The general Fintech category of Personal Financial Management (PFM) has two main sub categories:

• Tools to help you save and spend smarter. This as the personal P&L.

• Tools to help you invest smarter. This as the personal Balance Sheet.

Within the latter, there are two main approaches:

• Passive, Beta. This is where the likes of Wealthfront and Betterment play. They reduce the cost of asset allocation according to life-stage models (eg more bonds and less equities as you get older). You won’t get more than average returns (Beta) but it won’t cost you much in time or money to get this average.

• Active, Alpha. Alpha is what Private Equity and Hedge Funds claim to get and why they can charge “2 and 20″  (2% of Assets Under Management and 20% of the profits that they generate).

It is not an either or choice. Most investors do both. A common strategy is the “bar bell”. One end is passive/low cost/Beta and the other end of the bar bell is the part where you apply your expertise and insight to get Alpha above average returns.

Motif Investing is one of the players in the Low Cost Active Alpha Space. They aim to help you get some of those above average returns, without having to pay 2 and 20. I think of this as tools to democratize Wall Street i.e to make it easier for Joe Q Public to make money in the capital markets.

The most disruptive player in the Low Cost Active Alpha Space (IMHO) is Angel List Syndicates.

However there are many other startups in this space, notably Covestor, Estimize, ThinkNum and StockTwits. The one I am looking at today is Motif Investing.

Motif Investing is based on the fact that many of us have insights and concepts of how the world is evolving. For most of us those insights are not easily actionable. Motif Investing is based on the idea that you can assemble a portfolio of stocks based on those concepts. I decided to test this by using an insight/concept that there is a lot of growth in emerging markets as countries pass the tipping point to a self-sustaining middle class. This is not the Unbanked/Bottom of Pyramid. Nor is it the Global 1% Ultra Luxury market. It is the cost conscious but also quality and brand conscious mainstream. This is the “Emerging Middle Class”. Whether that is a great insight/concept is not the point. The point is:

“how easily can I create a portfolio based on that Insight/Concept using Motif Investing?”

I hit a problem at step # 1. Motif Investing is only available for US Residents. Oops.

So I am reduced at this stage to other reviews such as this one.

Key takeaways:

– Motif Investing is an online broker. That makes sense. The online broking business has become a commodity race to the bottom price. So, adding tools on top makes sense.

-Motif Investing charge a flat fee of $9.95 for a Portfolio of 30 stocks or ETFs.

– They also enable a passive mode (100 Pre Selected Motif Funds).

I did not see any way for me to gain a following and make passive income from investors who want to buy exactly the same stocks as I put into my Emerging Middle Class Motif and make some fees from that. That is what both Covestor and Angel List Syndicates allows.

The disruptive technology in this space is XBRL. Widespread adoption of XBRL would make this kind of portfolio construction system trivially simple to create.

It feels like we are in the really early days of the Low Cost Active Alpha Space and that a mature offering would enable:

• Global investors i.e not limited to US residents.

• Global stocks (for example, my Emerging Middle Class Motif would have a lot of Indian, Chinese and Brazilian stocks).

• The ability to short (eg to choose an overhyped sector and short all of them).