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Custom Direct Indexing
Meet client demands and control tracking error with individual asset allocations.
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Current Challenge
Custom Direct Indexing is often marketed as a breakthrough in portfolio personalization, but in reality, it falls short of delivering on that promise. While it allows advisers to make surface-level adjustments—such as excluding certain sectors or individual stocks—it fails to account for how these changes alter the portfolio’s underlying risk and return characteristics. As a result, portfolios may appear tailored but lack the proper optimization to maintain performance in line with client expectations. The illusion of customization is created, but the critical step of rebalancing exposures to preserve the intended investment profile is missing.
True personalization requires more than just adjusting inputs—it demands a system that can absorb those preferences and then intelligently restructure the portfolio to maintain proper diversification, risk alignment, and return potential. Custom Direct Indexing skips this step because it relies on outdated, overly simplistic frameworks that aren’t equipped to handle real optimization. Much like the shift in baseball analytics depicted in Moneyball, wealth management needs to move beyond superficial adjustments and embrace data-driven tools that deliver meaningful, performance-aligned personalization.
True personalization requires more than just adjusting inputs—it demands a system that can absorb those preferences and then intelligently restructure the portfolio to maintain proper diversification, risk alignment, and return potential. Custom Direct Indexing skips this step because it relies on outdated, overly simplistic frameworks that aren’t equipped to handle real optimization. Much like the shift in baseball analytics depicted in Moneyball, wealth management needs to move beyond superficial adjustments and embrace data-driven tools that deliver meaningful, performance-aligned personalization.
Pave Solution
Pave enhances custom direct indexing by going beyond basic inclusion or exclusion of assets. Its nuanced, asset-level analytics enable the platform to build personalized portfolios that reflect each client’s unique preferences—such as sector or industry exclusions and assets they prefer not to sell—while still optimizing for a risk and return profile that closely tracks the chosen benchmark. This ensures that personalization doesn't come at the cost of performance or increased tracking error.
Advisers can now implement nuanced personalization dynamically and at scale. Pave connects directly to a firm’s custodian and can automate all ongoing management and trading. The result is a fully personalized, actively managed solution that brings the future of wealth management into the present—giving advisers the power to offer true customization, all while reducing operational complexity.
Advisers can now implement nuanced personalization dynamically and at scale. Pave connects directly to a firm’s custodian and can automate all ongoing management and trading. The result is a fully personalized, actively managed solution that brings the future of wealth management into the present—giving advisers the power to offer true customization, all while reducing operational complexity.
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See It in Action
Learn how to implement Value-based Personalization Screens within Pave
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Reimagine Your Firm's Potential
Evolve your investment strategies and client relationships through the power of automation and personalization.
Automate
Implement Value-based Personalization Screens and turn on Autopilot to save each advisor up to 60 days a year.
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Personalize
Further personalize Value-based Personalization Screens to create portfolios as unique as your clients.
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Start saving up to 18 hours per week with automated portfolio management
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4 Source: Vanguard; Pave performance is actual performance of the Islay affiliate Systematic Alpha investments, LLC. Please see disclaimers at the end for more details
The above material is for educational purposes only and not an offer, solicitation, or recommendation. Investing is speculative and involves risk, including the possible loss of principal. Performance herein is from Pave affiliate, Systematic Alpha Investments, LLC (“Systematic Alpha”). Systematic Alpha is a registered investment adviser. Such registration does not imply any level of expertise by the registrant. Performance assumes the reinvestment of all interest, capital gains, dividends, and fees and expenses of 0.5% charged on an annualized basis. Past performance is no guarantee of future results. Performance results may vary on an investor-by-investor basis.
For Financial Professional Use Only.
Any videos are for illustrative purposes only, Pave is not recommending any specific investments.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
We take protecting your data and privacy very seriously. Please see our privacy policy here.
Pave Investment Advisors, LLC is an SEC Registered Investment Advisor. Such registration does not imply any level of expertise.
Securities offered through Pave Securities, LLC – New York, NY. Member FINRA/SIPC. You can review Pave Securities LLC with FINRA’s BrokerCheck BrokerCheck.
Advisory Services are only offered through Pave Investment Advisors, LLC., an SEC Registered Investment Advisor which is an affiliate of Pave Securities, LLC.
Pave Securities, LLC and Pave Investment Advisors, LLC do not offer tax or legal advice.
The news, resources and articles available on this site are being presented for educational purposes only and should not be considered specific investment or planning advice applicable to each individual.
Please see ADV Part 2A here and Form CRS here.
For Additional Information and Important Disclosures please click here.
Any videos are for illustrative purposes only, Pave is not recommending any specific investments.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
We take protecting your data and privacy very seriously. Please see our privacy policy here.
Pave Investment Advisors, LLC is an SEC Registered Investment Advisor. Such registration does not imply any level of expertise.
Securities offered through Pave Securities, LLC – New York, NY. Member FINRA/SIPC. You can review Pave Securities LLC with FINRA’s BrokerCheck BrokerCheck.
Advisory Services are only offered through Pave Investment Advisors, LLC., an SEC Registered Investment Advisor which is an affiliate of Pave Securities, LLC.
Pave Securities, LLC and Pave Investment Advisors, LLC do not offer tax or legal advice.
The news, resources and articles available on this site are being presented for educational purposes only and should not be considered specific investment or planning advice applicable to each individual.
Please see ADV Part 2A here and Form CRS here.
For Additional Information and Important Disclosures please click here.
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