Model Folios are Folios that a Model Manager creates and manages and which you can subscribe your clients to. When the Model is modified, trades are generated based on the selected Sync option you chose—and immediately placed or presented to you on a review-and-release basis (this can be done by going to your Client Accounts page and next to Actions selecting Sync Order)—across all subscribed accounts with effected Folios, synchronizing each subscribed Folio to the updated Model Folio.
Registered Investment Advisor (RIA) firms determine who can use and manage Model Folios. If you have been authorized you to create and manage Model Folios, you will see a Models tab in the top navigation. If you are not granted this capability, you will not see this tab.
Advisors designated by their firm as Model Managers can create Model Folios. If you log in and do not see a Models tab, please contact your firm’s point of contact for the Folio Institutional relationship to request this access.
You can only create Model Folios if you are a designated Model Manager:
Only Published Model Folios can have subscribers.
A Model name can have up to 64 characters.
The Abbreviated Model name will appear on the Models page. Advisors subscribing their clients to a Model Folio will see the abbreviated name on the subscription page. The abbreviated Model name can have up to 25 characters. Example: A Model Folio name may be ABC Advisory Corp.’s Long-term Aggressive Growth, and its abbreviated name might be Aggressive Growth.
You can change the Model Name and the abbreviated name by clicking on the model on the main Model Folios page.
The dollar amount to track this model is not real money that is invested in the model. It is an amount that we use to generate paper trades and calculate hypothetical performance and other statistics specific to the Model Folio.
Once set, this value cannot be changed.
You can set a benchmark so that when you are viewing your Model Folio’s hypothetical performance you will see its performance compared to the benchmark you set here. You may also choose to have no benchmark by selecting ‘–No Index Selected–’ from the menu of available indexes.
If you have more information regarding the Model Folio on a separate website, you can enter the internet address for that information here. The address will be displayed on the specific Model Folio’s information page. This is not required for creating a Model Folio.
We will provide this link for the convenience of our customers; however, we have no control over the content. We in no way can guarantee the accuracy, reliability, or completeness of any data or information provided in any linked Web site, nor do we approve or endorse the content. You and your firm are responsible for the content that appears on this page.
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The Model description provides a brief description of the Model Folio. The description can be up to 100 characters.
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We will display this description of the Model Folio to advisors when they “subscribe” a client to a Model Folio. Specifically, this description will appear on the page that lists all the Model Folios from which an advisor can choose.
We will also display this description to you when you modify the Model Folio and when you place orders to create this Model Folio.
You may use up to 100 characters.
We will provide this information for the convenience of our customers; however, we have no control over the content. We in no way can guarantee the accuracy, reliability, or completeness of any data or information provided in this description. You and your firm are solely responsible for this description.
The Percentage Trade Threshold is the minimum percentage by which a security’s current weights within a folio must deviate from the Model’s Target Weights in order for a trade to be generated for that security in a client’s folio when a model sync order is created. Securities that would have orders generated within the designated threshold at the time the model sync order is created will not have trades generated. The Percentage Trade Threshold only applies to model syncs.
To set a Percentage Trade Threshold:
When setting a Percentage Trade Threshold, keep in mind Model Folios with a large number of securities require a small Percentage Trade Threshold, otherwise a large number of orders may not be generated.
Review the question below to see an example of a Percentage Trade Threshold.
Using a Percentage Trade Threshold allows you to:
Example of a Percentage Trade Threshold:
Security | Target Weight |
Current Weight |
Deviation | Percentage Trade Threshold |
Security A | 25% | 25.2% | 0.2% | 0.5% |
Security B | 25% | 24.7% | 0.3% | 0.5% |
In this example:
To change Model Folio settings:
Model Managers can allocate a portion of the Model Folio to cash by using the FDIC.CASH ticker. Clients subscribed to the Model Folio will thereafter hold the same FDIC.CASH position as specified in the allocation.
Cash can have a specific allocation within a Model Folio or may be present as the result of trading imbalances during a sync order. In the event there is a corporate action (such as a cash merger or cash liquidation) for a security in a Model Folio, the excess cash will become part of the FDIC.SWEEP position of the entire account, thereby removing the value of that cash from the Model Folio.
