A New “Trend” For Me

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  • on July 20th, 2014

“I believe that understanding what is good is obtained by looking at the way the world works and operating in harmony with it to help it evolve.” Ray Dalio

Through 20 years in financial services, I’ve seen the best and worst of investment-driven behaviors. As much as it pains me to read about conflicts of interest and outright fraud, the opportunity to learn and compete has provided a constant source of inspiration. Our industry tends to magnify basic human traits and thus becomes an incredible place to advance one’s self-awareness.

Consumed with finding the good, I’ve fallen in love with discount commissions, direct access executions, exchange-traded funds, democratized research, the advisor movement from commissions to fees, and disclosure of sickening 401k charges. And of course, the ability of the web and social media to bring me in touch with forward-thinking peers. What’s had my attention in recent years is the same as many of you; better ways to help investors through lower costs and/or alternative investment approaches.

Then I got a look at the future, a combination of vision and technology that brings together each of these investor-friendly breakthroughs. The notion that an individual could add factor and timeframe diversification to a standard asset allocation was a dream at best, absent an additional layer of management  fees. Trading a personalized basket of stocks or ETFs for $10 is quite an advance in cost and simplicity; controlling each position in an SIPC-backed account, with real-time liquidity derived from the underlying stocks? Not on my radar, until recently.

With that vision now a reality, I’ve taken a role as Advisor Solutions Specialist at Motif Investing. Having seen the platform, I couldn’t help but imagine its adoption by those most qualified to use it…investment advisors. I realize a move is underway to replace humans with technology, but I believe a relationship with a true fiduciary is worth every penny. No industry is immune from bad actors, but independent advisors who have rejected high-commission, in-house products for low-fee independent investments are people we should seek to embrace, not replace.

Implementing low-cost strategic allocation that addresses MPT’s most flawed assumptions? Done. Adding low-correlation tilts toward the historic edges from momentum and deep-value factors? Done. Satisfying a client’s desire to gain exposure to an emerging theme like robotics, or avoid one like smoking? Done, and all with a single click to rebalance, I might add. Selling individual equity losers and replacing them with similar securities to harvest tax losses? On its way from manual to automated…

Everything being done at Motif is in pursuit of a more level playing field between old Wall Street and pesky investor advocates. If you know me at all, you know I’ll be contributing my own set of ideas in both investment and practice management. Constant access to engineering and service teams means the platform will be forever improving, using advisor feedback to create a brokerage experience unlike any seen to date. The revolution from overpriced products to value-driven solutions is well underway; this is a highly inclusive step in that direction.

A general skeptic of financial “innovation”, I admit nonchalance(at best) when first hearing of the Motif concept. Seeing its evolution, and spending time with its architects, has me convinced that major changes in the way investors receive advice are at hand. For a process junkie like me, the ability to create my own relative strength and mean reversion “indexes”, customize the weights and timeframes, and manage them with ease as tactical positions, is exactly the simple elegance my approach needed.

As “all-in” client fees compress towards 1%, technology becomes the growing ally of advisors seeking to maximize returns in a low interest rate environment.  I couldn’t be more excited to expand the universe of investors with access to such tools, and partner with thoughtful advisors seeking the best for their clients. I’m proud to be the newest member of the Motif Advisor team, and look forward to finding ways to support the needed mission of better investor outcomes.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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