In times of market turbulence, emotions often override logic, causing investors to make decisions that run counter to their long-term goals. The Behavioral Benefits of Direct Indexing offers a timely and powerful perspective on how personalization can serve as a stabilizing force in volatile markets.

Drawing from principles in behavioral finance, this white paper reveals how direct indexing does more than provide tax benefits or risk management — it rewires the way investors relate to their portfolios. It explores three powerful psychological forces: the IKEA Effect, the Endowment Effect, and the power of personalization. Each one increases a client’s sense of ownership, which research shows can lead to more disciplined, less reactionary investment behavior.

The paper also highlights how direct indexing can combat status quo bias and choice paralysis by empowering clients with customized portfolios aligned to their personal values — without overwhelming them with decisions. By giving investors a role in shaping their portfolio, direct indexing increases emotional investment in the strategy, which, in turn, fosters resilience when markets fluctuate.

For financial advisors, this behavioral edge is critical. In a commoditized landscape where product differentiation is increasingly hard to achieve, direct indexing offers a compelling way to deepen client relationships and encourage long-term thinking. It enables a new kind of conversation — one that connects money with meaning, emotion with outcomes.

Whether you're seeking to retain nervous clients during bear markets or simply differentiate your advisory practice, this white paper arms you with insight into how direct indexing can transform not just portfolios, but investor behavior.

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What You'll Discover

  • Greater Emotional Investment: Clients who help shape their portfolio are more likely to stay the course through market volatility.
  • Personalization That Drives Discipline: Aligning investments to client values encourages long-term commitment and better behavior.
  • A Behavioral Advantage for Advisors: Direct indexing isn’t just about performance — it’s about creating clients who are less reactive and more resilient.

Who Should Read This?

  • Advisors Navigating Market Uncertainty: Those helping clients manage emotional responses to market swings and stay aligned with their long-term plans.
  • Firms Focused on Client Retention: Practices looking to strengthen loyalty through personalization and greater emotional connection to investment strategies.
  • RIAs Seeking Meaningful Differentiation: Advisors who want to offer more than model portfolios and demonstrate added value through customized, behaviorally sound investing.
Financial decision making

Why This White Paper Is a Must-Read

Volatile markets test even the best investor plans. This white paper helps advisors understand how to use direct indexing not just as an investment strategy — but as a behavioral tool that strengthens client commitment, enhances personalization, and encourages long-term financial success.

Empower Better Behavior
Through Personalization

Uncover the psychology behind direct indexing and how it can help your clients stay invested, even when markets are anything but steady.

Download the White Paper

Orion Behavioral Finance (“Orion BeFi”) is the branding name of various tools and services related to behavioral finance offered by Orion Advisor Solutions, Inc. and its subsidiaries. Orion BeFi tools are crafted to help investors and their financial advisors integrate behavioral psychology research into their investment decisions. Orion BeFi tools and services do not provide investment advice.

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

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.

Information contained herein is not intended to constitute accounting, legal, tax, security, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Orion Portfolio Solutions, LLC does not render tax, accounting, or legal advice.

The views expressed herein are exclusively those of Orion Portfolio Solutions, LLC, a registered Investment Advisor, and are not meant as investment advice and are subject to change. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation, and the particular needs of any specific person.