Folio Investing Absorbs Loyal3, Embraces Long-Term Investment Strategy


It’s been over a month since Folio Investing absorbed the clients of the now-defunct brokerage, Loyal3, and so far, Folio Senior Vice President Peter Jacobstein is pleased with the transition.

“Of course, anytime you transition 200,000 customers you’re dealing with a lot of very large numbers, and so we were worried about potential call volumes, potential customer confusion,” Jacobstein recently told Benzinga. “We staffed up very significantly in our customer service area. We’ve been able to manage the customer service volume very well, so that has been a tremendous relief to us.”

The clients didn’t have much adjusting to do. Their new brokerage home offers the same dollar-based investing, fractional shares and “window” or “batch” trading as Loyal3 had, with the only difference being the breadth of options.

FolioFirst supports more than 200 securities against Loyal3’s 70, and this summer, it will roll out joint and retirement accounts to supplement the existing individual opportunities.

Grounds For Purchase

Folio pursued the customer acquisition because trading philosophy aligned with that of Loyal3 and its user base. And, of course, “adding Loyal3 customers seemed like a good opportunity to add another very, very large group of investors,” Jacobstein said.

The 17-year-old company pushes a long-term investment strategy built on the core principles of diversification, customization, individual cost management, tax awareness and consistency, and its clients embrace similar values. Consequently, the platform doesn’t generally attract day traders following breaking news and technical plays.

“As a group, they do tend to share our ‘buy and hold philosophy,’” Jacobstein said. “They do tend to diversify. They don’t tend to react to quick changes in the market.”

Folio’s methods don’t support such strategies, anyway. The firm’s patented “window trading” brings trades to the market twice a day, once at 11 a.m. and once at 2 p.m., which isn’t conducive to quick reactivity.

“We encourage and we see that our investors tend to be long-term investors, rather than either market timers or technical traders,” Jacobstein said.

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Posted In: FintechMovers & ShakersExclusivesInterviewGeneralFolio InvestingLoyal3Peter Jacobstein
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