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Folio Investing Review. Is it a Scam or Safe? Is Folio Investing Legitimate, and SIPC/FDIC Insured Brokerage? Folio Investing BBB Rating

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About Folio Investing is the online retail brokerage of Foliofn, Inc., a brokerage and investment company founded in 1999 by former Securities and Exchange Commissioner Steven Wallman. The company serves U.S. investors, financial advisors, and financial institutions. Folio Investing offers retail clients nearly unlimited, commission-free trades at specified times of the day (Window Trades) for a flat annual fee of $290.

Investing Approach

The company technology allows customers to create an unlimited number of diversified investment portfolios called folios. These combine the benefits of direct stock ownership with the diversification and convenience of mutual funds. Each folio may contain up to 100 stocks, ETFs, and mutual funds. Another option allows customers to select from more than 160 pre-made Ready-to-Go folios.

Other features include the ability to trade less than full shares of any security and portfolio rebalancing on a regular basis. Tax management tools include automated tax strategies and the company’s patented Tax Football, which allows individuals to tailor their investing to their tax situation.

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Window Trades

Folio Investing’s patented Window Trades give investors the ability to buy and sell an entire folio in a single transaction. Window Trades are aggregate buy and sell orders that are executed at Folio Investing’s discretion at least once per day. The price is not locked in so there may be a difference in gain or loss from the time an investor places a trade order until the trade executes. The current windows each business day are 11:00 AM and 2:00 PM (ET), but fewer or additional windows may be provided at the company’s discretion.

Folio Investing Pricing

Orders may be placed by dollar amount rather than shares with the ability to buy and sell both whole and fractional shares. Window Trades are commission-free with the Folio Unlimited Plan, which costs $29 per month or $290 per year. Under this plan, investors are allowed 2,000 commission-free Window Trades per month. Market, limit, stop, and stop-limit orders cost $3.

A Basic Plan is available for smaller investors who plan to trade fewer than 8 securities per month, maintain smaller folios, or rebalance less often. The commission is $4 per Window Trade per security. Market, limit, stop, and stop-limit orders are $10. In addition, a $15 per quarter service fee is charged for customers who make 3 or fewer trades in the preceding quarter.

Folio Investing also charges annual IRA custodial fees of $25 and charges additional fees for checkbooks, wire transfers, returned checks, and other usual administrative services.

The company only brokers no-load mutual funds, so no upfront sales charges apply. However, early redemption fees may be imposed by certain funds.

Is Folio Investing Safe and Legitimate Company?

Folio Investing is one of the new breed of online brokers that are using technology to offer different ways for individuals to invest. Fear of the unknown causes most investors to worry about safety. Folio Investing is safe in that it is a registered broker-dealer that is regulated by the Securities and Exchange Commission (SEC) and is also a member of the Financial Industry Regulatory Agency (FINRA), which polices and disciplines member brokers for unethical or fraudulent behavior.

Since Window Trades only occur twice per day under normal circumstances, there is definitely a safety risk for investment capital in volatile markets. With stocks sometimes trading in very wide ranges on a given day, placing an order at the open that doesn’t get filled until 11:00 AM (ET) may generate a significant loss on that trade. The reverse is also true, but many investors may shy away from giving up that control with a stock portfolio. Mutual fund investors are aware of that risk and generally accept it as reasonable since mutual fund trades are executed at the close of trading each day.

The website appears to be well constructed and is fully encrypted and has instituted several extra security measures such as session time-outs and account lockouts that protect customers from hackers.

Is Folio Investing SIPC/FDIC Insured?

Folio Investing is insured through the Securities Investor Protection Corporation (SIPC) insurance for all equity securities. Since the company offers banking services like checking accounts and their Cash Sweep Program, they are insured by the Federal Deposit Insurance Corporation (FDIC). In addition, Folio Investing has purchased supplemental customer securities insurance from Lloyds of London for $50 million but caps the benefit to any single customer at $10 million. As always, this insurance doesn’t protect against losses from a decline in the market value of securities.

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Is Folio Investing a Scam?

Folio Investing is not a scam. Investors who don’t understand the commission pricing structure may end up paying more for their trades than with another broker. Individuals who don’t understand proper diversification may construct a folio that severely underperforms the market index they may be using as a benchmark.

Folio Investing Better Business Bureau (BBB) Rating and Reviews

The Better Business Bureau has given Folio Investing a B- rating. The company is not accredited with the BBB, which is not uncommon for brokerages. Three complaints have been closed with the BBB in the past three years against Folio Investing. Here’s a rundown:

Advertising/Sales Issues-0

Billing/Collection Issues-0

Delivery Issues-0

Problems with Product/Service-3

Guarantee/Warranty issues-0

No customer reviews have been submitted to the BBB.

Folio Investing Review Conclusion

Although relatively new, and using a different marketing model than traditional online brokerage firms, Folio Investing’s Folio Unlimited Plan is a viable alternative for investors who actively trade, seek low trade commissions combined with easy options to diversify, and like to actively manage their portfolio. Folio Investing’s Basic Plan offers relatively low commissions for infrequent traders but may end up costing unwary traders more commissions if they don’t fully understand the commission and fee schedule.

About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for, Chad can usually be found managing his portfolio or building a new home computer.