Wealth Advisor Magazine September 2024 Edition - 33

Who Uses Direct Indexing?
RIA
21.19%
Wirehouse, i.e., Morgan Stanley, Merrill Lynch
10.6%
Independent, i.e., Commonwealth, LPL
7.95%
Other, accounting firm, law office, IRA Custodian
4.64%
Bank or Trust Company
3.97%
Family Office
3.97%
Would like to use direct indexing and would like to learn more.
3.97%
IBD
3.31%
Don't use direct indexing and have no plan for it.
40.4%
Wealth Advisor reader poll, 2024
version of the index that better aligns
with a client's specific circumstances,
preferences, and goals.
DEMOCRATIZATION
Historically, direct investments in
indexed securities were limited to
extremely affluent investors due to
the complexity and costs involved in
implementing and maintaining these
holdings. However, advancements
in technology have lowered these
barriers, making direct indexing more
accessible to a broader range of investors,
including the mass affluent and
emerging affluent segments.
While exchange-traded index
funds have dominated the market due
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to their operational efficiency and
scale, which minimizes fees, many
investors now seek the ability to tailor
their investments to better suit their
individual needs. Modern technology
has made it possible for financial
advisors to offer this level of customization,
signaling a shift from the onesize-fits-all
approach of traditional
index funds.
Direct indexing allows advisors
to go beyond the limitations of index
funds, offering the potential for
enhanced diversification, tax optimization,
and alignment with a client's
nonfinancial values. This approach
empowers advisors to act as a " quarterback "
for their clients' portfolios,
providing more personalized and
impactful financial strategies.
LEARN MORE
In an era where investors are increasingly
looking for more than just convenience
and low costs, direct indexing
offers a pathway to greater value. By
leveraging direct indexing, advisors
can better meet their clients' needs and
achieve more successful outcomes.
For those interested in exploring direct
indexing further, our comprehensive
Direct Indexing Buyers Guide is available
to help navigate the options and find
providers that can deliver the tax optimization,
customized solutions, and other
benefits that clients are seeking.
SEPT/OCT 2024 | 33
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Wealth Advisor Magazine September 2024 Edition

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