Motley Fool One Introduces A Game Changing New Feature: Separately Managed Accounts

Motley Fool One is opening up its membership next week, and they are also introducing an intriguing new feature, exclusive to their members: Separately Managed Accounts (SMA’s).

From their FAQ:

“A separately managed account is an account at Interactive Brokers in which Motley Fool Financial Planning does the investing for you, following the strategies of the Motley Fool real-money portfolio service(s) that you choose, including Motley Fool Pro, Million Dollar Portfolio, Supernova: Odyssey 1, Supernova: Phoenix 1, and Fool One‘s Everlasting Portfolio.”

So basically, you open up an Interactive Brokers account, transfer in money and/or existing equities, choose one or more of the premium services to follow, and they will execute the exact trades on your behalf, based on percent allocations to match your portfolio size. Other than standard trade commissions, there will be no additional fees beyond the Motley Fool One membership. And only equities that are part of those services can he held in the account, as I understand it (so if you own a Uranium penny stock that your Uncle recommended, you can’t hold that here).

Members and potential members have been requesting this feature for a long time apparently, either because they don’t have the time to manage their own accounts (or don’t want to spend the time) or lack the comfort level or conviction to execute their own trades, and would rather have the Motley Fool facilitate all the transactions on their behalf.

Possible Game Changer for the Motley Fool

What’s interesting about this feature is that I think this opens up a potentially vast new market for the Motley Fool. Previously, Motley Fool One was best fit for fans of the Motley Fool and/or people who wanted to spend a lot of time researching and managing their own investments. Members had access to a ton of content, and but you had to filter through the information and trades that were of interest to you. So unless you were a general Motley Fool fan, Motley Fool One was not a very efficient way to manage your investments. Many people were paying money to a financial advisor to manage their investments in addition to their Motley Fool memberships.

Now with these SMA’s, the service will appeal to a much larger audience of people who can compare the cost of a Motley Fool One membership to the fees they are paying their own financial advisors. With typical SMA fees running at about 1.5% or more of assets under management (i.e. portfolio size), anyone with a portfolio of around 250,000 suddenly has a probably lower cost alternative (assuming a Motley Fool One membership cost of approximately $2500/year). Suddenly the cost of Motley Fool One can be not in addition to their Financial Advisor fees, but instead of them. The access to everything else Motley Fool One offers would just be icing on the cake, and the service would still be cost effective even if those members didn’t avail themselves of any of it.

So this could be very good for the Motley Fool bottom line, and also a good deal for members who want to take advantage.

Let me know in the comments if this feature is something that would be of interest to you.

{ 21 comments… add one }
  • Kenwood Jean March 16, 2014, 9:13 pm

    Your offer seems most interesting. Hope to hear more in the days ahead

  • linda March 21, 2014, 9:44 pm

    yes, further info on sma would be greatly appreciated. The question will be which of the Motley Fool services would be best in such an account. As a potential Motley Fool one subscriber, who wants only cap gains and no income, which model, in your opinion, would be best for SMA? Thanks Kevin

    • Kevin March 21, 2014, 10:29 pm

      Linda, I think all of the portfolio services have at least some dividend paying stocks in them so avoiding all income would be impossible. But Supernova Odyssey would probably be best suited towards that investing style (minimal income).

      • linda March 23, 2014, 12:56 am

        Thank you, Kevin, for your comment on . the Odyssey fund. Would it also
        be worth opening an sma in the PRO fund for further diversity, or is this
        simply duplication?

        • Kevin March 23, 2014, 1:58 pm

          It might be a good way to diversify in terms of risk allocation. Pro’s returns are more slow and steady, whereas the Odyssey returns are likely to be more volatile. There is not a lot of overlap in the stocks they invest in either. Just one thing you might want to consider: Pro also uses options and shorts, and tends to buy/sell stocks more often than Odyssey, so you should make sure you are psychologically comfortable with the broker executing all those trades on your behalf. I’m not implying there is any risk there, but some people may not be comfortable with that amount of activity outside their direct control.

          • linda March 23, 2014, 11:34 pm

            Thank you Kevin, Your info is extremely helpful. I will be enrolling
            in Motley Fool one and will follow your posts.

