Good technology seldom goes to waste.
Late last month, thematic brokerage platform Motif Investing informed users it was shuttering, but now Schwab is giving it new life, announcing this week it was acquiring the “pioneering” platform’s technology and intellectual property, including algorithms, patents and source code in an all-cash transaction. As part of the deal, Schwab will also hire a majority of Motif's development and investing staff, including founder Hardeep Walia.
However, as noted in Schwab’s statement, Motif’s broker/dealer, registered investment advisory, client accounts and client assets are not included in the acquisition. As previously reported by WealthManagement.com, Folio Investing had already purchased Motif’s client accounts and assets.
While terms of the deal were not disclosed, the transaction is expected to close by the middle of 2020.
Despite some level of attrition amid the remains of Motif’s operations, Schwab’s announcement took an optimistic tone.
“As a company with a deep history of innovating to improve the financial lives of investors, we are thrilled to bring transformative technology to Schwab to help our clients navigate their investment needs in a more personal way,” said Neesha Hathi, who serves as chief digital officer at Schwab.
“For over a decade, Motif’s unwavering mission has been to introduce investors to the power of thematic investing. By combining data science and automation, we have developed an innovative and personalized investing platform that appeals to both individuals and advisors,” said Walia. “Schwab shares our spirit and passion for making personalized investing easier and more accessible for all. We’re excited to join them in helping to shape the future of wealth management to better serve investors.”
The Schwab announcement also shared some of what the firm intends to do with Motif’s technology and expertise going forward. In addition to accelerating development of thematic and direct indexing technology at Schwab, Motif’s technology will help the larger firm in creating more flexible personalized investments. The technology and development talent it has acquired will also allow for further improvements in Schwab’s recently announced fractional-share trading and help the larger firm enable more sophisticated tax optimization strategies within investment portfolios.
