No. of Recommendations: 4
Folio Investing has some very convenient features for working with MI strategies. And costs are pretty low, particularly for using window trades to update strategy holdings.

However I recently found that this firm is not able to correctly do withholding taxes on Canadian dividends. During the depress market conditions of early January I decided to buy small amounts of ENB and BAM. Both seemed to be a nice discounts to long term value and ENB had a sustainable and increasing dividend of about 8% currently. Now I have received the dividends on these and found that Folio Investing simply takes 25% as withholding tax and ships that to Ottawa. This account is a retirement account. There is a Canada - US tax agreement that waives Canada tax on dividends into retirement accounts.

This is the Folio Investing response to my inquiry about the matter:

Thank you for your email. Due to system limitations, we apply a unfavorable rate of tax withholding across all of our accounts ( taxable and non taxable). We suggest filing Form 6616 - Certification of Tax Residency to claim the refund. Please note that this does not constitute tax advice.

Thank you for your inquiry. Please feel free either to reply to this email or call us with further questions. Please remember to reference your case number.

Regards,

Folio Institutional
1-888-485-3456 (phone)
1-703-649-6288 (fax)
support@folioinstitutional.com
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I responded to the Folio Investing email by noting that I could not claim a tax offset on my US taxes for withholding from my non-taxable retirement account. Folio had applied an arbitrary rate of 25% for the deduction from the dividend payment.

Response from Folio Investing:

You are correct, however due to system limitations we are only able to apply one rate of withholding across all accounts. Please contact your tax advisor for further assistance with the refund of the withholding.

Thank you for your inquiry. Please feel free either to reply to this email or call us with further questions. Please remember to reference your case number.


So, since they have an inadequate capability for dealing with a known problem, I'm supposed to investigate with a specialist tax advisor. Sort of like the cop wishing you a happy day after giving you a $100 citation for a burnt out tail light bulb.

The amount of $$$ involved in this instance is very small. The point of the post is simply to make others aware of how the accounting works at Folio. Some may have substantially larger amounts invested through that firm.
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Thanks Charley. I'm pretty sure Folio is in KTLO (keep the lights on) mode at this point. Whatever software they have works as it has forever. That website hasn't changed in many years. The "blog" area hasn't been touched in a while. I recall seeing some really negative stuff on Glassdoor about their IT culture; I wouldn't be surprised if they have outsourced the whole thing to India or China.
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I finally got fed up with Folio and pulled my accounts from them last year. I had a trade execution on a small stock that was about 8% below where it should have been had it executed any time near the "window" of 2:00. When I talked to a customer service rep, who was very nice, had suggested that maybe Folio wasn't the best broker for me. I agreed.

John
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No. of Recommendations: 2
Every time I looked at Folio, I couldn't see any advantage to it. Elan (and others) always say to use limit orders and not market orders....and with Folio it's essentially an "Eh, whatever." order.

All for saving (arguably) a few bucks of commission. Well, heck, you can get 100 free commissions a month at Merrill, and almost free commissions at plenty of other brokers. I think RobinHood is free, too.

Folio's main gimmick appears to be to rebalance a portfolio with one click.

I've seen a lot of brokers try various gimmicks and none of them seem to last very long. Zecco kept raising their minimum to get free trades, and eventually shut down. Just2Trade had $2 commissions, but they closed down, too. Actually not totally closed, just changed their name and sold off to a Russian outfit.

The comment on their blog was interesting, so I took a look at it. No dates on the blog posts, but the next to last one was written in early 2015, because it talked about the next year election and the 16 Republican presidential candidates.
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"Folio's main gimmick appears to be to rebalance a portfolio with one click. "

That and the cost is the reason I use them! I'm not going to spend hours entering my sixty positions! The fun out of MI would be sucked out even just thinking about it! (I don't know about others, but I do find MI "fun.")

" had a trade execution on a small stock that was about 8% below where it should have been had it executed any time near the "window" of 2:00."

