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00:00Good morning . Good morning. Wow. I just flew in from the West Coast. That's a tough tough travel for those of you who made the journey up . Before we begin I'm going to digress. I'd like you to raise your hand if you think 10 years from now a guy is going to be ubiquitous . OK 20 years from now . All right. Almost everyone now keep your hands up. If you've invested any of your clients assets in a . All right. Almost a handful. So I'd say about 5 percent of the audience have actually have invested in it. An obvious trend that they see happening around them filling in that gap is what we do at Motif . Motif is a thematic investing company. And I started the company about nine years ago with a very simple problem statement. I had read an article circa 2009 basically stating that the mobile internet was going to grow at five times the rate of the original Internet. And so I did what any Wharton grad does. I call my friends working on on these interesting funds on Wall Street. I said how do you invest in the mobile Internet. And a lot of them said I don't know how deep just by Google or Apple or something like that . So I went to Sandhill asked him the same question how do you invest in the mobile Internet. And they came back with the same answer. I don't know how deep by Google or Apple. And the inner consultant in me came out and I sent out a survey and I surveyed rich young old set of investors. And I basically wanted to ask them not just how they invest in the mobile Internet but how they invest generally. And the big aha that led me to is to create motif was a very simple observation. We are all creatures of concepts . We think conceptually about investing and we in humans are expression engines. That's the easiest part. We can express what it is that we want to do. The hard part is actually acting on that expression. What do we mean by expressions. I live in a small town in the heart of Silicon Valley. I have drones flying over my house every weekend. It has nothing to do with Amazon by the way. It's actually parents too lazy to watch their kids play soccer so they send their drones to the soccer fields. Hashtag only in Silicon Valley. That is more of a thematic expression. Those expressions can be trading models . I like to buy beaten down stocks when and that's when I want to buy. I don't have time to follow the markets. Have someone go do that for me. But interesting more and more we're seeing a lot of stylistic and values expressions. I want to invest in this but I don't want to do that. So what we do at Motif is we solve that expression problem by mining data to create investment models that allow investors to act on those expressions. And we have two businesses. We have a business where we've been created a retail a vertically integrated retail platform where you can take these expressions and make them actionable. I'll show you that today . And we have an institutional business where we build these models and we partner with large financial institutions to take this data. Take these expressions and put them into institutional great products . One of the nice things about having a retail business a direct retail business with over 300000 clients is they tell you what their problems are . And the problems they've been telling us for quite some time now is something that many of you know which is stock picking doesn't work. Yet it's the most obvious form of investing for individual investors. It takes them about 18 months to realize it doesn't work. And then what they do is they give up and they move to the next weapon of choice which is they invest in active funds. The problem with a lot of their active funds they don't know how to pick which active fund works and which doesn't. And along the way whether it's a 2008 type crisis there's always a hiccup. And what they hiccup does is it forces an investor to look at their portfolios and what they realize. Seven out of 10 realized they didn't really know what was in their portfolio to begin with and they didn't know what they were paying in terms of fees. The second advantage of having a retail business is they tell you their problems but they also tell you how to solve the problem. And so when we talk to our investors and say all right we've heard you loud and clear. How do we solve these problems. They say well give us interesting ideas. I'll give us transparency so that we know what we're invested in and give us simple tools where we can invest in give us simple tools where we can actually do our own investment and feel some degree of empowerment . And in the middle one really struck a chord with us. So we went out and we decided to ask investors what do you mean by customized ability and transparency and what do you mean by this notion of values. So we did a national survey of retail investors and we asked them a bunch of questions. And one of the things that surprised that is 83 percent of retail investors say their value. Are important when it comes to making investment decisions. We probed and we said all right . Would you change your investment if we gave you data. And 68 percent said yes. Fifty seven percent actually said they would be angry if they were shown that their investing dollars were being invested in ways that were inconsistent in their values . But only 42 percent actually invested consistently with those values and that tended to skew higher up towards high net worth investors. So we decided to go out and actually create a product that would allow people to invest in in these ideas. So I'm going to walk you through this product right now and give you a sense of what's possible as we think about the realm of of responsible investing . If we can change screens now. Thank you. All right. So . So I'm gonna show you a model and what we're doing now is we're walking through expressions interesting ideas that people are telling us they want to invest in. So unlike most investment platforms instead of seeing stocks and bonds and funds what you see here are interesting concepts and ideas. You can come in here and if you have a favorite company you can type in Microsoft. I'm an alumnus and you can see all the interesting ideas that surround Microsoft. It's a diverse play. It's socially responsible. It is fossil free. It pays dividends and is a good player and a guy you can type in. I'm interested in water. It will contextualize the search and show you water as in what most people are thinking as utility companies. But it can also factor in water as in water shortage. Cleaning up water in climate change dirtying water in fracking. And my favorite kind of water caffeine. And so you get a very good