Folio Institutional: A FinTech, Brokerage and Custody Partner for RIAs and Enterprises

Folio Institutional is one of the most experienced financial technology companies in the financial services industry. It is part of the FOLIOfn, Inc. family that provides brokerage, custody, clearing, and asset management services to financial advisors, enterprises and investors.  Experience gained from more than 17 years allows the company to feel proud of its platform and the principles that underlie its work:

• Diversification;
• Cost reduction;
• Customization;
• Consistent investing;
• Tax minimization.

I was happy to have the chance to talk to Greg Vigrass and Borys Harmaty about Folio Institutional and some of the products it offers.

Greg Vigrass, President of Folio Institutional, has more than 25 years’ experience in the financial services and investment management industry.

Greg oversees all institutional sales and business development activities with RIAs, broker-dealers, and asset managers. He is an expert in retirement plans and robo-advisory services.

Borys Harmaty, CIO and CISO of FOLIOfn, has more than 25 years of experience in the global financial services industry.

He joined Folio in 2015, and leads application development, infrastructure, database management and security for the firm.

Previously, Borys was the CTO of BGC Partners and also the Global Head of Infrastructure, providing services to Cantor Fitzgerald, BGC and NGKF.

The company structure

FOLIOfn, Inc. and its wholly-owned subsidiary Folio Investments, Inc. provide integrated brokerage, custody and technology development services to financial enterprises and investment advisors on both a full-service and technology-licensed basis. Folio Investments, Inc. is a self-clearing FINRA broker-dealer and custodian and operates under the brands Folio Investing, Folio Institutional, and VIA Folio. It provides services to some of the world’s largest financial services firms as well as start ups. FOLIOfn, Inc. is also the parent company of First Affirmative Financial Network, a registered investment advisor specializing in sustainable, responsible, impact (SRI) investing and producer of the SRI Conference, the largest, longest running annual forum for investors and investment professionals engaged in SRI investing.

• Folio Institutional provides fully-integrated trading, custody, clearing, performance reporting, paperless account opening, state of the art digital engagement and robo/hybrid-advisor solutions along with a complete set of APIs and private label capabilities to investment advisors, banks, credit unions, insurance companies and other enterprise clients.
• Folio Investing is an online brokerage using its patented technology to help individuals invest in a more diversified, customized, and cost-efficient manner, and to benefit from one-of-a-kind tax management tools.
• VIA Folio is a dynamic platform for capital raising by small to medium sized enterprises, and for those interested in investing in private securities and alternative investments, including non-traded REITs, Reg A+ offerings and others, all with transparency and ease.
• First Affirmative offers investment advisory, portfolio management, and consulting services to investors seeking sustainable, responsible and impact investments, while The SRI Conference, now in its 28th year, is the premier event for advisors and others interested in SRI investing.

Because the company began as an entirely online firm, it sees financial issues from a digital-first point of view.

From automating components to a new-generation robo-platform

Folio Institutional works with many enterprises, RIA firms, and robo-advisors in the marketplace to provide custody, brokerage technology and online investing solutions. According to Greg Vigrass, president of Folio Institutional, Folio offers the digital engagement tools such as:

• Automation of key workflow components (such as end to end online account opening with  straight-through e-signatures, online bank link creation for online ACH transfers) that enable RIAs to bring efficiencies to their business.
• A set of APIs that provide full capabilities for those who wish to provide a robo advisor option to clients. Greg says, “This enables robo-advisors to create their own front-end, client ecosystem and client engagement environment, and then, via APIs, actualize everything on the Folio platform. Using our APIs, they can take full advantage of all of our innovative brokerage capabilities.”

In the near future Folio will bring to market a robo solution. Greg states, “It will be a next-generation robo-platform. It’s fair to say this will bring the robo experience to a new level. It’s a modular-based, completely customizable and white-labelable platform that will allow for a much deeper and broader range of investor and portfolio profiling. It will allow clients to not only define and understand their investment profile, but also invest in accordance with their values, their beliefs.”

Greg says that this new product will create a bespoke portfolio on the fly that is tailored to the client’s needs. “The real idea here is to use the most cost-effective building blocks and to provide maximum portfolio diversification and customization to meet each individual client’s needs.”

What makes the difference

Folio is an online brokerage, custodian, and FinTech company all in one. This is why its clientele includes individual investors, investment and retirement advisors, financial institutions and WealthTech firms.

Folio offers one of the few online brokerage platforms that make it possible for advisors and investors to trade securities in dollar amounts or fractional share amounts. In fact, Folio pioneered and patented this way to invest. Advisors and investors can save time and money because, in addition to not charging commissions, Folio executes all trades in two twice-daily windows.

Window trading is a patented way of executing orders. Borys, CIO & CISO, comments, “We trade in two windows a day. We aggregate all orders from all portfolios, synchronize the models and execute an omnibus order. We maintain all the fractional shares for all the customers on our books and the firm takes any leftover fraction onto its book.”

