Previously, Rusty was chief investment officer and president of CLS Investments. An award-winning ETF strategist including ETF.com’s ETF Investor of the Year (2019, 2017) and Wealth Management’s ETF Strategist of the Year (2018, 2016). Global ETFs, ETF Strategist Best Global Insights (2018)

2020 Hot List Recipient

2021 CEO of the Year

Accolades

Media

Enhancing rational decision-making in wealth management

WHILE INVESTORS now have unprecedented access to data, making sound investment decisions involves more than just analyzing numbers. It’s essential for clients and investors to understand both market psychology and their own emotional impulses to improve rational decision-making. This is especially important during periods of market volatility, when emotions can often disrupt logical thinking. Ensuring that financial advisors and clients are comfortable with the markets and their strategies is crucial in the wealth management industry. In conversation with Investment News, Rusty Vanneman, chief investment officer at Orion Wealth Management, emphasizes that his firm is known for behavioural finance. “Our focus on behavioral finance significantly aids advisors in finding the right investment solutions for their clients,” Vanneman

says. The advantage of this approach is that it provides advisors with a deeper understanding of their clients’ overall happiness and well-being, enabling more personalized and effective investment strategies.

Orion has undergone significant transformation since Vanneman joined in 2012. Initially part of CLS Investments, known for its innovative ETF strategies, Orion has since acquired multiple firms, including FTJ FundChoice, HiddenLevers, Brinker Capital, TownSquare, and Redtail. Orion now operates with two primary divisions, technology and wealth management, with Vanneman leading the latter’s investment operations. Inspired by a friend’s mother who suggested he should be an investment manager, Vanneman started reading investment books and pursued an emphasis on investments at Babson College. A pivotal moment was meeting pioneering investor Sir John Templeton, whose story deeply impressed Vanneman. This interest evolved into a career in wealth management, with Vanneman working in Boston for many years before joining Orion. Vanneman says, “When we communicate our story with confidence, consistency, and transparency, it enables advisors to convey the same clarity to their clients. Ultimately, it’s about ensuring investors stay invested and diversified. The focus is on enhancing the investor experience. “Let me share a quick story that illustrates this point. About ten years ago, I was on a personal trip at a cattle ranch near the Black Hills in South Dakota. I struck up a conversation with a retired pastor, and as we talked, he realized I helped manage money and communications for a registered investment advisor in Boston. “It turned out he was a client of that firm. His face lit up with a big smile, and he gave me a hug, expressing his gratitude. He said his positive investing experience with our firm enabled him to afford this particular trip. He appreciated the consistent support from his advisor, which helped him stay the course through good times and bad. This encounter was unique, especially happening on a cattle ranch in South Dakota, but it underscores the importance of a reliable and supportive investing experience.”

Looking ahead, Vanneman discusses several key trends and innovations at Orion. Behavioral finance tools like Pulse Check, 3D RTQ, and BeFi20 help advisors understand clients’ values, risk tolerance, and financial personality, enhancing the advisor-client relationship. “Direct indexing is also a very hot topic in the industry right now, and for good reason,” Vanneman states. Orion is expanding resources and leveraging experienced talent in this area, particularly with its custom indexing solutions. Active management, which has faced challenges over the past 15 years, could see a resurgence, with opportunities for globally diversified multi-asset portfolios to excel once again. Orion aims to stay disciplined and dynamic, ready to seize these opportunities. “Could we finally be entering a period like after the dot-com era, when actively managed, globally diversified multi-asset portfolios started to excel again?” Vanneman wonders.

A promising indicator for active management, according to Vanneman, is the potential outperformance of smaller companies. Since the year 2000, small caps have typically traded at a 20 percent discount to the market, but now they’re trading at a 50 percent discount. Additionally, non-benchmark items such as non-US equities are also at significant discounts compared to the US market.

