Meeting the Top Six Demands of RIA Model Managers

RIAs have long known the importance of tax efficiency, cost reduction, strategy optimization and customization. In this way, they share many of the same concerns highlighted by Cerulli in a study on the top priorities of asset allocation model providers. Cerulli concluded model providers want personalization options. It follows, then, that RIAs – whether they’re model creators or model users, also value the ability to offer deeply personalized investment options to their clients.

RIAs deserve a platform that matches their needs. We built VAST™ to represent a high level of investment platform flexibility, with scale.

With its tax efficiency, ability to cost-effectively blend strategies, incorporate the preferences of individual investors and create a portfolio as unique as each client, Vestmark VAST enables the portfolio solutions modern advisors need to provide to their clients to differentiate their services.

The Cerulli study cited above highlighted six key priorities for portfolio construction and management. VAST strives to meet all of these needs and enables advisors to scale management across all of their clients.

Making models more tax efficient: All investors expect tax efficiency in their portfolios, but the benefits are felt most acutely by high-net-worth investors. VAST supports continuous, ongoing tax optimization across a client’s entire portfolio.

Our platform was also built to make the tax-aware transition of a portfolio as easy—and individualized—as possible, whether changing investment strategies or advisory firms. VAST accounts for each client’s actual tax circumstances, instead of relying on pre-programmed assumptions. After an advisor inputs their client’s tax scenario, the VAST portfolio managers handle the tax management in the background, allowing advisors to focus on building client relationships and growing their business.

Blending active and index strategies to reduce costs: With VAST’s underlying UMA structure, advisors can construct diversified multi-asset portfolios, incorporating multiple index strategies and active SMA strategies sourced from Vestmark’s open architecture manager marketplace, or choosing ETFs or mutual funds. With VAST, the advisor controls the selection and allocation of the underlying strategies and can control the mix of index-based and active strategies, along with the resulting overall blended management fees on the portfolio.

Instead of managing multiple single-strategy accounts to meet a client's objectives, our approach combines a client's holdings into a single multi-sleeve portfolio.

Incorporating ESG factors/criteria: Personalization has become unnecessarily confusing and complicated. Truly being able to offer customization should be a differentiator for advisors, as they help their clients express themselves through their portfolios and investment decisions.

Nearly all advisory firms claim personalization as a unique value proposition, so it can be difficult to stand out from the pack. VAST offers a differentiated capability, tailoring portfolios in individualized and targeted ways for each client at every level (security, sector, industry, or theme) -- and doing so across each multi-asset portfolio at scale. Approaching the expression of values and preferences in this way can be more personal and more targeted, enabling advisors to avoid navigating complex, difficult-to-understand explanations of ESG ratings and the polarized politics of ESG investing.

Incorporating different investment vehicles (e.g. separate accounts): As discussed earlier, VAST enables a diversified multi-asset portfolio – in a single account – with index-based and actively managed SMA strategies sourced from Vestmark’s open architecture manager marketplace (offering over 1,000 strategies), plus the ability to incorporate ETFs and mutual funds.

One of the platform’s key service offerings is a tax-transition service that enables clients to open accounts with transferred-in securities, not just cash. VAST allows the advisor to work with the client to build an initial portfolio from existing holdings, seeking to optimize individual circumstances and expectations for the tax consequences of transitioning to planned strategies.

Expanding customization potential (e.g. ticker swaps): There are myriad reasons clients might need customized portfolios, from expressing values and preferences to excluding certain firms, industries and/or sectors from their portfolio. These can include factors like business ownership, stock options or a concentrated position. VAST allows advisors to account for these preferences across the entire portfolio, rather than in a single SMA strategy, and the VAST investment team, through a portfolio optimization process, can often offer substitute securities that maintain similar risk and return characteristics for the strategy or portfolio. Best of all, VAST enables advisors to do this at scale for all clients on the platform.

“Advisors need to personalize—and do it with scale,” said Rob Battista, senior vice president at Vestmark. “Advisors really do want to put their thumbprint on client portfolios.” Problems arise, however, when advisors have to spend hours every week as they go account by account to make adjustments to client portfolios.

VAST helps solve for that. It’s a “full personalization platform,” not just a direct indexing tool, helping advisors to optimize and automate their customization, so they can focus on building and bolstering their business.

Expanding asset class and sub-asset class exposures: Adding a wider range of exposures to a client’s portfolio improves diversification, return potential and investment granularity, which enhances advisors’ ability to capitalize on specific investment opportunities or market trends. VAST’s multi-asset portfolio capabilities allow for this diversified exposure in a single account.

With VAST, advisors can choose from index-based strategies and more than 1,000 active strategies available on the Vestmark Manager Marketplace (VMM), covering numerous asset classes and sub-asset classes. Advisors can also request to add strategies to VMM quickly and easily since we’re truly open architecture and have no access hurdles. Even the most esoteric asset classes or sub-asset classes can be covered by ETFs or mutual funds within a VAST portfolio.

Vestmark VAST Transforms the Delivery of a Personalized Client Portfolio

At Vestmark, we offer far more than a direct indexing workspace; our VAST solution allows RIAs to manage diversified, personalized portfolios. VAST can easily account for each client’s unique details like actual federal and state tax rates, employee stock positions and legacy holdings. All in all, VAST handles ongoing investment and tax management functions so that advisors can focus on the relationship and services to their clients.

Every investor is unique—and so is every advisor. Cookie cutter just doesn’t cut it. To learn more about VAST and how it can help you regain time and resources to focus on building client relationships and growing your business, schedule a demo today.

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TAX TRANSITION AND OVERLAY SERVICES OFFERED BY VESTMARK ADVISORY SOLUTIONS (VAS). VAS DOES NOT PROVIDE TAX OR LEGAL ADVICE.

There is no assurance that investment products based upon indices will accurately track index performance or provide positive investment returns. Inclusion of a security within an index is not a recommendation by VAS to buy, sell, or hold such security, nor is it considered to be investment advice.

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.