2019 Folio Investing review: brokerage pros and cons, commissions, fees, account minimums, rating, trading platform, investment research tools, education, and customer service.


Overview of Folio Investing

Most brokerage firms offer just one commission schedule and either offer investment advisory service or self-directed accounts. Folio Investing offers something different, something new, and something that most traders aren’t even aware of. Here’s the rundown on this unusual broker.


Folio Investing Basics

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The Folio Way of Investing

Folio Funds Rating

Folio Investing specializes in folios. These are baskets of stocks, ETF’s, and mutual funds. One folio can contain up to 100 securities. It’s possible to trade an entire folio or rebalance one by trading individual assets within the folio. Folios can be traded in fractional shares, which means it’s possible to invest whole-dollar amounts.

There are two basket types of folios: company-built varieties (also known as Ready-To-Go folios), and customer-built folios. The RTG folios follow a certain theme, like energy or medical services. If you don’t care for any of Folio Investing’s products, you can just build your own.

When adding money to an existing folio, there are several options the broker offers. One is to add money to the folio without attempting to alter current allocations. A second available method is to add funds according to target weights. Another option is to add funds and attempt to rebalance the folio to original targets.

One possible disadvantage of folios is that they don’t have ticker symbols, which means you can’t conduct research on them off of Folio Investing’s platform. Folios don’t have expense ratios, although the broker does charge fees, which will be discussed shortly.

Besides folio investing, Folio Investing also provides trading in the individual stocks, ETF’s, and mutual funds that make up its portfolios.


Folio Automatic Investing Plan

Folio Investing allows automatic investments, so it’s possible to use dollar-cost averaging to periodically purchase more shares of folios.


Folio Example

There are slightly more than 160 Ready-To-Go folios that the brokerage house has constructed. One of them is the Utility Folio. It attempts to achieve moderate capital appreciation while receiving periodic income with lower-than-average volatility.


Ready-To-Go folios


The Utility Folio has exactly 30 stocks. There are no mutual or exchange-traded funds in the basket. The companies are engaged in the production, distribution, or transmission of gas, electricity, or related goods and services. According to Folio Investing’s spec sheet on this product, telecommunications companies can also be included. We found American Electric Power (AEP), Dominion Energy (D), Exelon (EXC), Duke Energy (DUK), and Xcel Energy (XEL). All stocks have equal weight in this folio, which means they each make up 3.33% of the folio.

The Utility Folio started in August of 2009. Since inception, it has returned 8.4%, while its 3-year-annualized performance is 10.6%. By comparison, the 3-year-annualized performance of the SPDR Utilities ETF (XLU) is 12.03% (calculations were made on the same day). XLU’s 15-year performance is 9.82%, slightly lower than the Utility Folio’s figure since inception.


Folio investing example


Customer Service

Folio Customer Rating

A Folio Investing agent can be reached toll-free on the phone seven days a week. This is better than we were expecting, given the type of broker Folio is. Weekday hours are from 7 in the morning till 9 in the evening, EST. On the weekend, the hours are a little shorter: 8 till 4.

The broker also offers a fax machine, a snail mail address, and an e-mail form on its website for guests. There’s a separate internal messaging system inside the website for account holders.

We also found a very helpful FAQ section on the Folio website. Due to the esoteric nature of the brokerage firm’s method of investing, this will be helpful to both current and prospective clients.

Missing in this category are branch locations and an online chat service.


Banking Features

Folio Banking Rating

Folio allows its customers to add checkwriting to a brokerage account, although there is a charge of $7.50 for 25 checks. The other available option is 125 checks for $12.50. To qualify for checkwriting, Folio Investing requires a form be filled out and submitted (look under “Accounts” and then select “Set Up Check Writing”). The brokerage firm does not offer a debit card at this time.

To transfer funds to a Folio account, customers can use ACH, check, wire, direct deposit/payroll deduction, or bill pay from a participating bank. Cash can be moved out by wire, ACH, or check.


Alternative Investment Vehicles

Folio Investment Rating

We really like that Folio Investing has included mutual funds in its lineup. However, it fails to deliver bonds, CD’s, and options, and these absences will send many traders elsewhere. Also missing at Folio are futures contracts, cryptocurrencies, and forex.


ETF's

Folio ETF Rating

American-listed (but not foreign) exchange-traded funds are available for trading at Folio Investing, either inside of folios or separately, as with a normal self-directed account. While this sounds nice, we didn’t find a lot of information on ETF’s inside our test account.

Information we did find included basic trade data, such as market cap, price/book ratio, volume, and bid-ask spread. There were no SEC filings for the SPDR S&P 500 fund. Earnings were also not shown, which is strange because SPY should have cash coming in from its assets. Even stranger is the inclusion of option chains on SPY’s profile page. As mentioned earlier, Folio Investing doesn’t offer trading in derivatives.


Folio Fees, Commissions, and Account Requirements

Folio Fees Rating

Now we come to the $64 million question: what does all of this cost? Well, it’s not $64 million, but there are some uncomfortable charges.

There are actually two pricing schedules at Folio Investing. The first is the Basic Plan. There’s a $15 quarterly service fee for funded accounts that hold ETF’s and make three or fewer trades per quarter. There is no minimum balance requirement, so presumably this fee would not be assessed against an unfunded account.

The other pricing option is the Unlimited Plan. It costs $29 per month or $290 per year with no way to avoid the fee.