Spotlight

In addition to manufacturing a reliable rate of return in their investment strategies, Vanneman and his team are dedicated to partnering with advisors by providing quality content and portfolio manager access, which is essential for fostering confidence and clarity in investment decisions. In the current market environment, Vanneman finds wealth management firms need to remain dynamic in actively managing portfolios. Vanneman explains that Orion’s investment strategies fall into two main categories: direct indexing and discretionary, actively managed portfolios. “Our discretionary portfolios are dynamic and active, adjusting based on market conditions and risk characteristics,” he says. Orion uses a wide range of diversifying asset classes, including alternatives, real assets, and global credit, which differentiates them from other multi-asset managers. Vanneman further indicates that at Orion Wealth Management, the team conducts thorough institutional due diligence. Risk management is a key component of Orion strategies. As a result, the portfolios maintain stable risk characteristics over time, ensuring dependable performance. The Orion investment team studies and incorporates behavioral finance principles to promote good decision hygiene and sound decision-making practices. “Another key aspect is what I call ‘X plus one,’” Vanneman says. The X represents our commitment to ensuring portfolios behave as advertised – that they are differentiated and disciplined. The ‘plus one’ encompasses our client-focused activities, including investment team accessibility, client service, and educational content. This holistic approach helps advisors and investors feel confident in our funds, strategies, and market outlook.”

Orion helps financial advisors build strong and profitable businesses by integrating intuitive technology, flexible investment options, and hands-on support in one open-architecture solution. We help advisors support their entire book of business with scalable investment options, including a simplified UMA process, a selective approach to third-party strategists, and proprietary investments that empower you to build well-diversified portfolios for your clients. Our dedicated high-net-worth program provides direct access to specialty investment strategists and a collaborative case-design approach, and our full-service trading desk – featuring tax-loss harvesting capabilities and custom model management – enables you to easily implement your unique investment philosophy.

Company Profile

12 of the Top 15

Barron's RIA firms rely on Orion's technology

$4.3 trillion

Value of AUM serviced by Orion

2300+

Number of advisory firms served by Orion

$68.3billion

Value of wealth management platform assets serviced by Orion

52,000

Number of advisory reps served by Orion

Bio

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Milestones

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Accolades

Company Profile

Years of Experience

Over 30

Fast Fact

Host of “The Weighing Machine” podcast

BAsed In

Omaha, Nebraska

Rusty Vanneman

Chief investment officer at Orion Wealth Management

How Orion Wealth Management’s innovative strategies and tools strengthen client relationships and improve investment outcomes

Read on

“When we communicate our story with confidence, consistency, and transparency, it enables advisors to convey the same clarity to their clients”

Rusty Vanneman, Orion Wealth Management

“Could we finally be entering a period like after the dot-com era, when actively managed, globally diversified multi-asset portfolios started to excel again?”

Rusty Vanneman, Orion Wealth Management

2012

2017

2018

2019

Served as the chief investment officer and managing director for a multi-billion-dollar RIA in the greater Boston area

2012

Published Higher Calling: A Guide to Helping Investors Achieve Their Goals

2017

Received Wealth Management’s ETF Strategist of the Year Award

2018

Named President of CLS Investments

2018

Named ETF.com's Investor of the Year

2019

Named Chief Investment Officer of Orion

2019

Milestones

Investment philosophy and principles

Trends and opportunities

Published June 17, 2024

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Orion wealth management: innovation and strategy

Real assets could play a vital role, especially if inflation remains higher and more volatile than in recent decades. Given the current market environment, these seem like viable opportunities. However, many investors currently lack exposure to real assets and alternatives – areas that could enhance risk-adjusted performance during economic and market volatility. With lower investment management fees than in years past, active management also appears to be at less of a disadvantage now, more so with reduced average cash balances (minimizing cash drag), and significantly lower internal transaction costs. These factors diminish some of the long-term disadvantages of active management. Alternatives present another significant opportunity. Many multi-asset portfolios that advisors build have much lower weights in alternatives compared to institutional investors. Vanneman expects the trend toward higher alternative allocations to continue. To support this, Orion has entered a key partnership to offer more alternatives and have fortified due diligence in this area.

Real assets and alternatives: the prospects ahead

Fostering collaboration between different groups within the investment team encourages exposure to diverse perspectives and lines of thinking. Additionally, Vanneman strongly advocates for analysts and portfolio managers to communicate and write as much as possible. “This not only improves their ability to articulate ideas clearly, but also helps them think through issues more thoroughly. Moreover, it enhances investment decision-making by reinforcing the principle that teaching is often the best way to deepen one’s own understanding,” Vanneman asserts.

Continuous learning within investment teams

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