Charles Schwab Purchases Motif’s Technology Capabilities
May 07 2020 - 4:15PM
Business Wire
The Charles Schwab Corporation (“Schwab”) today 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.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading
provider of financial services, with more than 360 offices and 12.7
million active brokerage accounts, 1.7 million corporate retirement
plan participants, 1.4 million banking accounts, and $3.50 trillion
in client assets as of March 31, 2020. Through its operating
subsidiaries, the company provides a full range of wealth
management, securities brokerage, banking, asset management,
custody, and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and
affiliates offer a complete range of investment services and
products including an extensive selection of mutual funds;
financial planning and investment advice; retirement plan and
equity compensation plan services; referrals to independent,
fee-based investment advisors; and custodial, operational and
trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles
Schwab Bank (member FDIC and an Equal Housing Lender), provides
banking and lending services and products. More information is
available at www.aboutschwab.com. Follow us on Twitter, Facebook,
YouTube and LinkedIn.
About Motif
Motif uses breakthrough technology and data science to build
innovative investment products for individuals, institutions, and
advisors. The company specializes in thematic investment strategies
and allows investors to trade intelligently weighted baskets of
stocks built around themes, investing styles or multi-asset models.
Current board members include former Securities Exchange Commission
Chairman Arthur Levitt and former Boston Consulting Group Chairman
& CEO Carl Stern. Motif is a FINRA registered broker-dealer and
an SEC-registered institutional investment advisor, headquartered
in San Mateo, California.
Forward-Looking Statements
This press release contains forward-looking statements relating
to the acquisition of assets from Motif, including the timing of
closing, and the growth of Schwab’s development of personalized
indexing solutions, which reflect management’s expectations as of
the date hereof. Achievement of these expectations is subject to
risks and uncertainties that could cause actual results to differ
materially from the expressed expectations.
Important factors that may cause such differences include, but
are not limited to, failure to satisfy the closing conditions in
the purchase agreement in a timely manner or at all; failure to
satisfy the closing conditions in the purchase agreement in a
timely manner or at all; integration of Motif’s intellectual
property into Schwab; client demand for personalized indexing
solutions; general market conditions and other factors set forth in
Schwab’s most recent report on Form 10-K.
1 Index mutual fund and ETF provider industry rankings: Charles
Schwab Investment Management, Inc. (CSIM) is the investment
adviser. All rankings based on assets under management as of
3/31/20. Source: ISS Market Intelligence Simfund; Retail separately
managed account ranking: As of 12/31/19. Source: Cerulli Edge U.S.
Managed Accounts Edition 1Q 2020. Reflects estimated ranking for
manager-traded retail SMAs; includes CSIM’s managed account
strategies (Schwab Managed Portfolios, Windhaven Strategies,
ThomasPartners Strategies).
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version on businesswire.com: https://www.businesswire.com/news/home/20200507006051/en/
MEDIA:
Mayura Hooper Charles Schwab Phone: 415-667-1525
Brittany Price Motif Phone: 310-739-2731
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