I had that done to me by folio, both in and out, but I learned my lesson. I just moved the liquidity filter up. Those sky high returns based on illiquid stocks wasn't realistically doable anyway.

DoesMIWork
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No. of Recommendations: 9
Rayvt:
Every time I looked at Folio, I couldn't see any advantage to it. Elan (and others) always say to use limit orders and not market orders....and with Folio it's essentially an "Eh, whatever." order.

And yet, time after time, people who have looked at the average execution performance have come up with completely reasonable trading costs, typically in the 0.2-0.3% one-way range.

You don't see an advantage because there isn't any for your strategy. For me, simplicity and speed are worth a lot, given my strategy.
I simply don't have time to enter limit orders and adjust them until I get an execution.


JohnIII:
I finally got fed up with Folio and pulled my accounts from them last year. I had a trade execution on a small stock that was about 8% below where it should have been had it executed any time near the "window" of 2:00. When I talked to a customer service rep, who was very nice, had suggested that maybe Folio wasn't the best broker for me. I agreed.

This is indeed a problem with FolioFN, and I don't like it at all.
My only answer is that it is the statistical average of many trades that counts, not the individual bad ones.
To the extent that the average is reasonable, I don't sweat the bad ones.
Yet, it is exceedingly difficult to see those stinker executions.

What I don't like is that FolioFN executions for thinly traded stocks will often be outside of any trade reported anywhere.
I have asked them about that in the past, and have been less than satisfied with the answers.

I have been close recently to switching to IB. It would be an interesting experiment.
In my case direct commissions would be something like 100x higher at IB, and the question would be, would gains in execution quality make up for that.
I've really thought about moving half of my accounts and trying that.
But I've not figured out how to actually do the trading that my MI implementation requires at IB.


FlyingCircus:
I'm pretty sure Folio is in KTLO (keep the lights on) mode at this point. Whatever software they have works as it has forever. That website hasn't changed in many years.

I've had that feeling too. Nothing has changed in years, and they had been talking about platform improvements (margin for example) that never happened.
It looks like the writing is on the wall.


Mark
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No. of Recommendations: 2
Foliofn
11/16 Acquired First Affirmative Financial Network, an investment advising company. The firm manages
$1 Billion in assets serving 2,500 housholds. It produces the SRI Conference for advisors ( 28+ years).
https://www.investmentnews.com/article/20161101/FREE/1611099...

5/17 Acquired LOYAL3 200,000 brokerage accounts, moved them into FolioFirst.
https://www.prnewswire.com/news-releases/folio-investing-acq...
It appears that many of the LOYAL3 people where not too pleased based on web complaints. LOYAL3
had a large number of small investors that didn't trade frequently which didn't exactly match Folio's
platform advantages.

As mentioned previously Glassdoor's collection of Folio's employee reviews with a rather poor
1.9 out of 5 rating. They paint a picture of a CEO who micromanages and continually changes direction.
https://www.glassdoor.com/Reviews/Folio-Financial-Inc-Review...

I don't think they are about to close the doors but it appears they aren't focusing on the Foliofn part
of the business MI investors use.

RAM
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I'm not going to spend hours entering my sixty positions!

There's your problem right there.

Sure, Folio is a great place to effectuate a large number of trades with one click.
But: "If it's not worth doing, it's not worth doing well."
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No. of Recommendations: 1
Nothing has changed in years, and they had been talking about platform improvements (margin for example) that never happened.
It looks like the writing is on the wall.


I keep looking at Robinhood, ever since they started with using a smartphone app (only). I don't have a smartphone, so that was a no-go. I was also not sure how for real they were, since they clearly cater to very low-tier and beginner investors (read: naive).

Free commissions, even for options. And now they do support browser-based access & trading. But worryingly, they thought that SIPC would protect cash in a bank account at the brokerage----which is why they had to rescind their announcement of offering bank (savings) accounts. What else are they ignorant & wrong about?

Might be worth it to open a small account there just for my options positions. Every other of my brokers charges an option commission, even IB and at Merrill you only get free stock commissions.
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"There's your problem right there."

