At the 2025 Schwab IMPACT Conference in Denver, Colorado, Jeff Chang, Co-Founder of Vest, shared insights that every financial advisor should understand as target outcome investments continue their rapid transformation of modern portfolios. From pioneering the first Buffer Fund in 2016 to launching ground-breaking solutions like Synthetic Borrow™, Vest has played a pivotal role in making option-based strategies accessible, scalable, and safer for financial professionals and their clients.

The Origins and Impact of Target Outcome Investing

Vest’s introduction of the Buffer Fund nearly a decade ago marked a paradigm shift for financial advisors. Buffer ETFs and Target Outcome Investments® package option strategies into simple fund wrappers, so advisors can deliver clarity and risk management without the legacy barriers of direct option trading.

Chang explained, “One of the biggest reasons why financial advisors have been reluctant to hedge with options largely deals with compliance and scalability. If you buy a fund, as opposed to writing calls for every single client, you gain the ability to scale the benefits of options and derivatives inside fund form. That’s been really game changing to the industry. ”

Unlike structured notes or annuities with protections that expire, these funds offer perpetual portfolio solutions with predefined outcomes, letting advisors use defined-risk tools in asset allocation and model construction. “Advisors who have ever written cover calls for their clients… they’d be doing nothing except trading options. The perpetual structure fundamentally changes what’s possible,” Chang added.

Accelerating Growth and Industry Influence

Today, Vest manages over $55 billion across more than 250 defined outcome products. It’s not just about product innovation; Vest has helped set industry standards, unlocking widespread adoption of new tools for the ETF universe. Chang reflected, “Finance moves slower than tech, because you can't build something in isolation. You need partners, exchanges—the entire industry has to go with you. ”

Several pivotal innovations catalyzed growth:

  • Bringing flexible exchange options (“flex options”) off the shelf and into mainstream trading, multiplying daily contract volumes in ETF wrappers.

  • Helping expand what can be “in-kind” transferred within ETFs to include derivatives, not just stocks or bonds.

  • Creating new trading mechanisms like delta-adjusted closes for simplified and transparent execution.

“These are the types of things that then explode the space. Now, everybody can see and build, because those game-changers opened doors for the whole industry,” said Chang.

Addressing Misconceptions: Clarity Over Complexity

One persistent industry myth: derivatives automatically equal outsized risk. Chang was quick to correct this. “A lot of times, when people look at derivative-based products, they think they’re more risky. In fact, in many cases like buffer ETFs and buffer funds, they are designed to have less risk, less volatility. That’s a common misconception. ”

He noted how options, when packaged with defined guardrails, actually create wealth protection. “Maybe it was back in the day when Warren Buffett called derivatives ‘weapons of mass destruction. ’ If you use them wrong, yes, but they can provide a tremendous amount of wealth protection when engineered carefully. ”

Synthetic Borrow™: Portfolio Credit Reimagined

Vest’s latest launch, Synthetic Borrow™, takes portfolio lending and flips it on its head. Traditional margin lending via banks is slow, paperwork-heavy, and typically comes with significant risk or forced liquidation triggers. Synthetic Borrow™ allows advisors to generate sample borrowing terms with indicative rates—no banks, no credit checks, no forced sales, in seconds.

This innovation leverages listed derivatives, not credit lines: “We utilize this strategy in a lot of our funds as a way of funding. The cool thing about exchange-traded options is, since they’re cleared through the OCC, there’s no credit risk associated with them. The interest rates inside option structures are very close to Treasury,” Chang said.

He explained, “If you’re currently paying 8% to 10% borrowing against your securities portfolio, Synthetic Borrow™ can dramatically improve, potentially reducing, the interest rates. Plus, many traditional loans aren’t tax-deductible, while in this case, option appreciation can be structured for beneficial tax treatment. ”

Advisor Use Cases and Portfolio Impact

Who benefits? Chang pointed out, “There are hundreds of billions of dollars getting borrowed against portfolios today. If investors are already borrowing against their portfolio, this is a great alternative. ”

Advisors can now offer clients institutional-grade financing directly via an intuitive platform, potentially lowering borrow costs while reducing operational friction, ushering in a new era of portfolio liquidity management for advisory practices.

Commitment to Transparency, Education, and Technology

As regulators pay closer attention to derivatives strategies in retail investing, Vest has invested equally in risk management and advisor education. “We have a massive team on the ground, educating advisors—meaning hand-to-hand combat to ensure investors have a very clear understanding of what the solution does, what are the risks, and what is the achievement objective,” said Chang.

Vest’s technology leads the way in transparency. “With our Synthetic Borrow™ platform, you can go through every step and actually see what you’re getting, instead of handling four different options separately. Technology makes it easier not just for education but for better understanding and risk control. We do this across all our target outcome and buffer funds, providing a 360° view for advisors and clients alike. ”

The Future of Defined Outcome Investing

Vest continues to bridge the gap between complex, institutional-level strategies and practical, advisor-ready solutions—in the form of ETFs, UITs, and digital platforms. The goal, Chang emphasized, is to make the benefits of sophisticated derivatives broadly accessible—empowering advisors to build resilient, outcome-oriented portfolios in all markets.

As defined outcome strategies gain mainstream traction, Vest’s leadership in product design, risk management, and digital integration ensures financial professionals are equipped for whatever market challenges lie ahead.

Ready to discover what Target Outcome Investments® can do for your clients? Learn more about Vest’s solutions and Synthetic Borrow™ at vestfin. com.