Hortz: Can you share any further thoughts or recommendations for advisors and investors on employing direct indexing into their investment portfolios?
Gordon: Make a direct indexing solution the core of your taxable equity portfolio with a 50-70% weight and choose the broadest index you are comfortable with rather than trying to blend multiple indices. Do not tinker with your direct index allocations — that is what alpha-generating satellite portfolios are for — but do adjust the portfolio during life-cycle events. Feeding the direct indexing portfolio with additional cash will help refresh cost basis and reinvigorate tax-loss-harvesting opportunities, just as funding liquidity needs with appropriate tax lots can improve tax outcomes.
We welcome advisors interested in separate accounts and direct indexing to visit our Knowledge Center page on our website where we share ongoing research, thought leadership, infographics, videos and advisor practice management issues addressing these topics.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors — Ultimus Fund Solutions, NASDAQ, FLX Networks, Pershing, Fidelity, Voya Financial, Advisorpedia and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).