I don't about you, but I do not have a crystal ball that tells me which screen will work in the future, so I have to bet on a whole bunch of them.

With so many positions, I do not have to worry about a 30% hit when the stock beats but forecasts poorly.

DoesMIWork
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...they thought that SIPC would protect cash in a bank account at the brokerage....

If they couldn't even afford a lawyer to vet their claims a priori, I have to wonder whether they're adequately capitalized, even as a later stage startup. How viable are they, really, as a business?

Eric Hines
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I have a small account at M1 Finance. Unfortunately I can not provide an estimate of their trade performance, but thus far I like them a lot. Every account I had at Folio has been moved to them. But to be clear, their business model is to sell flow as one of their revenue sources. For a non-actively traded accounts I think they are a good option worth looking into. For a monthly rotation, IDK. It would be interesting to see some of the same stats posted here previously on Folio for trades with M1.
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I have a small account at M1 Finance. Unfortunately I can not provide an estimate of their trade performance, but thus far I like them a lot. Every account I had at Folio has been moved to them. But to be clear, their business model is to sell flow as one of their revenue sources. For a non-actively traded accounts I think they are a good option worth looking into. For a monthly rotation, IDK. It would be interesting to see some of the same stats posted here previously on Folio for trades with M1.

Huh. Never heard of them, so I googled them. Not impressed. Darn little useful information at their web site. Lots of words and fancy pictures, though. My English professor would have called it "glittering generalities."

No explanation of how to set up a Pie (portfolio) no mention of any limitations on how many Pies you can have or how you can change an existing Pie to add/remove stocks or if there is a limit on how many stocks you can have in a Pie. Just about everything you can click to get more detailed information takes you to a "Open your Account" signup screen/

They are trolling for beginning investors who basically don't know anything.

Like the exciting new feature "M1 Borrow". They go on and on about how this can help with your personal finances, and how flexible it is and how you can use the money for any purpose. Wowsa!!!

They only mention once that all you need is a margin account.

The typical broker used 4 times more words to explain the details of margin accounts and the risks of margin. M1 said not one word about the risk.

Oh, and for $125/yr ($75 1st year) you can get a 1% cash-back Visa card.

I tried to find out what things you could trade. Once I found it (I think!) it reminded me of the joke where the guy walks into a country bar and asks the waitress what kind of music the band plays. She say, "They play *both* kinds of music. Country *and* Western." You can buy tech stocks or healthcare stocks or Green ETF or Real Estate ETF or....

They didn't say anything about mutual funds or options, so I guess you can't trade those.

They said they were the Sharebuilder Alternative. And explained that Sharebuilder used to be Capital One investing which has been sold to Etrade. Left unsaid was how an upstart like M1 Finance will be able to succeed where Capital One could not.

Looks like they are trying to be a clone of FolioFN but for free. If Folio can't make it while charging a monthly fee, how can they make it?

Sorry, didn't mean to go on so long.
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Trust Rayvt for curmudgeon sauce at any and all times.

When you initiate a new account you get to verify you have read all this stuff before you are allowed to open/fund the account and they follow up with an email that sends everyone of them to you...as is always the case caveat emptor/due diligence advised.

https://www.m1finance.com/legal/disclosures/

I found their disclosures refreshing in their brevity. Most financial institutions pretty much tell you the same thing in 10x the length with a lot of CYA for them in very small 6 pt font.

For me, moving the assets I had at Folio was a no brainer. There is nothing I don't like better at M1.

