Frank Nickel and Tom LaBarbera from Orion - Direct Indexing: How it Works and What You Need to Know About it

Mar 19, 2024

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This week, Rusty and Robyn are joined by Frank Nickel and Tom LaBarbera from Orion Portfolio Solutions to discuss Direct Indexing. Frank is an experienced investment professional known for his expertise in portfolio management and a history of contributing positively to performance outcomes.. He believes that a rigorously designed, flexible and robust investment process can add value by exploiting market opportunities. Thomas LaBarbera is a Quantitative Portfolio Manager at Orion who manages 23 SMA strategies within Beta, Factor and Thematic Portfolios for qualified and non qualified assets. In addition, he works alongside marketing and sales to enhance distribution channels and raise AUM.

Key Takeaways

[03:20] - The guests’ professional backgrounds and what they are doing in their current positions.
[04:36] - What is quantitative investing and what are some arguments for why it is an effective way to manage portfolios?
[06:35] - How do Frank and Tom define, measure and manage risk?
[09:25] - What do most people get wrong about, or not appreciate about, risk?
[11:30] - How exactly would they define Direct Indexing?
[12:42] - How much is Direct Indexing expected to grow?
[14:25] - What are the arguments for why certain clients would want customization and why others don’t want any customization?
[15:45] - Where does the “Disciplined Equity” product line at Orion align with Direct Indexing and how does it differ?
[16:50] - How “actively” are they working on the “Disciplined Equity” strategies?
[19:02] - What new strategies are they currently working on?
[20:56] - How does their team produce and vet new ideas before introducing them?
[22:22] - Where do they think the financial services industry is headed next?
[23:41] - How might AI impact the financial services profession?
[24:36] - What is currently their favorite investment idea?

Quotes

[19:10] - "We recently launched two new strategies. The first came up over the summer, and it was an Artificial Intelligence strategy. With all of our strategies that we run, how we get to them is, we take demand from the field…The most recent strategy we launched is called ‘Agressive Equity,’ and again that’s trying to provide a very aggressive profile. We’re looking at…companies with really high growth rates…and that came from, again, from demand from a very specific client that was looking to use that strategy in conjunction with a fundamental active manager. ” ~ Frank Nickel

[24:36] - "I love Small Cap. I was a Small Cap manager for 15 years, [and] I think for the last 10 it has been extremely undervalued. I think there are a lot of areas in the market that are undervalued, and they are not undervalued because they aren’t appreciated, I think tech has taken all of the air out of the room…This year could be a small cap rally if rates are reduced, but that’s dependent on rates and you can’t predict that.” ~ Tom LaBarbera

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Disclosure(s)

Custom Indexing offered through Orion Portfolio Solutions, LLC a registered investment advisor.

Orion Portfolio Solutions, LLC, an Orion Company, is a registered investment advisor. Wealth Management services are offered by Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor. Orion Portfolio Solutions, LLC is a wholly owned subsidiary of Orion Advisor Solutions, Inc. (“Orion”)

Compliance Code: 0613-OPS-3/11/2024