There are two ways to analyze Model Folio.
Option 1:
Option 2:
There are two ways to subscribe a client to a Model Folio.
To subscribe a client to a Model Folio by creating a new Folio:
To subscribe to an existing Folio:
When you subscribe an existing Folio to a Model Folio, current holdings will be sold and replaced by the Model Folio’s holdings when you sync the Model Folio for the first time.
To unsubscribe a client from a Model:
When a Model Manager syncs a model, orders will be generated for subscribed Folios. You have the following choices to determine how you want those orders generated.
When subscribing clients to Model Folios, you must also decide how to handle excluded securities:
You can retain sole discretion over when orders to sync a subscribed Folio (sync orders) are generated by selecting Do not create sync orders following changes to the model. If you make this choice you decide when to create sync orders when subscribing a client to a Model. You can place a sync order anytime no matter the sync option selected.
To place a sync order:
As a model manager, you place a Syncronization Request (Sync Request) which results in actual Folio orders (called Sync Orders) being created by the system for all customer accounts that have a Folio subscribed to your model. If you place a second Sync Request before all the customer Folio Sync Orders have been processed in one of our windows, then either the original or the second Sync Order will be cancelled for any customers in this situation.
If you place a second Sync Request for a model Folio while there are still unprocessed Sync Orders for customer Folios, these are the rules that the system uses to determine which customer Sync Orders to cancel:
When this Model Folio generates excess cash, our system will automatically invest the cash in the sweep investment you choose here.
Your Model Folio may generate excess cash in these situations:
In all the above cases, the cash will automatically be invested in the sweep investment.
If an advisor subscribes a client to a model, in all cases described above, the cash will NOT be invested in the sweep investment. Rather, the money will go into the client’s Cash and Money Fund.
Once money is added to a client’s Cash and Money Fund, the money will not be reinvested in the Folio unless the advisor makes a separate transaction.
This page allows you to compare various statistics of the Model Folio to an index, security, or mutual fund.
You can change the Model Folio you are viewing by making a selection in the drop-down box at the top right side of the screen and selecting Go.
Follow the steps below to choose a comparison criteria:
The “Average Model Statistics” table compares the Model Folio to the index or investment you choose. The following items are included:
Target Weights allow you to easily modify your Model Folio and all client Folios that are subscribed to it.
When you choose to modify a model and sync subscribers, our system will generate orders to bring the weight of each security in the Model Folio and all subscribed Folios in line with the model’s Target Weights.
Initially, the Target Weight of each security in the Model Folio is equal to the weight of that security when you created the Model Folio. Say you create a Model Folio with five securities, with weights listed in column 1 in the table below. The initial Target Weights are equal to the when-created weights.
Weight When Created | Initial Target Weight | |
CSCO | 10% | 10% |
GE | 15% | 15% |
MRK | 25% | 25% |
INTC | 35% | 35% |
C | 15% | 15% |
After you create a Model Folio, you can modify the Model by setting and saving new Target Weights.
If you click on “Modify Model” on the Model Folios page, the most recent Target Weights appear in the “Saved Target Weights” column.
After the Model Folio is created, obviously the weights will change as the stock market fluctuates. At any point in time, the current market weight of each security depends on its market price.
Weight When Created | Initial Target Weight | Current Market Weight | |
CSCO | 10% | 10% | 12% |
GE | 15% | 15% | 17% |
MRK | 25% | 25% | 23% |
INTC | 35% | 35% | 30% |
C | 15% | 15% | 20% |
If you want to rebalance the Model Folio to bring it and all subscribed Folios back in line with the Target Weights, you can easily do that. Simply click “Sync Subscribers” next to the appropriate model on the Model Folios page and follow the steps. Our system will generate orders so that the weight of each security in the model and all subscribed Folios will be brought back in line with the Target Weights.
If you want to rebalance the Model Folio and all subscribed Folios to different weights, you must set and save new Target Weights.
Reminder! Unpublished Model Folios do not have subscribers. You modify an Unpublished Model Folio the same way—by setting and saving new Target Weights. However, you can only update the Model Folio to the new Target Weights because there are no subscribers.