context of ideas . We have a whole catalog and we build these models but we've also allow our customers to build these models. So when you're interested in some ideas you can come here and actually self select and a lot of our clients come in here saying we really want to work where we are values based investors and we want to find interesting concepts that align with our values so you can quickly get a sense of interesting ideas. The presentation of information to retail investors is very important. And so when you click on a model like this we give you a very simple thesis of what clean tech everywhere is about. You can see all the companies that are in here. You can hover over them do as much research as you like. You can see how this model has performed against the S & P 500 which is the green line as well as another thematic benchmark. And if I wanted to purchase the let the notion of transparency is so important I could click by and buy all these portfolios. But there are gonna be so many views on this portfolio. In the earlier session today you were talking about Tesla . It does. Does the governance issues outweigh its good issues as it relates to the environment. One of the nice things about our models is we want to give the user the empowerment to have their own view. So if you click on customize you can change your exposure in different areas. I might say Tesla I'm worried about governance so I can lower its exposure. I can even take out companies and delete it. And we're able to add other companies that may or may not being in the portfolio. And so this notion of empowerment is very very important. And the notion here of making it easy for investors is really really important. So when you're ready to go in you can buy and and you can put as little as two fifty dollars and you can have a full degree of transparency of what it is you're buying. And so we've sent this order to market and there it is. The power of this model is the fact that and we're looking at my my Roth IRA here is the notion if you can see I have a number of strategies running in the account. When we talk about transparency what we mean is letting people have full visibility into what they own down to the fractional share in penny. So if you click on this model here you can see the investor owns thousands and thousands of stocks. They actually own them. So if BP has an oil spill they want to remove BP out of their holdings. They can do so in one click . And so this model tends to do very well for the investor that wants some degree of control. They can again reconcile this with asset allocation. And let's look at my large cap U.S. holdings. And again they can drill down to the fractional share and penny and you can go in and screen out companies based on your value system. So this was a product that made sense for investors that are very self directed. There was a discussion earlier on today about what is what do you do when you are someone who is more of a delegator and you want to go in. And so we we launched a product specifically around impact investing . And we asked ourselves the question of what if the expression that the investor has is a financial goal. So you can express here a financial goal. I want to retire in twenty five years . I want to save a million dollars. And I know unfortunately my risk category is on the higher side and a lot of automated investing tools do this. Now this is where it gets interesting . I love my wife but we have very different views. She grew up in Laguna Beach spray painting people who were fur coats for a living. I grew up in Kuwait where oil was not a bad thing. It was actually a good thing. And so we were sitting down arguing over carbon . It's a it's a dreaded C word in our house. And if it were my wife she would go in and say I don't want anything misaligned with the value of sustainable planet. I'm more of a good governance kind of person myself. And so if it were my wife she would click here. A sustainable planet. And what we're going to do is we're going to build a portfolio for her. But we're going to screen out companies that have bad environmental records and we're going to replace them with equivalent equity exposure of companies that do have good environmental records . And at the end of the day what you're getting is an integrated portfolio with different asset classes that have a value system aligned. And the nice thing about this model is when you go in and actually see the model at work it is completely customizable . And I need to spell motif . And when you go in here here . One of the nice things and by the way I do have her permission to show her model in action one of nice things about this model is everything is customizable. So much of what we talk about in terms of retail investors is doing it for them. But a lot of what they're saying is give us the tools and let us express our own views. And so you can see here everything from the growth rate is customizable. I'm going to change 4 percent. You can see I'm not going to hit my retirement goal. I'm going to start saving some money and you get a very interactive experience . But the most powerful thing about this model is if I look at what I'm invested in I can actually take out companies and remove them because I have a different view. We it's interesting. We launched this product . A week before the Wells Fargo scandal and a lot of people were sending us comments. What are you going to do about it. We said we're not going to do anything about it. What are you going to do about it. And so the notion here is you can see what you hold down to the fractional shares. And we even flag companies that have particularly good environmental records . And the nice thing about this model is you can go in swap out companies adjust companies. And so when we talk about the responsible investing a lot of our investors say stop telling us what our values are . So much of the problem that we have in our industry is everybody's values are different. Even in my own family we have very different values. And so part of what we think we need to do as an industry is give people choice give people tools and give people the level of transparency that they need to to to make those decisions for themselves. Thank you very much .

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Motif Founder and Chief Executive Officer on Responsible Investing Online

Motif Founder and Chief Executive Officer Hardeep Walia talks at the Global Responsible Investing Forum in New York about how emerging technologies and online platforms are changing the way supply meets demand in responsible investing. (Source: Bloomberg)

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