Building a Fintech Firm with Folio’s API Technology
New York-based FinTech entrepreneur Matthew Cohen and his partners had a vision. They wanted to build two cutting-edge digital investing platforms, one being a direct-to-consumer finance and investing channel, and the second, a provider of white-label digital technology for investment advisors.
The vision was clear, as was the need to engage with a strong strategic partner to realize it. What would become Grand (the B to C platform) and Invest Forward (the B to B to C platform), now both in beta stages, will launch in the second half of 2017. Both ventures are back-ended by Folio's APIs. Behind the scenes, Folio acts as custodian, broker-dealer, and FinTech provider.
Cohen, who is CEO of both Invest Forward and Grand, said he and his partners had plenty of options when it came time to choose a custodian and technology partner. Three factors tipped the scale in favor of Folio: 1) a proven track record, 2) the ability to leverage Folio's APIs, and 3) a real interest in working with growth-minded companies.
“I wanted to feel we had a partner who would support our initiatives and our growth, and was committed to [us] as a business line for its future growth. I saw that in Folio,” said Cohen, whose background is rooted in investment banking. “I saw a partner who was willing to make us a real focus rather than some side act within a much broader set of business objectives. Folio has been great in this regard.”
Invest Forward Leverages Folio’s Comprehensive Solution
Invest Forward’s strategy is to make it possible for advisors to secure new clients who are difficult to market to, and whose modest-sized portfolios are often costly to service. The business model requires sophisticated trading, custody, model management, and investment management technology to deliver a turnkey, white-label experience for the advisor.
By using APIs to connect with Folio behind the scenes, Invest Forward will permit advisors to digitize all interactions with clients, including account opening and funding, and to manage investments on a wholly online, automated platform. They’ll do all this with a dashboard built by Invest Forward, and that dashboard will then talk to Folio to execute the securities transactions and account management functions.
How Folio will Help Invest Forward Empower Advisors and Clients
The overarching idea behind Invest Forward is to empower RIAs to be technologically forward-thinking and acting. On top of the technology it will provide, Invest Forward will craft and support a comprehensive digital marketing plan and website for advisors.
“Advisors need to keep pace with the industry’s technological advancements in the robo space and in other areas,” Cohen explained, “Invest Forward gives advisors a direct, website presence with a robo solution that allows them to address clients with accounts below their traditional minimum account threshold in a very scalable way.”
“The advisors can do this through their customized websites and access everything they need through Invest Forward,” Cohen said, “They control all trading, model construction, and portfolio rebalancing. And all of this is executed in the background by Folio.”
So far, things are going well.
“We’re adding advisors at a pretty rapid clip, which is exciting,” Cohen said. “We think in a year from now we’ll have a nice suite of advisors whom we’ll help to grow their practices from our home base, as opposed to them having to do it all themselves.”
Development Support Key for Invest Forward
“Folio was ahead of the curve in almost all these things,” Cohen said. “There are a couple of other players out there making a big push to be our partner, but we decided early to adopt it [Folio’s platform]. We’ve been very happy with what Folio has been able to offer us.”
Folio’s API development support has impressed Cohen and his colleagues, Cohen said. Folio’s team has worked competently and closely with Grand and Invest Forward’s software developers, with Folio never dropping the ball, he said.
“I’ve been incredibly impressed with the service we’ve gotten, whether it’s for an unexpected problem or during our weekly meetings [with Folio],” Cohen remarked. “Everything we’ve needed, Folio has delivered on.”
Grand – Folio’s Fractional Share Trading Opens up New Possibilities
As Cohen explains, Grand is about democratizing investing for the smaller investor. It will offer them 11 pre-designed portfolios across the risk/return spectrum, and will then allocate investors’ cash into low-cost, passive mutual fund family – Dimensional Funds. Grand is also experimenting with offering separately managed accounts and, to do that, it will need Folio’s fractional-share trading capability.
“Fractional shares would allow us to offer separately managed accounts at much lower account minimums,” Cohen said. “If [investors] are putting in smaller dollar amounts, then there is a need to fractionalize access to investing. And what [Folio] has done with fractional shares allows clients to dollar-base invest into a model portfolio.”
APIs Make All the Difference
Folio’s APIs will give both Invest Forward and Grand a competitive edge because it provides customers—both advisors and individual investors—with a seamless user experience, Cohen said.
“For both Invest Forward and Grand, we leveraged the same API technology to connect with Folio, so that trading occurs on both sides in an easy way, and the end-user doesn’t know the difference,” Cohen said. “That’s the beauty, power and flexibility of Folio’s APIs. We’re able to power both of these channels simultaneously.”
Invest Forward is a white-label technology solution for financial advisors seeking to adopt a digital platform for clients who want an online, automated investing experience. Invest Forward provides advisors with a customized website, and the account management and back-office tools necessary to implement a robo advisor experience. In addition to automated investing, Invest Forward allows advisors to digitally offer term life insurance, loans and estate planning.
Grand is a direct-to-consumer digital savings, investing and financial management platform. As part of its business, Grand encourages its retail clients to save by connecting their existing bank accounts to a Grand Jackpot Savings account, where each dollar saved into the Grand account is an entry to win weekly and monthly cash sweepstakes. Grand then offers clients the ability to invest those savings into pre-assembled portfolios, as well as other financial services, such as life insurance and retail lending products.
How Folio Met the Criteria
How Folio Works Behind the Scenes
Utilizing Model Rebalancing & Fractional Shares
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