Greg states that investors of all demographics use their brokerage platform. He added that their institutional partners are focusing more on the millennial market and women investors. “As the preferred custody and brokerage partner to several hundred firms, we serve almost all segments of the investor population.”

Folio’s entire brokerage platform was built to be optimized online. According to Greg, Folio offers innovative online investing technology that includes:

• Adaptive and responsive design: Folio’s brokerage tools perfectly render on all desktop and mobile devices.
• Real-time, online account opening, funding and management: Folio was one of the first to accept an electronic signature to open an account, create a bank link, and initiate an ACAT account transfer.

Additional online investing tools include Tax Football, which helps advisors and investors to project the maximum, realizable taxable gains and losses from a specific trade(s). Folio also offers entirely online access to private and alternative investments and, for advisors, model management technology and access to hundreds of third-party portfolios.

Greg summarizes, “The Folio platform and everything built around it is very precise; it really is a very rich experience made simple and elegant by our technology.”

Behind the scenes

During our discussion, Greg shared that Folio is focused on what he calls digital engagement:

“We provide the most robust, most rich, most efficient, most easy-to-use set of services and work with our partners to help them determine how they want to maximize them.”

To make this possible, the company has a set of RESTful APIs that cover all online brokerage functionality, including account opening, decision files, trading, tax management, setting up and managing bank links, etc. Folio uses these APIs to provide online investing services to RIA firms and enterprises and as an important component of its digital engagement services.

Borys confirms that Folio’s RIA and enterprise clients “have access to all of our RESTful APIs and decide – often in collaboration with us – which they want to use.”

Through Folio’s platform, data and cyber security measures are implemented and managed by software engineers who hold the CISSP certification. The multi-layered security approach includes:

• Two-factor authentication;
• NIST encryption standards;
• Real-time threat intelligence;
• Firewalls and antivirus solutions;

When talking about software development processes, Borys says, “We run a fully automated Agile shop, where we keep track of everything. We can deploy directly from programmers into a cloud container. As a result, our development processes are very tight and fast.”

According to Greg, Folio gathers feedback from clients in the following ways:

1. At the enterprise level. Folio gathers nuances and requirements specific to a particular client’s business. By capturing these details Folio can define requirements, along with the best way to implement the solution, deliver that solution to the client. The interaction with the client is a continuous feedback loop.
2. Trends. When the Folio team identifies a trend, it will strategize internally on how it impacts the firm’s clients, how it impacts the Folio platform and whether Folio can deliver something unique in the market.
3. On a day-to-day basis with Folio’s individual clients, Folio carries out direct client engagement. When a client comes to the company, the team tries to determine how many people a concern or functionality might impact. They then develop a plan for implementing the issue, present that plan back to the client for feedback, and prioritize the task.

Greg states, “Those are the key ways that we get product ideas. The other piece is in the company’s DNA. We often come up with ideas, brainstorm and kick ideas around. We try not to simply build stuff because we think it would be fun to build, but we look at various pieces and parts of the business, compare with what’s happening in the industry, and discuss. We speak with our own clients, prospects, industry leaders, consultants and ask for their feedback on our ideas. This natural curiosity, I think, leads to innovation and continually thinking about better ways to do things.”

As Folio grows, it is becoming more important to make sure product knowledge transfers quickly and efficiently between departments. In this regard, the company has ITIL processes in place and is implementing the knowledge database components thereof.

Modern challenges

Folio and all of its subsidiaries are growing, and one of the biggest challenges they face is helping clients manage change. Greg says,

“We help our clients manage change in what is probably the fastest-moving period in the history of financial services. There are so many options, different siloes, solution sets, etc. We work with our clients to help them understand where the natural integration points are, how certain things affect their business, and where they should be spending mental energy.”

Greg emphasizes that all these changes have also caused a cultural shift within RIA and enterprise firms. With the first attempts to automate investment advisory, human advisors worried about being pushed out of the business. Today, they understand that digital platforms can instead assist them, be part of their practice, and make their workflow more efficient.

Greg says, “Automating certain things enables advisors to focus on other activities, whether it’s marketing or client service or financial planning. So, we help them figure out how to manage that cultural shift as well so that they know their place in the evolution.”

WealthTech Club conclusion

As a financial technology company with considerable expertise, Folio has definitely altered the wealth management industry. It has opened up successful investing to any investor with a computer and a few hundred dollars, even with no previous experience. The Folio Institutional platform and its set of APIs enable investment professionals to efficiently facilitate the account opening and portfolio management workflow. Folio’s integrated custody, brokerage, clearing and FinTech platform is secure, innovative, and supportive.

The company enables its clients to create an unlimited number of customized, well-diversified portfolios and to combine the benefits of direct stock ownership with one-click control over the portfolio strategy. The Folio platform’s full functionality is available on any desktop or mobile device. This, plus many other features, makes the platform appealing to investors of all demographics.

A full set of RESTful APIs gives financial enterprises access to all features and functionality, enables them to have complete control over their offering, and leverage the benefits of the Folio platform.