investing online.
You will probably find it interesting to watch Hardeep’s video interview and demo on CNBC SquakStreet today as well. It provides a quick visual synopsis in his own words, though the screenshots here are better than what you can make out on the laptop he’s demonstrating with.