The cost to trade stocks, ETF’s, mutual funds and folios also varies between the two plans. The Basic schedule charges $4 per trade when the trade is submitted as a window order. Under this service, Folio Investing submits batches of orders twice a day. Regular orders cost $10 each.

Under the Unlimited Plan, customers get 2,000 commission-free window trades per month ($0.50 thereafter, but who’s going to place that many trades?) and $3 for regular orders.


Initial Public Offerings and Private Investing

Folio IPO Rating

Besides folios, another unique investment service that Folio Investing offers is access to non-public securities. These include private funds and small companies that don’t trade on U.S. exchanges. Some of these opportunities are restricted to accredited investors, however. That means you have to have a lot of money to get in on these offers.


Folio Investing IPO


Folio Investing has a section on its website devoted to IPO’s and the private placements just mentioned. In our trial account, there were 8 companies listed offering a variety of securities, such as preferred stock and pooled investments.


Retirement Features

Folio IRA Rating

Folio Investing customers can open a range of retirement accounts. The brokerage house offers Roth, Traditional, SEP, and SIMPLE accounts. A pension plan or other retirement account from a previous employer can be rolled over into a Folio Investing IRA; and a Rollover IRA can also be setup as a Beneficiary plan under certain circumstances.

Although there are some retirement questions on the Folio Investing FAQ page, we did not find a lot of retirement resources (such as IRA calculators) on the company’s website. The broker also doesn’t offer a self-employed 401(k) plan.


Investment Advice

Folio Investment Rating

Beyond its professionally-constructed folios, Folio Investing doesn’t offer any portfolio management or investment advice. We think a robo-advisory service would be a good addition to its platform in the future.


Trading Technology

Folio Trading Rating

Folio Investing doesn’t emphasize active trading, and it really shows in its software. There is no desktop platform at Folio. Moreover, the broker doesn’t offer a browser-based trading system. It’s just the website here, and there’s no trade bar.


Folio Trading


Trades for folios and individual stocks or funds are submitted through the website. The order ticket is fairly simple but effective. Market, limit, and stop orders are available for individual securities.

Charting is very basic, with no drawing tools or technical indicators. Also missing is comparisons. We did find company events. Another helpful feature is the ability to switch a stock’s price history from dollar amount to percent change. The graph style can be changed from candlesticks to four other options. Volume can be turned on or off and a graph can be displayed full screen.


Folio Charts


Mobile Platform

When we looked for Folio Investing’s mobile app, we couldn’t find a link or information about the platform on its website. So we went to Apple’s App Store, where we found a “FolioFirst” mobile app. We were able to login with our credentials, but there was a message that service was temporarily unavailable. Looks like the app is out of commission for now. Hopefully, the broker will jumpstart it soon.


Financial Education and Security Research

Folio Funds Rating

Obviously, there aren’t a lot of research tools on the broker’s mobile app. On the website, we found news articles from “Livemoney,” not the most well-known source. The articles were up-to-date and included information on indexes and international political issues. The market research section shows the NYSE Composite instead of the S&P 500, and the Morningstar US large Cap instead of the Dow 30.

Individual stocks have news articles from Business Wire and Seeking Alpha. Recent trades by executives are shown, a really helpful research feature. SEC filings are also posted in multiple formats.

One feature we really liked on Folio’s research section is an “Analyst” tab that presents buy, hold, and sell recommendations. These are displayed both numerically and in bar chart format. The number of analysts reporting on the stock is displayed, and historical recommendations are shown along with the current leaning.


Folio Stock Ratings


A stock’s earning history is shown in a similar graph and number format. Besides EPS history, there is also information on EPS forecasts and target prices.

Although stock research isn’t very in-depth on Folio Investing’s website, information on mutual funds is virtually non-existent.


Comparison

The most similar brokerage firms to Folio Investing are M1 Finance and Motif Investing. At M1, customers build Pies, which are baskets of stocks and ETF’s. The company also provides professionally-built Pies. Missing is mutual funds, which is a disadvantage compared to Folio. The same investment structure exists at Motif Investing, except that the baskets are called motifs and customers can invest in other customers’ motifs. At M1 and Folio, you can only invest in baskets you create yourself.

The biggest strength that M1 has over Motif and Folio is that M1 decided to become a $0 broker, which means there are no account fees or commissions. Overall, we think M1 Finance is the best value out of the three.


Recommendation

Folio Investing offers a free 60-day trial of the Unlimited Plan. If you’re interested in the broker’s method of financial management, we recommend opening an account and trying out the broker’s tools for 2 months.

We don’t suggest Folio Investing for beginner investors because there aren’t enough learning materials on the company’s website; and there is no 24/7 service or online chat, either.

We can’t recommend Folio Investing for active traders or day traders, due to the lack of advanced trading tools.

Because of the broker’s pricing schedule, we don’t propose Folio Investing for small accounts. Robinhood or Firstrade might be a better option.

Although mutual funds are available at Folio Investing, we think TD Ameritrade, Firstrade, and Fidelity would be better choices for mutual fund investors. These three have more thorough mutual fund resources, and it will be cheaper to trade them.

As for retirement savers, we don’t recommend Folio Investing, either. Schwab and TD Ameritrade have more account types and learning materials.


Folio Investing Review Summary

Folio Investing has tried to offer something distinctive in the brokerage world, but it doesn’t quite seem to outperform its two major competitors for baskets of securities. If you’re interested in IPO’s or private securities, give Folio Investing a try.




Folio Investing reviewed by TopRatedFirms.com. Rating: 3