Positives
- Very easy interface once you get used to it
- Account opening ease for IRAs (I've never seen anything easier with any brokerage...you just e-mail them your last statement from the outgoing account. That's it.)
- Simplicity in pretty much about everything compared to most brokerage interfaces
- Margin rates are cheaper than any of the big name brokers with the exception of IB

Negatives
- ETFs and stocks are it...no futures, no options, no MFs etc.
- Gains accounting displays are price only, no dividend adjustments etc.
- Brokerage statements remind me of something from the 80s-90s
- They sell flow, one should understand this. (But they still have to abide by US best available offer rules at the time of transaction which of course they control)

Overall assessment:
- For a LT buy and hold portfolios where all you are really doing is maintaining allocation, they are excellent.
- For an active "full spectrum" trader, no way would I go with them (for my active side I use IB)
- I will probably experiment with a monthly rotation system to see how their fills are
- I have one account with them where I have a monthly deposit which turns into a buy and the executions have been good

I remain a big fan of IB whom I have been with for many years. If one had a choice between only two firms Folio and M1, for me that's a pretty easy decision. IDK if they would or would not be a good firm for a monthly rotational system. My guess is they would be comparable to Folio, but that is a non-educated guess.
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Trust Rayvt for curmudgeon sauce at any and all times.

Too true. Thank you ::blush::

As the saying goes, been there, done that, got the scars to show for it. First thing I look for is the downsides. Hard lesson learned.

FolioFN & Robinhood & M1 all strike me as amateurish and small-time. Robinhood, with their recent screwup of what SIPC covers, very much so. (How in HELL could a broker make that level of mistake? Is their legal staff Better Call Saul?) I really don't expect any of them to last very long. Seems that for the most part they cater to the unsophisticated, small (very small) beginning invvestor. NTTIAWWT.

I've seen many of these small niche brokers come and go over the years. I recall a discussion here on TMF back in probably the last 90's, some broker had a deal where for one price, something around $400/yr you could all the trading you wanted for that one fee. Curmudgeon me. But they shut down in a year or two. None of these guys seem to last very long.

If your trading strategy is a match for what they offer, great. Get it while the getting's good.


When you initiate a new account [with M1] you get to verify you have read all this stuff before you are allowed to open/fund the account and they follow up with an email that sends everyone of them to you

My complaint was that they posted very little useable information on their web pages, and all the links for more details just led to a signup page. Lots of words & pictures, little actual information.

I find the free commissions attractive. But as IB likes to point out, price improvement by the broker may well save you much more than the "free" commission.
OTOH, I get 100 free commissions per account type at Merrill. The attractive thing to me abot Robinhood is the free commission on options. So far that hasn't gotten me to open an account there, though.

Since all these 3 cater to small beginning investors, I picture in my mind their office staff reaction to somebody transferring a $500,000 account to them. "Holy mackerel, our accounting software doesn't support that many digits! What can we do!"


I remain a big fan of IB whom I have been with for many years. If one had a choice between only two firms Folio and M1,...

Luckily we don't have to make such a choice. All told, I have accounts at probably 6-8 different brokers. Etrade & Ameritrade go around hoovering up other brokers, so some accounts that start elsewhere often wind up at ETrade or Ameritrade.

We truly have an embarrassment of riches these days. IB for cheap commissions and good execution, and cheap margin. Merrill for free commissions. Vanguard and Fidelity for free commisions on their own funds/ETFs, and low commissions on others. Dozens of mainline brokers with $5-$7 commissions. Folio & Robinhood & M1 (plus maybe others that we haven't heard about) offering free or negligible commissions and you can buy fractional shares. Virtuall _every_ broker offers free DRIP on almost every stock.
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I've seen many of these small niche brokers come and go over the years. I recall a discussion here on TMF back in probably the last 90's, some broker had a deal where for one price, something around $400/yr you could all the trading you wanted for that one fee. Curmudgeon me. But they shut down in a year or two. None of these guys seem to last very long.

When I resigned from using Fidelity for my brokerage accounts (fees way too high), I went to Karl Aufhauser who had a plan: for $800/year, you could make 20 trades a month for free. And the $800 could be made from outside the account. I was making monthly rebalancing of the Foolish Four, Unemotional Value, and Unemotional Growth, so lots of trades. I got over that after several years, as more data came in to make the backtests more valuable.

A little later, Ameritrade bought them out; they did not exactly go out of business.

