Direct indexing has emerged as a popular strategy for investors looking to enhance tax efficiency by owning individual stocks rather than traditional ETFs or mutual funds. Its growing adoption is driven by the rise of passive investing and advancements in fractional share technology, making it more accessible to a broader range of investors.

By selectively selling underperforming stocks and replacing them with others in the index, investors can realize capital losses to offset future gains—a key advantage of this approach.

However, tax benefits are generally front-loaded, meaning that over time, opportunities for tax-loss harvesting diminish as portfolio gains accumulate. To sustain tax efficiency, investors can reinvest funds, donate appreciated stocks, or explore strategies like transitioning holdings into ETFs through in-kind transfers.

Finsum: As direct indexing expands beyond passive strategies, advisors are also exploring actively managed SMAs with built-in tax management features, offering more tailored solutions.

The financial industry is evolving rapidly, with new technologies helping advisors streamline operations and enhance client relationships. Investing in the right tools can give firms a competitive edge while also improving talent retention, as many advisors seek better technology. 

Essential tools include CRM software, which centralizes client interactions, financial planning software for scenario modeling, and risk analysis tools to assess investment strategies. Fi360 offers data and technology specific to advisors that can improve their efficiency. 

Additionally, scheduling software simplifies appointment management by automating bookings and reminders. Selecting the best options—such as Salesforce for CRM, Fi360 for financial planning, or Calendly for scheduling—can optimize efficiency.

 Finsum: With Fi360 advisors have the right technology and can focus more on delivering personalized financial strategies and strengthening client trust.

Managed accounts are set for a major transformation as current models often benefit providers more than participants due to high fees. Employers must evaluate how providers personalize portfolios and whether participants actively engage with these features. 

While managed accounts generally offer strong investment management, fee structures can erode some of their value, requiring significant equity exposure increases to match target date fund returns. Personalized portfolio returns tend to fall within a narrow 5% to 7% range, with minor impacts from strategic asset allocation shifts. 

A subscription-based model could better align incentives, offering lower-cost options for less engaged participants while providing premium services for those seeking greater customization. Inconsistencies in provider methodologies, driven by factors like risk tolerance and retirement readiness, highlight the need for greater transparency. 

Finsum: This is an interesting strategy, but if done properly managed accounts are a great vehicle for retirement and defined contribution.