Key trends in portfolios constructed with Vise

Vise’s mission is to provide access to customized investment solutions to every investor. The platform allows advisors to quickly create bespoke portfolios, showcasing a differentiated investment approach to both prospective and current clients. 

With thousands of accounts now on the Vise platform, we are able to share trends in how advisors are leveraging Vise to deepen relationships with their clients and grow their businesses. 

This study presents key trends we see in portfolios constructed by Vise clients. 

Vise believes in bringing access to personalized financial services to investors of all types and all account sizes — not just the wealthiest investors. More than 95% of Vise accounts are less than $500,000, and half are less than $50,000.  

The data make clear that advisors not only benefit from the efficiencies of working with Vise, they view the platform as a solution for accounts of all sizes. 

Vise’s technology platform enables new efficiencies and personalization, while still supporting advisors in seeking to balance the relationship between human capital and investment capital through a client’s investment lifecycle.

For example, accounts invested on the platform tend to take more risk when the investor has a longer time horizon, and less risk when they have a shorter horizon: 

Automated glide paths make it seamless and efficient to transition from more aggressive allocations to less aggressive allocations as accounts move towards the end of their time horizons. 

Our data show that accounts with less than a 30-year time horizon are nearly twice as likely to utilize glide paths than those whose time horizon is greater than 30 years.

For advisors hoping to offload the burden of managing the risk/return relationship for clients throughout their investment horizon, it’s clear that they see the Vise glide path feature as a great starting point. 

One of the primary benefits of Vise is the ability to customize portfolios for clients. 

While we see many different customizations on Vise, among the most popular are: 

• excluding specific industries based on sustainability

• including municipal bonds in taxable accounts

• excluding individual companies based on exposure in other areas of a client’s life 

Overall, a strong majority of Vise accounts utilize customization:

Working with Vise can allow advisors to offer prospects and clients a differentiated approach to investment management, helping advisors drive new business and build deeper, stickier relationships with their current book of business. 

We believe strongly in providing advisors access to the asset classes their clients need to help maximize the probability of achieving their goals. Year-to-date, we have seen high inflation and, in response, increasing numbers of advisors turning to traditional inflation-hedging instruments, like commodities, in an attempt to bolster client accounts against rising prices. 

The decision to not include exposure to commodities is available for advisors and investors whose preference is to trust the power of capital markets to provide returns above and beyond that of inflation. 

Advisors working with Vise find a lot of value in the platform’s “always on” approach to tax management, with nearly 97% of taxable accounts opting into automated tax loss harvesting. Manually managing tax loss harvesting can add an operational burden to an organization, detracting from the time advisors can spend with clients and prospects. 

Offloading previously manual tasks like trading and tax management is another one of the primary benefits of working with Vise:

>> Read more about an RIA benefiting from technology to help with trading and other tasks.

Advisors are able to easily manage clients’ tax exposure by leveraging Vise’s maximum capital gains limits. By setting limits, advisors constrain the amount of realized gains ongoing management is able to incur. 

The chart below shows the median long- and short-term maximum capital gains advisors have set as a percentage of the account value. Unsurprisingly, advisors do not want their clients to incur short-term capital gains, as these gains are taxed at higher rates. 

Technological innovation is helping advisors provide truly customized, differentiated portfolios for their clients. We expect more and more advisors to take advantage of this approach, as its benefits — deeper relationships with clients, more time to grow their business — become more clear.  

The writer, Christian Boinske, is a senior investment strategist at Vise.

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Disclosure:

Vise AI Advisors, LLC (“Vise”) is an SEC-registered investment adviser. The material presented is for informational purposes only and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Investing in securities involves risks, including the potential loss of money, and past performance does not guarantee future results. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes and may not reflect actual future performance. Data collected from 2,184 Vise executed account proposals as of May 25, 2022.

Tax loss harvesting is not suitable for all investors. Investors whose circumstances typically make tax loss harvesting unsuitable for them include, but are not limited to: (1) those in relatively low-income tax brackets, and especially those who expect to be subject to higher tax rates in the future, (2) those who are planning to withdraw a large portion of their taxable assets within the next 12 months, and (3) those who trade (or whose spouses trade) any of the securities in Vise portfolio (or substantially identical securities) in external accounts, including joint accounts. Restrictions exist for wash sales and the use of specific types of losses to offset certain gains. Clients and their tax advisors are responsible for how transactions conducted in their accounts are reported to the IRS, or any other tax authority, on clients’ personal tax returns. The tax consequences of tax loss harvesting are complex and uncertain and may be challenged by the IRS or any other tax authority. It should be noted that there are restrictions on using specific types of losses to offset certain gains. When conducting these types of transactions, you should also be aware of the IRS wash-sale rule.