If you really care, ...

http://www.company-histories.com/Ameritrade-Holding-Corporat...
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I didn't think Ray was being a curmudeon, merely (exuberantly!) reporting his negative opinion about M1's website. I had looked at M1 when mentioned here a few days ago and I had exactly the same reaction to their website; not very helpful or informative at all. Just kind of, 'Go with M1, it's great!! Sign up here!<hotlink>'.

But I also had trouble finding anything out about Merrill's 100 free trades. I did find
50 free trades available, but I probably didn't spend enough time with their site.
Does Merrill have a set up to trade a basket of stocks like Folio?

For overall options,futures, corporate bonds and direct trading on non-US markets, IB is
great. For standard US stock markets any number of brokers seem fine. For ease of trading
MI screens, I still like Folio. Maybe I'm just easier to please than Ray :-)

rrjjgg
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No. of Recommendations: 3



Y'know, Scott Adams (and others) says that if you list more than one reason for/against X, then your case is very weak. All you need is *one* reason, if it's good enough.
I know that, and I tell it to my kids all the time. If you go on and on, you're probably just throwing sxxt against the wall hoping something will stick.

However, in these cases, it amuses me to find and list all the stupid little things that they fail at. Ha! You shoulda seen the discussions a few years ago on "Money Merge Accounts". (The stupidest and most transparently stupid thing you could ever hope to see, but the proponents just couldn't see that.)

But I also had trouble finding anything out about Merrill's 100 free trades.

Yeah, no argument there. You have to paw through a whole bunch of crud to find it and figure it all out. Plus they've changed the name a couple of times. https://www.merrilledge.com/preferred-rewards
You have to have a bank account with Bank of America (I have a BAC checking account with $100 just sitting there totally un-used), and $50K with Merrill to get 30 free trades, or $100K to get 100 free trades/mo. And you get a 75% bump-up on the cash-back BAC credit cards.
But unlike M1, they explain it all in exhaustive detail. So much detail that it can be rather difficult to understand it all. Plus there is an "online chat" button where you can ask them about anything you don't quite understand.

Does Merrill have a set up to trade a basket of stocks like Folio?

No. I am not aware of any "normal" broker that has this feature. It seems to be a gimmick that these niche brokers like Folio and M1 offer.

For ease of trading MI screens, I still like Folio. Maybe I'm just easier to please than Ray :-)

I have accounts at something like 6-8 brokers. Probably 12-15 different accounts that I manage. Never had any difficulties doing MI trades at any of them. It's generally only 5 stocks per screen, and they rarely turn over more than 2 stocks per month. I don't do rebalancing of current holdings, so that feature is worthless to me. In fact, I would not do rebalancing even if I could do it in one click. Sounds like an accounting and tax nightmare.

For a couple, you can reasonably have 7 accounts. His & her IRA, H&H ROth, joint taxable, and each individual taxable. Even if you run the exact same screen ("folio" or "Pie") in multiple accounts, you can't with one click effectuate the same trades in all the accounts, can you? You would have to places the orders in each individual account?

And, sigh....M1 web page doesn't come up in my main browser, Pale Moon. Just a blank blue screen. Aaand, the main page comes up in Internet Explorer 11, but any of the other linked pages also just show a blank blue screen. M1 only works right in Firefox.

This business of "M1 uses fractional shares, so you’re always fully invested — down to the penny." is silly. If you have a decent size account, say $10,000 or more, leaving a few pennies or a few dollars in un-invested cash is not a problem worth worrying about. The gains you would get on the few extra pennies or dollars invested are going to be negligible. Nice for an account with only a few hundred or thousand, though.
I did have to put an unscheduled $20 in the grandkids' accounts last week, so I'd have enough cash to buy another full share of VTI (147.32) instead of leaving them with XX shares and $120 in cash.

