Frequently Asked Questions

A Personal Portfolio is a Separately Managed Account (SMA). An SMA is a brokerage account that you own, but that an investment advisor (in this case Motley Fool Wealth Management) manages for you on a discretionary basis. An SMA is a private portfolio composed of actively managed, individual securities.

SMAs were created in the 1970s and offer three primary benefits over other investment account types:

  • Transparency - your Personal Portfolio allows you to log in to the custodian’s website at any time and see each and every holding in your account and its value (value is based on prior close of business day).
  • Customization – your Personal Portfolio will be personalized, based on what you tell us about your specific financial situation. If you’d like to adjust the allocation to be more aggressive or more conservative than we suggest, you have the ability to modify the mix of strategies we’ll deploy in your account. You also have the ability to restrict specific securities, if you’re prohibited from holding or trading certain stocks.
  • Ownership - your Personal Portfolio is comprised of actual shares of stock, not a share of a mutual fund. This means you participate directly in the capital gains/losses of the stocks you own and are not held responsible for gains you may not have participated in.

Please note that the assets you dedicate to a Personal Portfolio will be managed only by the Motley Fool Wealth Management team – you will not be able to make trades in this specific account.

Motley Fool Wealth Management charges an industry-standard, assets under management (AUM) fee. 1/12th of your annual fee is debited from the account we manage for you on a monthly basis.

Our AUM fee follows the typical tiered structure common in the money management industry. We charge 0.95% on the first $1,000,000 under management, and 0.75% on amounts above that.

Fees for index-based portfolios are as follows:

Index Portfolio Fees
Asset Level Standard AUM Fee for Index-Based Portfolios
First $100,000 0.50% of assets
Next $900,000 0.40% of assets
Next $4,000,000 0.35% of assets
Next $10,000,000 0.30% of assets
Amounts over $15,000,000 0.25% of assets

In addition to the management fee, certain of MFWM strategies may utilize exchange traded funds (ETF) that are subject to fees and expenses that are passed along to clients. Depending on the strategy, these underlying fund fees and expenses may be significant. Index-based strategies that exclusively utilize ETFs will have higher fund-related fees and expenses.

You will also be responsible for the custodial fees and commissions charged by Interactive Brokers for operating the account. The most common custodial fees are trading costs. There is a transaction fee assessed on each share traded, but a large part of why we chose Interactive Brokers as our partner and custodian is because they offer the least expensive trading fees.

It is tough for us to think about our costs in fractions of a penny. So, consider that if you were trading 100 shares of a stock that costs $100, or about $10,000 worth of stock, the commission might be about $0.35 for that trade.

For more information about current Interactive Brokers’ fees, please see their website. The commission schedule as of 9/1/2016 is copied below for your reference. The monthly volume tiers will be measured by the collective volume of all the SMAs combined. This is one of the ways you can benefit from the scale of the Motley Fool Wealth Management’s SMA program.

IB Commission Fees
Share Volume (per month) Commission per share: US Stocks, ETFs, and Warrants Maximum per Order

<=300,000 Shares

$0.0035

0.5% of trade value

300,001 - 3,000,000

$0.002

0.5% of trade value

3,000,001 - 20,000,000

$0.0015

0.5% of trade value

20,000,001 - 100,000,000

$0.001

0.5% of trade value

>100,000,000

$0.0005

0.5% of trade value

In addition to the management fee you will pay to Motley Fool Wealth Management, you will be responsible for the trading and account level fees that are charged by Interactive Brokers (IB). Typically, those account fees include:

  • Commissions of $0.0035 per share of stock traded (As an example, 100 shares of stock would trade for less than 40 cents)
  • For accounts below $100,000, a minimum commission of $10 per month

You may also choose to participate in the Stock Yield Enhancement Program (SYEP) which allows Interactive Brokers to lend your shares to other IB clients on a short term basis to allow them to short. You would be paid a portion of the fee that IB charges to that other client to short. This program may offset some of the cost of maintaining an account if you choose to participate.

Please read the account opening disclosures from IB carefully for a complete description of their fee structure and how the SYEP program works.

Other Interactive Brokers fees may apply. Please familiarize yourself with them.

Each and every holding, as well as its allocation, will show up directly in your brokerage account, and you can review these holdings at any time. These are holdings that you personally own - Motley Fool Wealth Management is merely investing and managing those holdings on your behalf. Mutual funds, on the other hand, only make lists of their holdings (i.e., securities that you indirectly own) available periodically, and you can’t view these individual securities in your account.

In addition, our Personal Portfolios allow you to exclude specific stocks from your portfolio, in case there are certain equities you are not allowed to own for compliance purposes, or simply do not wish to own. For instance, say you aren’t allowed to invest in Coca-Cola because you work at Pepsi. You can restrict Coke and know that Motley Fool Wealth Management will not buy or sell any Coca-Cola stock in your account.

Not to mention that mutual funds frequently come loaded with obscure, often unnecessary trading fees layered in throughout your portfolio. With a Personal Portfolio from Motley Fool Wealth Management, you’ll also have complete transparency into all of your account’s trades and trading fees (estimated at roughly 1/3 of a cent per share and a minimum of $0.35 per trade).

Finally, mutual fund holders are responsible for taxes based on the total activity within the fund, regardless of their own personal account activity. That means that investing in a mutual fund can result in unexpected tax consequences, such as recognizing income from capital gains that are distributed across the entire investor base. But with our Personal Portfolios, you’re solely taxed on your personal holdings and your corresponding account activity.

If you reside in the U.S. (regardless of citizenship) and can provide Motley Fool Wealth Management with a Social Security number, or Individual Taxpayer Identification Number (ITIN), and a U.S. address (a P.O. Box does not count as valid), you can take advantage of Motley Fool Wealth Management’s services, including Personal Portfolios and financial planning.

If you are a U.S. citizen currently residing abroad, you must still have a valid U.S. address in order to use Motley Fool Wealth Management’s services.

Unfortunately, foreign citizens residing abroad do not have access to the services provided by Motley Fool Wealth Management.

The absolute minimum amount you’d need to invest with Motley Fool Wealth Management is $25,000. However, as the amount to invest increases, the portfolio that Motley Fool Wealth Management recommends for you might change. Our recommendation will always be based on your time horizon, and risk tolerance - but at larger dollar amounts, more robust portfolios may be available.

Motley Fool Wealth Management can manage as many accounts for one individual as they would like us to manage. If multiple individuals in the same household would like us to manage their accounts, they will need to create separate profiles with us, but they may be eligible to have those accounts combined for the purposes of billing.

Motley Fool Wealth Management understands that many family members look at their accounts as working towards the same goals, and potentially having the same risk tolerance.

However, at this time, we only support one person per profile. As a result, every account you open under a profile should be specific to one person, unless it is a joint account, in which case it may be opened under either owner’s profile.

After completing both the Motley Fool Wealth Management and the Interactive Brokers portions of the application for all of your accounts, you can then go to https://foolwealth.com/register/, and create a new profile for each subsequent family member. When you are finished, please contact us at [email protected] to make sure your accounts get the benefits of household billing.

Household billing allows you and members of your immediate family (as defined in our Investing Advisory Agreement) to benefit from the total relationship that you have with Motley Fool Wealth Management. Rather than assessing our pricing structure on each individual account, we will view the relationship as a whole, and provide the most favorable pricing tier according to each account that is part of the billing group.