Charles Schwab Purchases Motif’s Technology Capabilities
The Charles Schwab Corporation announced that it has entered into an asset purchase agreement to acquire the technology and intellectual property of Motif in an all cash transaction. Motif is a fintech pioneer that has combined breakthrough technology and data science to deliver customized thematic portfolios to investors. The acquisition will include all of Motif’s technology and intellectual property, including algorithms, patents and source code.
“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, EVP and Chief Digital Officer at Schwab. “We continue to see an increasing number of clients interested in customizing their investing experience to suit their values, objectives and personal circumstances. We intend to leverage Motif’s platform to build on Schwab’s existing capabilities and help accelerate our development of thematic and direct indexing solutions for Schwab’s retail investors and RIA clients – all with the sophisticated digital experience our clients expect from Schwab.”
Schwab will be hiring a majority of Motif’s development and investment talent. Founder and CEO, Hardeep Walia, will join Schwab as part of its acquisition-related hiring of Motif’s staff.
“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.”
In addition to thematic investing, Motif’s technology platform offers the flexibility to personalize investments, supports real-time fractional share trading and can help enable sophisticated tax optimization strategies within investment portfolios.
“In addition to an increasing interest in personalizing portfolios, we know many individual investors and RIAs seek the powerful tools that allow them to minimize taxes, efficiently manage transitions out of concentrated stock positions, and incorporate personal investing preferences – all of which can be provided by a robust direct indexing offer,” said Rick Wurster, EVP and Head of Schwab Asset Management Solutions. “We intend to bring these solutions to our clients, democratizing capabilities that previously only existed for institutions and high net-worth individuals.”
Schwab will leverage its experience and expertise as a leading index manager as it builds out direct indexing capabilities. Schwab’s asset management arm is the industry’s third largest index mutual fund provider, fifth largest ETF provider and fourth largest provider of retail separately managed accounts1.
Motif’s broker-dealer, RIA, client accounts and client assets are not included in the acquisition. Motif recently announced the sale of its client accounts to Folio Investments.
The transaction is expected to close by the middle of 2020, subject to customary closing conditions. Financial terms are not being disclosed.