Hmmm, does M1 have UMTA accounts? Can't find it in the FAQs or anything. Maybe google knows where to look.
**frantic typing** Yup, google found it. No. "M1 does not support custodial accounts. We hope to provide these types of accounts in the future." Guess I'd have to go to Fidelity and use FZROX instead of VTI.
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We agree there are lots of good choices and options and we've all been blessed by the compression in brokerage costs. I'm not a salesman for M1 and I don't think I disagree with anything that has been said by anyone in this thread on the technical points. If someone wants a large super stable brokerage that has been around for 30-50 years and has a couple a billion/trillion AUM, we all have that option(s). If they want advanced trading options and instruments, they have lots of great choices. Let's call these the big name brand, multiple advanced features and products brokerages.

However, why do most people chose Folio? They pick Folio because it is easy and cheap. So given we are in the "easy and cheap brokerage space" as your main reasons for choosing a brokerage (as opposed to those in the top paragraph) I will stick by this statement...between Folio and M1 it's a no brainer for me. M1 is both easier and cheaper than Folio. If you are an asset allocater who rebalances occasionally and wants dividends reinvested with M1 you do the following: Click on the "rebalance" button that greats you on the opening page when you need to. Set cash options to "reinvest all cash balances over $1" once and do nothing afterward for as long as you hold the account. (If you are good with a $10 cash balance before auto reinvesting dividends, then do nothing ever.)

Side note: As was mentioned by others, Folio has clearly been in a hold/do nothing mode for what a decade now? And...Folio also sells flow when using their trading windows. Yep, check it out. (I assume you knew this right?)

https://www.folioinvesting.com/folioinvesting/important-disc...
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"It seems to be a gimmick that these niche brokers like Folio and M1 offer."

It's not a gimmick, to me. It allows me to diversify in under a minute. Isn't that how MI is supposed to work? I'm not a fan of that "top 3, top 5" stuff. There's just too much statistical noise. That's why you need lots of screens and picks. If folio works, then it serves my needs, not it's most definitely not a gimmick. It's a helluva lot easier to sleep with sixty positions and many ideas than holding only five or ten positions. I use other brokerages who offer free trades, but it's too much work, and cost.

Sophistication- Diversification trumps sophistication seven days a week and twice on Sunday- How'd the highly sophisticated "credit default swaps" work out??? How many hedge funds thought that their sophisticated model was the greatest thing since sliced bread, only to fold later when reality hit? Who cares if folio doesn't offer options! William O'Neill didn't do them! In fact, I'd bet most funds who went to ZERO BECAUSE of options. It most definitely was NOT due to diversification!

DoesMIWork
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<. In fact, I would not do rebalancing even if I could do it in one click. Sounds like an accounting and tax nightmare.>

No sweat. Using TaxCut or H&R Block tax software you download the information from Folio (who has done the accounting for you) and let
the software do the taxes.

< It's generally only 5 stocks per screen, and they rarely turn over more than 2 stocks per month. I don't do rebalancing of current holdings>

I currently use 4 MI monthly screens, one SI screen with 15-21 picks, 2 WER screens holding 15 and 10 picks and a screen from eftscreen.com
using 2-3 etfs. At your rate of 2 changes per 5, I'd have about (45/5)X2=18 changes or 36 trades/ month, which at a brokerage using $6-$7 commissions per trade would be more than the yearly Folio cost in just a couple of months. The Merrill free trade account sounds good, but having to fill an order form for each of the 36 trades sounds like a chore.

rrjjgg
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The brokerage cost is usually much smaller than the slippage. I changed from Folio as I continually seemed to be loosing a cent a trade. For a 1,000 stock order that is $10, much larger than the commission at Vanguard which is as low as $2/trade and their market orders nearly always fill between the bid and ask. The Folio slippage is not bad if you don't trade frequently, but one of the reasons for using them is frequent trading!

However, Vanguard is not very user friendly in the number of clicks and pauses required to enter an order.

Craig
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Not sure if it has already been mentioned, but IB does offer a basket trading option, which may be useful to you.
https://www.interactivebrokers.com/en/index.php?f=579

Cost still is based on IB's commission structure. It just offers the convenience of setting up the orders in a basket.

FWIW, I do trade a rebalance / trade 50-100 stocks in IB at regular intervals, but I have a hacked up program using TWS-API. That's an alternative too, but needs quite a bit of programming.
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