  • andy March 22, 2014, 1:17 pm

    I’m a MF/1 member now. How can I enroll? Also, I heard Tom and the guys say it’s best for IRA’s. When would it make sense for a taxable acct?

    thanks –

    • Kevin March 22, 2014, 2:25 pm

      Andy, I understand the enrollment for the SMA accounts will start in April. I’m sure they will notify existing members on the details at that point. As to the other question, I’m not sure why an SMA would be better suited for an IRA versus a taxable account. A taxable account would generate a taxable event whenever you sell a stock but that would be the same in an SMA or a regular brokerage account.

  • Frederic March 24, 2014, 6:32 pm

    Hi, Do these portfolios invest in international equities and fixed income (i.e. bond ETFs). This seems a bit “cookie cutter” and not a personalized approach. If asset allocation is as important as they say it is, how do they get a diversified portfolio across all asset classes (i.e. domestic equities, international equities, domestic and fixed income, etc.) Also, what are the average trade fees in addition to the membership costs?

    • Kevin March 24, 2014, 7:05 pm

      Hi Frederic, thanks for the question. They don’t invest in fixed income and their international exposure is limited. So you are not getting that kind of diversification. The way the SMAs work as part of is service is that you would pick one of the premium MF services to follow, and they action the investments on your behalf. There are no additional trading fees whatsoever. But these portfolios do not follow the traditionally prescribed allocation models so bear that in mind.

  • Siva April 18, 2014, 7:12 pm

    For some one who is 1-2 years from retirement what would be the best portfolio for Motely Fool (among the 5 or so modeles) SMA service? Thanks

    • Kevin April 19, 2014, 12:15 pm

      Siva, Supernova Phoenix is specifically designed for investors in your situation so that might be the best place to start.

      • Siva April 19, 2014, 1:34 pm

        Thanks. That is what I had put down in my application but then wanted to make sure to get an independent opinion. I appreciate your suggestion. I read most of the articles that you had written in your review and they have been very helpful. Thanks

  • Mark Goldman August 26, 2014, 10:42 am

    Kevin: I currently subscribe to Supernova Phoenix and execute almost all of their trade recommendations. I am retired, and gradually I will need to be selling positions, and do not have new money to add. If I only wanted to follow Phoenix, it does not seem that Motley Fool One SMA is appropriate for me. Am I correct?

    • Kevin August 26, 2014, 1:30 pm

      Mark, the Motley Fool One SMA for Phoenix just allows for the automatic execution of all the Phoenix trades on your behalf. It sounds like you are already doing that yourself. If you are not interested in any of the other features of MF One (or at least not interested enough to pay the hefty MF One fee), then I would say it’s not worth it for you. Hope that helps.

  • James June 17, 2015, 4:36 pm

    Kevin, thanks in advance for all your info. Now that the SMA’s have been around for more than a year, what are your impressions of the service? They still have no stat’s published on performances, which don’t actually mirror the MF portfolios. I am looking for a managed service, retirement in about 3 yrs, have already begun to take distributions from IRA. Not feeling warm and fuzzy about the SMA’s, although never feel great about any management. But I need management. Thanks again,

    • Kevin June 23, 2015, 8:41 pm

      James, I haven’t actually signed up for the SMA’s myself, so I can’t really comment on the service or the returns. I haven’t heard any chatter on that from other members either. If I learn anything, I’ll let you know.

  • Robert June 27, 2015, 4:21 pm

    Appreciate the information. I have been aware of Motley
    Fool investing for quite awhile and they seem to offer reliable information. Haven’t had the faith or fortitude to get back in the market and at 65 i need a SMA.

  • lyd July 23, 2015, 5:29 pm

    Subscribed to Motley Fool One SMA in feb 2014. BIG MISTAKE. DISASTER.
    The person who handled the account should have been fired. Loaded the account with short positions which I am still trying to cover. Huge losses. I quit in March 2015 and in line with their guarantee they did refund my mgt fee

  • John March 8, 2016, 9:26 am

    Kevin, I have been a Stock Advisor subscriber for over 10 years. I manage about 1/3 of my personal IRA using this service and the other 2/3 I have managed for me by a discount broker. For the most part, I feel Stock Advisor is a great value. Regarding my discount broker-managed IRA, I’m not so sure. I am now about 5 years from retirement and am looking at the possibility of moving my entire IRA to a SMA with the Motley Fool. My only issue is that I’m looking to pay the annual SMA fee from the IRA itself. Last I heard, this was not possible. Have you heard any talk to the contrary?

    • Kevin March 8, 2016, 9:19 pm

      Hi John – no, I don’t believe that is possible.


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