Digital wealth management platform RobustWealth is the latest technology company to bring direct index investing to advisors. The tool, which goes live in May, will allow advisors to invest directly in the underlying securities of an index, with lower transaction costs and tax-loss harvesting.
“This feature is a game changer for advisors, who can now use the RobustWealth platform to implement a strategy that was historically reserved for high-net-worth clients,” said RobustWealth founder and CEO Mike Kerins. “Just as ETFs shook up the mutual fund market, direct indexing tools will dramatically change and improve modern portfolio construction as we know it.”
The tool brings the benefits of separately managed accounts—for years the favored tool of advisors to wealthy clients—to the masses. (Read more about direct indexing here.)
Using direct indexing, advisors can build cheap, customizable portfolios for clients based on indexes or model portfolios, using fractional shares of stocks, automatically rebalanced, with lower transaction costs.
It can also provide clients with cheap rules-based models that can be tweaked to accommodate a client’s legacy investments or individual mandates, while still adhering to a targeted risk profile.
The new feature is available to all advisors on RobustWealth’s platform, which currently has $900 million in assets.
Some automated investment service firms—Wealthfront being the first—already offer direct indexing to clients for tax-loss harvesting, while other wealthtech firms have similar tools for financial advisors. Orion Advisor Services, for example, went live with its direct indexing tool on March 1. SMArtX Advisory Solutions, a turnkey asset management platform that grew out of the alternative investment platform Hedgecovest, recently expanded its direct indexing platform to include 14 new direct indexing models from S-Network Global Indexes, one of which will be offered free of charge, with no platform or manager fees.
