Introducing: Socially-Selective Investing. If you feel strongly, for example, about climate change, equality, sustainability, gun control, and dozens more, now you can have your values reflected in your investment portfolio.
The software builds a properly diversified investment portfolio while optimizing for social value and maximizing after-tax performance.
- First of its kind software and analytics
- Socially Responsible Investing segment is of interest to 71% of investors and is therefore poised for rapid growth
- 66% of children fire their parents' financial advisor after they receive inheritance
- Empowers advisors to broadly offer customization that has, previously, been available only to very high net worth individuals
For a test drive, go to ImpactLabs.com. Access to the live version and APIs is currently available today only for Investment Professionals.
The algorithmic portfolio generation and customization tool was designed and developed by Impact Labs Inc. Founder & CEO, Jason R. Escamilla, CFA and Co-Founder Videh Seksaria.
Escamilla began his career in Asset Management over 20 years ago at Seneca Capital Management, where institutional clients -- socially responsible mutual funds, university endowments, pension funds, etc. -- all had separately-managed portfolios. For example: Labor unions had the option to exclude 'union-wrecking' companies from their pension fund.
Sustainable, Responsible or Impact (SRI) investing has recently taken off. By 2014 more than $6 trillion or one in six dollars under professional management was involved in SRI strategies, up 76% from just two year before.
"But that was only 18% of the $37 trillion in the U.S.," comments algorithms expert Seksaria, "SRI is just getting started." According to the Morgan Stanley Institute for Sustainable Investing 71% of individual investors are interested in sustainable investing.
Seksaria and Escamilla originally met via MIT's Externship Program, which pairs MIT students with alumni. "Videh hit the ground running accelerating the roll-out of our portfolio generation engine and APIs," commented Escamilla, MIT '02 MBA alum.
Next Generation = Customization, Automation & Tax-Optimization
Impact Labs Inc. is a software and analytics company that, in the words of Escamilla, "will empower next-generation wealth advisory firms to offer an entirely new level of portfolio customization and tax-efficiency than is otherwise available today."
"By 'next-generation' advisor, I mean much more than a 'digital investment offering'. Today, whether your client is a Millennial, Gen X or Baby Boomer, a mobile-first offering is table stakes, at least in San Francisco. The wealth management firms of tomorrow will offer far more customization and personalization, including individually-tailored investment products and portfolios that maximize after-tax performance around each client's unique needs."
The ability to custom-build a portfolio means you can eliminate the traditional performance drag from middlemen and hidden fees. "Moreover, it opens the door to delivering superior tax-optimized portfolio management for each client," says Escamilla.
Such an offering, today, tends be limited to the ultra-high net worth because it involves deep portfolio management talent and wealth management sophistication that, according to Escamilla, "is actually surprisingly rare in this industry. Those firms tend to require $5 or $10 million minimum account sizes because, at that level of differentiation, they can. And their offering is rarely automated. But make no mistake, it is a far more complex business model, especially without the help of software tools like we are building at Impact Labs."
Instead, the typical or 'legacy' wealth management business model puts clients into one-size-fits-all, or 'fits-many', buckets or 'model-portfolios' of mutual funds & ETFs, thus sacrificing both customization and tax-efficiency or after-tax performance. "I believe the business model of these firms has become optimized on 'other things', apart from maximizing client-performance and satisfaction: top banks reported wealth management operating profit margins of 22-26% this summer. Meanwhile the industry continues to score among the bottom on 'trust' measures."
As for today's ETF-based 'robo-advisors', "we could rebalance their portfolios on the back of a napkin," says Escamilla. "There's far more complexity involved when rebalancing a diversified 50 or 100-stock portfolio while optimizing for client-specific goals. What helps us sleep at night is having our CTO, David, a 20-year enterprise software veteran behind the automation of our offering."
The portfolio generation tools and front-end are handled by Escamilla, Seksaria and the offshore development team, managed by Co-Founder Catalin Cioloca. Co-Founder/CTO David Berkman can focus on the real-time portfolio rebalancing and optimizing engine.
Berkman is no stranger to automated tax-optimized portfolio management. A decade ago, long before the term 'robo' gained favor in the industry press, he was VP of Engineering at Active Index Advisors where he built one of the first enterprise-scale automated portfolio management engines, before the company was acquired. The core product at Active was delivering S&P 500 performance with superior after-tax results and various other customization options.
An unprecedented level of portfolio customization is available today: ImpactAdvisor LLC
ImpactAdvisor LLC is an example of this next-generation business model and is the first wealth advisor to offer fully-customized, Socially-Selective℠ Investing for mainstream investors. The California-Registered Investment Advisor in San Francisco is the first with full access to the Impact Labs software tools and APIs.
ImpactAdvisor serves a wide range of clients today. Some are passionate about causes such as climate change, tobacco and military/weapons. Others are simply interested in superior after-tax performance. Some are Trump fans; others are passionate about Clinton. What about you?