Is Motif Investing a Scam or Fraud? Is Motif Investing Safe and Legitimate Firm? Motif Investing Complaints And BBB Rating for 2020

Is Motif Investing Safe?

Some of our readers have asked us the following questions: Is Motif Investing a scam? Is Motif Investing safe company to invest money? Is Motif Investing SIPC insured and a member of FINRA? Are there any complaints on Motif Investing?

Let us reassure you - Motif Investing is a safe, legitimate company. One of its investors is Goldman Sachs, and the firm has been featured in all major financial magazines and TV channels such as Bloomberg, The New York Times, CNBC, Business Week, Fox Business, to name the few.

Is Motif Investing Insured?

Motif Investing is a member of SIPC. This means that Motif Investing accounts are insured in case of brokerage firm failure, very similarly to the way bank accounts are insured by the FDIC. The insurance is limited to $500,000 per customer, including up to $250,000 for cash. The company is also a member of FINRA and has to comply to strict regulations.

Is Motif Investing Scam?

Motif Investing Complaints and BBB Rating

Motif Investing BBB (Better Business Bureau) rating is B+. The breakdown of BBB data is following - total closed Motif Investing complaints in the last 3 years - 8: Problems with Product/Service - 6, Advertising/Sales Issues - 1, Billing/Collection Issues - 1, Delivery Issues - 0, Guarantee / Warranty Issues - 0. See the complaints on the Motif Investing BBB page.

Motif Investing Alternatives

One very popular brokerage firm that matches and even beats Motif's pricing with its $0 commissions is Ally Invest - learn more. For the best trading tools, investment research, and mutual funds selection (which Motif does not offer) TD Ameritrade is the most recommended option - learn more.

Motif Investing Overview

Motif Basics

  • $4.95 to buy or sell individual stocks/ETFs
  • $9.95 commission to buy or sell a motif of up to 30 stocks or ETFs
  • $9.95 commission to rebalance all or part of a Motif
  • No minimum account balance
  • $2,000 minimum required for a margin account
  • $300 minimum to purchase a Motif
  • Ability to invest as little as $250 in IPOs with no commission (through a partnership with J.P. Morgan)

What are Motifs?

Questions abound regarding Motif Investing. Who constructs the motifs? Are they qualified? What's the motif's track record?

Some of the professionally designed motifs are based on accepted allocation models such as "Dogs of the Dow," "Emerging Markets," or "Dividend Stars." Others are based on small subsectors or random criteria such as "Disappointing the Street," a motif that purchases stocks that have dropped sharply after posting weak quarterly numbers.

The customer-built motifs seem even scarier. Community Created motifs listed on the website recently totaled 29,347. Motifs with only one security in the portfolio numbered 3,196. Motifs with five stocks or fewer—11,434. Motifs with 10 stocks or fewer—20,203. Very few investment professionals consider a portfolio of 10 or fewer securities to be prudent diversification.

Each motif is named or themed. These themes sound more like advertising or appeals to emotions: Monster Stocks, Soaring Gold, Anytime Gold, The NASDAQ Massacre, The Jewish Billionaire Fund Index, and Betting Against Obamacare. Some names are just silly or seem to have no pretense at all of being well thought out, like the "Fruit Fund, Stocks that are Named after Fruit."

In short, investors must be very careful to find a motif they understand fully and are willing to accept the risk, especially if the motif was designed by a Motif community member. Without a long-term track record for comparison to indexes or benchmarks, even investing in a motif based upon solid investment principles that can only hold 30 securities at most is inherently risky.

motif investing complaints

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Navigation is easy because there are no research tools, education sources, trading platforms, or complicated commission and fee charts through which to sort. An unusual as well as questionable feature is the fact that Community Created motifs earn the creator a $1 royalty for each purchase or rebalance of the motif. While a royalty may be a nice bonus for someone who creates a solid, well-intentioned motif, other creators might design a motif that appeals more to investors' emotions than their reason solely to generate royalty income without regard to the quality of the motif's portfolio.

Account setup is only allowed online. The website has an extensive FAQ section and a blog and community section that seems current and well maintained. The pricing, concept, and construction of motifs are explained clearly and thoroughly.

The "Explore Motifs" feature is helpful. It allows filtering for more than 10 variables when researching motif candidates. However, it can be confusing to wade through the parameters and narrow down the candidates to a manageable list. A negative is that only one-day, one-month, and one-year returns are shown for each Professional motif. Another negative is that most motifs seem to compare their one-year returns only with the S&P 500 Index, which is not always the appropriate benchmark.

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