Beyond ESG: The Power of Holistic Investment Personalization

Instead of shying away from the topic, Americans’ worries about money can actually create an opportunity for advisors to offer a more tailored deck of solutions.

When talking about personalization, some advisors may believe that leaning on environmental, social and governance (ESG) factors is the only or best way to deliver this for clients. The truth is, the best personalization solutions present a far bigger, more distinctive opportunity for differentiation—far beyond complicated, hard to understand and frankly, quite controversial in some quarters, ESG considerations. In fact, a researcher with the Corporate Governance Research Initiative² at Stanford recently reported that “it is rare for ratings providers to offer concrete, systematic evidence to back up claims about their ratings,” and that a 2020 study of institutional investors revealed widespread concerns about ESG ratings, “including inaccuracy and inconsistency of data, inexperienced research analysts, and a perception that ESG quality cannot be distilled to a score.”

By moving away from relying on ESG scoring, advisors can not only sidestep any controversy regarding the methodology and criteria, but they can also offer their clients a more personalized and highly tailored approach to constructing – and managing – their portfolios.

Today, advisors are able to extend these solutions to clients in a scalable, cost-effective manner, particularly when partnering with Vestmark. Leveraging Vestmark VAST, which offers the sophistication of a multi-asset, diversified portfolio, advisors have more resources for controlling and improving client-advisor relationships and growing their business.

Personalization Beyond ESG Investing

Values-based investing is important, but it’s only one piece of the personalization puzzle. In fact, relying on ESG ratings, which are sometimes steeped in controversy and aren’t well understood, can result in far different outcomes than what advisors and clients hope to accomplish. And relying on ESG ratings can’t solve all of the reasons advisors need to tailor portfolios in the first place.

There are a number of reasons clients are looking for personalized portfolios, including:

• To express values or preferences.

• Because they want to exclude firms, sectors, industries and businesses for risk-related reasons.

• Factoring in client asset exposure elsewhere in a portfolio, due to employer stock options or business ownership.

• Concentrating on particular financial goals, including tax management, protection, income, etc.

“We believe that clients are expecting more personalized experiences across the board,” explained Rob Battista, Senior Vice President at Vestmark. “Today’s investors often want customization across the entire portfolio,” he added. “They also want to know that their portfolio is being managed and optimized to minimize the tax bill on an ongoing basis. A solution that captures their actual state tax and federal tax rates and reflects tax rules across different levels of income can help achieve these goals.”

VAST checks those boxes and more. “Our solution is a full personalization platform,” he said. “It’s a full end-to-end solution.”

True personalization is holistic. Solutions that incorporate direct indexing, active strategies and advanced tax optimization into a multi-asset portfolio, across more than just a single SMA strategy, all in a single account, are not only possible—they’re a major differentiator for advisors. Traditionally, this approach at a portfolio level has been cumbersome and time consuming. With VAST, however, advisors can finally unlock true customization at scale.

Vestmark VAST: Empowering Holistic Personalization at Scale

Advisors who use VAST aren’t restricted in their investing. They aren’t forced to choose between client goals and investment strategies. They’re encouraged to operate in an environment that facilitates holistic, personalized financial advice.

At Vestmark, personalization is at the heart of all we do. Clients trust advisors with their wealth; that’s why we believe advisors should always have the tools necessary to exceed client expectations.

We built VAST to make customization intuitive. Our flexible solution makes it easy to control personalization inputs and reflects the realities of continuously balancing target returns with minimizing tax obligations alongside other unique client portfolio expectations and goals.

To move beyond ESG, and learn more about how VAST can provide you with true, holistic personalization, schedule a demo today.

1 American Psychological Association, Stress in America 2022: Concerned for the future, beset by inflation.
2 Harvard Law School Forum on Corporate Governance. October 2023.

Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses. Tax-loss harvesting involves the risks that the new investment could perform worse than the original investment and that transaction costs could offset the tax benefit.

There is no assurance that a separately managed account (“SMA”) will achieve its investment objective. SMAs are subject to market risk, which is the possibility that the market values of the securities in an account will decline and that the value of the securities may therefore be less than what you paid for them.