You can easily set and save new Target Weights. You will also be given the chance to update your Model Folio and sync all subscribers. That will generate orders to bring your Model Folio and all subscribed Folios in line with the new Target Weights that you just set.
Weight When Created | Initial Target Weight | Current Market Weight | New Target Weight | |
CSCO | 10% | 10% | 12% | 20% |
GE | 15% | 15% | 17% | 25% |
MRK | 25% | 25% | 23% | 15% |
INTC | 35% | 35% | 30% | 20% |
C | 15% | 15% | 20% | 20% |
Fees and trading activity can result in debit balances occurring in accounts. Keeping some cash outside of your Folios will help reduce the possibility of a debit balance.
Management and Brokerage Fees are collected from the cash position within an account (not from cash held in a Folio). If fees are charged and an insufficient amount of cash is available in the account to cover the entire fee, a debit balance is created. We do not allow a debit balance to persist, so you must sell some of the securities in the account, have your client make a new deposit of cash, or refund some of your fees to satisfy the debit balance.
When you create orders that both buy and sell securities (e.g., model sync and rebalance orders), the client may end up with a debit balance if the proceeds from the securities sold are less than the cost of the securities purchased. This can happen when the prices of the securities being sold decrease more than the prices of the securities being purchased, between the time when the order is entered and the time the order is executed. If there is not enough cash in the account to cover this difference, a debit balance is created. In order to avoid Regulation T violations, the debit balance needs to be resolved quickly. This can be accomplished by selling some of the securities in the account or making a new deposit of cash into the account. If the debit balance is not resolved quickly, then we are required to sell a sufficient dollar amount of securities in the account to satisfy the debit balance.
After the Model Folio is modified, our system will start generating orders to synchronize this Folio. These orders will be executed according to your instructions.
You have the following choices:
Occasionally there may be instances in which an order already exists within this folio when a Sync trade is attempting to be placed. In the event that the existing order is a Buy/Sell at the Folio Current Weights, Buy Dollar Cost Average, Buy-/Sell-Only Synchronize or Just Synchronize—those orders that trade across all holdings within the folio—we will cancel and replace that order with the appropriate Buy/Sell and Synchronize order. The introduction of new cash or the sale of securities to generate proceeds within the folio will still occur, however the subscribed folio will be synchronized with the newest Model Target Weights, as intended by the Model Manager.
A Buy at the Folio Current Weights for $100 has been placed into the folio.
Stock | Current Position | Current Weight - Folio | Amount to Buy | Ending Position | Ending Weight |
A | 50 | 28.57% | 28.57 | 78.57 | 28.57% |
B | 90 | 51.43% | 51.43 | 141.43 | 51.43% |
C | 35 | 20.00% | 20.00 | 55 | 20.00% |
Total | 175 | 100.00% | 100 | 275 | 100.00% |
The Model Manager places a Sync order to rebalance the holdings to equal weights with an additional security. The existing order will be replaced with a Buy and Synchronize order to incorporate the $100 of new money while rebalancing to the new Model Target Weights.
Stock | Current Position | Current Weight - Folio | Target Weight - Model | Amount to Buy/Sell | Ending Position | Ending Weight |
A | $50 | 28.57% | 30.00% | $32.50 | $82.50 | 30.00% |
B | $90 | 51.43% | 40.00% | $20 | $110 | 40.00% |
C | $35 | 20.00% | 30.00% | $47.50 | $82.50 | 30.00% |
Net | $175 | 100.00% | 100.00% | $100 | $275 | 100.00% |
The $100 is still included in the order, but the order results in the Folio being brought in sync with the Model at the same time as other subscribers to this Model.
If there is an order to buy into or sell out of the Folio in place at the time of a Model Sync being generated, we will merge the two orders. The merged order will complete the buy into or sell out of the Folio while also synching the holdings with the latest version of the Model.
This will occur with all orders except:
A Buy at the Folio Current Weights for $100 has been placed into the Folio.
The Model Manager places a Sync order to rebalance the holdings to equal weights with an additional security. The existing order will be replaced with a Buy and Synchronize order to incorporate the $100 of new money while rebalancing to the new Model Target Weights.
The $100 is still included in the order, but the order results in the folio being brought in sync with the Model at the same time as other subscribers to this Model.
If you do not want these orders to merge: