Direct indexing platforms usually start with a standard index—typically the S&P 500—and then layer on customization. The approach carries an inherent limitation: advisors must work within a predefined framework, tailoring portfolios around the edges rather than building them from their investment convictions. Orion flips that model entirely.
Andrew Rosenberger, Head of Custom Indexing at Orion, explains how the firm’s technology-first model emerged from a simple reality: serving 2,200–2,300 RIAs means working with 2,200–2,300 investment philosophies. Rather than requiring advisors to adapt their approach to fit a predetermined framework, Orion built a platform flexible enough to accommodate how advisors already think about markets and portfolio construction.
“One of the great things about Orion is that we offer a lot of flexibility—both in our technology, but then also how we’ve approached custom indexing,” Rosenberger says.
And the difference starts with how Orion defines an index itself.
Beyond Market-Cap Weighting
The traditional direct indexing model assumes advisors want to replicate a market-cap-weighted benchmark like the S&P 500 or Russell 2000. Orion challenges the assumption built into the word “indexing” entirely.
“Indexes can be whatever you want them to be,” explains Rosenberger. “They don’t have to be market-cap weighted. They don’t have to come from a third-party provider like S&P or Russell.”
Advisors can build portfolios around factor-based strategies, using metrics like value, momentum, or quality. Others might unwrap an ETF to use its holdings as a target portfolio. Some develop proprietary strategies based on their own research. Orion’s platform meets advisors where their investment process already lives, treating each firm’s methodology as the foundation rather than an afterthought.
“We say, ‘Let’s work with that RIA, and let’s understand how they’re approaching the market. Let’s approach how they’re investing portfolio construction,’” he adds.
Rather than shoehorning advisors into a standard index, Orion adapts to the investment philosophy driving the practice. “It’s about understanding how they’re approaching portfolio construction and then working with them to create that custom portfolio where we can add value on top of their investment philosophy,” Rosenberger says.
The flexibility extends beyond the initial portfolio construction into how advisors manage client-specific needs—particularly around taxes.
The Tax Transition Problem
About 90% of assets in Orion’s custom indexing book are taxable accounts, and roughly 88% of new accounts are funded in kind with existing securities. Advisors rarely work with blank slates—clients often arrive with embedded capital gains accumulated over 15–20 years.
The question becomes how to improve the portfolio without triggering unnecessary tax consequences. Advisors recognize the need for portfolio changes, but implementing a better strategy shouldn’t mean generating painful tax events along the way.
“So, a lot of what we do to help clients is around the tax management portion of it with a heavy focus on the tax transitioning,” Rosenberger emphasizes.
Every client’s tax situation is unique. Cost bases, tax rates, income levels, and time horizons vary widely. A retired couple in California faces different tax concerns than a business owner in Texas planning to work another decade. Standardized approaches miss that nuance.
“The home run with what we do is that every client who’s taxable has a customizable need,” he says. “No two clients have the same starting point or the same tax rates or the same income levels. So, customization from our perspective is really focused on the tax savings and tax management portion of the allocation.”
The platform allows advisors to set capital gains budgets for individual clients and transition portfolios gradually over three years, five years, or whatever timeline makes sense. Tax-loss harvesting happens continuously and automatically. The technology monitors positions daily, identifying opportunities to capture losses even when the overall market performs well.
But tax efficiency only works if the technology can handle the messy reality of how clients actually arrive.
Starting From Where Clients Are
Direct indexing traditionally assumes clients hold individual stocks. Orion recognizes many clients come from mutual fund platforms, model portfolios mixing multiple vehicle types, or legacy brokerage accounts holding a combination of everything.
“We have a lot of flexibility on bringing over both individual securities but also commingled strategies and making them part of the allocation,” notes Rosenberger.
The platform accepts whatever combination of individual stocks, mutual funds, and ETFs a client currently owns. Rather than requiring advisors to liquidate the client’s holdings and start over, Orion’s optimizer figures out how to incorporate existing positions into the transition strategy.
“You can’t really help how people have started their journey,” he says. “You can only help how they finish their journey. So, the idea here is let’s work with what the client has and let’s focus on making their portfolio better, not just ripping the Band-Aid off and selling everything and starting fresh.”
Tailored Allocation Portfolios
Orion recently launched Tailored Allocation Portfolios, which Rosenberger describes as a sister product to custom indexing. The offering takes the same optimization technology used for direct indexing and applies the approach to a completely different target.
Instead of replicating an index of individual stocks, Tailored Allocation Portfolios target third-party strategist models. Orion partners with firms such as Janus Henderson, First Trust, and Russell Investments, allowing advisors to implement active manager portfolios through the custom indexing technology.
“What we have with Tailored Allocation Portfolios is taking the same technology that you would use to build a traditional direct indexing portfolio,” Rosenberger explains. “But rather than putting that on top of a traditional index, we put it on top of a third-party strategist.”
Advisors can select a strategist’s model—say, a moderate allocation spanning the manager’s top strategies—and overlay customization and tax management. The approach provides institutional grade active management, diversified portfolios aligned with client risk, and continuous tax-loss harvesting. Transitioning from existing holdings to the strategist’s portfolio happens gradually, aiming to reduce tax friction.
“What that allows you to do is have a fully diversified turnkey portfolio that you’re targeting, still get some of the benefits of customization and tax-loss harvesting, but then also in a really scalable way, think about that tax transition solve where you go from point A to point B—point B just being now that strategist target portfolio,” says Rosenberger.
The partnerships already integrated into Orion’s wealth management platform create natural alignment. “So, it’s a really great solution that we’re launching in partnership with some of our great money manager partners that we have on our wealth management platform,” he adds.
Because the offering integrates into Orion’s existing wealth management platform, clients aren’t charged extra for direct indexing. Strategists cover the cost, removing another barrier to scalable, tax-efficient personalization.*
Making Complexity Feel Simple
Orion’s edge lies in its technology-first approach. The firm invests heavily in making sophisticated portfolio management feel simple and as straightforward as buying an ETF.
Rosenberger puts the focus squarely on the advisor. “The competitive advantage that we have is: how do you leverage that technology to make the advisor experience that much better?” he says.
An advisor can run a proposal in five minutes. Once the client approves, the account opens with all the settings from the proposal—no starting over, no reentering parameters. If a client calls midyear saying they can handle more capital gains, the advisor updates the capital gains budget with a few clicks. The platform handles everything else automatically.
Managing dozens or hundreds of customized accounts could easily become overwhelming. But when the technology handles rebalancing, tax-loss harvesting, and ongoing optimization automatically, customization scales.
“By having all technology present and in the ecosystem, we’re able to make it a lot more scalable for the advisor to manage a whole lot of clients where each one might be different, but from their perspective, it still feels like you’re at a model-based solution,” notes Rosenberger.
Delivering sophisticated customization while maintaining operational simplicity requires intentional design choices. Orion built the platform around a core principle: remove friction wherever technology can eliminate manual work. “Our job at Orion is to make that experience as frictionless as possible,” he says. “So, to the extent that technology allows you to do that, we’re going to leverage technology as much as we can to make it seamless.”
The Onion Analogy
Early in developing Orion’s custom indexing offering, Rosenberger faced a challenge common to feature-rich platforms. Show advisors everything the technology can do, and they walk away overwhelmed and confused. The solution required rethinking how to present functionality.
Rather than leading with PowerPoint decks listing every feature, Orion guides advisors step-by-step through the process. “One of the solutions to that problem was that we made the experience digital,” Rosenberger says.
The workflow starts with the tax transition question, then moves to holdings, then customization options, then screens and exclusions. Each step reveals functionality organically without requiring advisors to remember a mental checklist.
“As you walk through this experience, you now understand the full functionality because it’s taking you through step by step rather than just having to keep that in the back of your mind when you’re opening up an account,” explains Rosenberger.
The result feels more like building a financial plan than opening a brokerage account. “By the time you get to the final journey, you have this fully customized portfolio, but you didn’t have to have a checklist along the way to do it,” he adds.
Rosenberger likens the platform to an onion: “Each time you peel a new layer off, you find there’s more and more functionality to it,” he says. “For new users, maybe you’re only peeling out that first or second layer, but by the time you become a power user of the solution, you’re getting three, four, or five layers deep and understanding some of the true intricacies of what the technology can do for a client.”
Different advisors need different layers—some focused on tax-loss harvesting, others on factor construction or ESG portfolios. Orion accommodates the range without requiring advisors to navigate irrelevant features.
Rethinking What Direct Indexing Means
Orion challenges long-held assumptions about direct indexing: the target portfolio doesn’t have to be an index; customization goes beyond screens; tax management is essential; and technology should adapt to the advisor, not the other way around.
Wealth management firms differentiate themselves through their investment approach, and a platform requiring everyone to fit the same mold defeats the purpose of customization. Orion has built technology flexible enough to support 2,200 investment philosophies because the firm’s client base demanded nothing less.
Whether an advisor wants to replicate the S&P 500, build a proprietary factor model, implement third-party strategist portfolios, or blend multiple approaches across different client segments, the platform handles the complexity. The technology stays invisible while the advisor’s investment process is front and center.
For practices managing high-net-worth taxable clients, the combination of flexibility, tax intelligence, and true open architecture creates possibilities traditional direct indexing platforms can’t match. The question shifts from whether direct indexing fits the practice to how broadly the practice can deploy customization across the client base.
*The advisory fee determined by the advisor and the platform fee in addition to other fees that may be assessed by the custodian will still apply.
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Additional Resources
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Disclosures
Wealth management services provided by Orion Portfolio Solutions, LLC (“OPS”), a registered investment advisor. Orion OCIO services provided by TownSquare Capital, LLC (“TSC”), a registered investment advisor. OPS and TSC are affiliates and wholly owned subsidiaries of Orion Advisor Solutions, Inc.
Custom Indexing offered through Orion Portfolio Solutions, LLC a registered investment advisor.
Tailored Allocation Portfolios are offered by Orion Portfolio Solutions, LLC, a registered investment advisor. The unaffiliated Strategists whose mutual funds or ETFs are utilized within the Tailored Allocation Portfolios pay us a fee in exchange for inclusion in the Tailored Allocation Portfolios program.
Custom Indexing is an investment strategy wherein a portfolio is managed to mimic an index or other portfolio, while taking into account the tax position, holdings, and individual investing preferences of a client. The performance of a portfolio using custom indexing may vary significantly from the target index (referred to as tracking error or tracking difference), and this variance may increase with greater customization within a portfolio.
Tax-loss Harvesting is a process by which securities trading at unrealized losses are sold to realize a taxable loss. Proceeds from the sales are then used to reinvest in alternate securities to maintain market exposure. Tax-loss Harvesting can be used as a strategy to offset realized gains from other investments and/or carried forward to later calendar years to offset future taxable gains.
This information is general in nature and is not intended as tax advice. You should consult a tax professional as to how this applies to an individual tax situation. Nothing contained herein is intended to constitute accounting, legal, tax, security or investment advice, nor an opinion regarding the appropriateness of any investment, or solicitation of any type.
