Experts From Angeles, Seeds Investor And Veriti Share Their Views On The Evolution Of Direct Indexing This Year
The Dow Jones Industrial Average, a technology we still use today, originated in the times when ticker tape parades used actual ticker tape. Financial mathematics advanced, giving rise to a plethora of indexes.
The next stage in index evolution brought us index funds, which enabled investments to easily track indexes. Now a third evolution is occurring via direct indexing, in which investors directly purchase the underlying assets of an index to mirror it without utilizing index funds.
Forwarded by technological advances, negligible trading fees and adaptation to new purposes, direct indexing is advancing rapidly. To learn where this year’s trends will take it as a wealth management tool, we spoke with several industry experts:
- Jonathan Foster, President and CEO of Angeles Wealth Management
- Zach Conway, Co-Founder and CEO at Seeds Investor
- Jim Dilworth, Managing Partner of Veriti Management
Featured below are Zach's answers:
Should the aged, static, direct-index portfolio be contributed to an exchange fund creating even better diversification or gifted to children as part of an estate plan?
For direct indexing, this year will usher in a period of augmented deliverables and lower prices. It will be a great time to be a user, for both advisors and clients.
Zach Conway, Co-Founder and CEO, Seeds Investor
Direct indexing has certainly increased in popularity both in the media and with investors. However, this trend will intersect with another one that clients have constantly demanded – a better experience.
According to New York Life Investments, more than 80% of investors over the age of 40 are show an interest in ESG investing. With the 24- to 39-year-old demographic, that number is over 90%. Investors are telling us what they want not only with their words but also their dollars, and advisors need to prepare for a conversation with the client about their values – and listen.
But direct indexing is a means to an end. Delivering a personalized experience involves much more than mere stock selection and should be infused into every stage of the client journey. Advisors who lean into this reality will be better positioned to unlock the true value of this technology.
Clients want to be understood – they want someone who will take the time to advise where they should invest based on their lifestyle, viewpoint and ethics and make those decisions with them.
