The Promise of Direct Indexing—And the Disconnect Holding It Back
Wall Street has a habit of falling in love with its own ideas.
Sometimes, that passion pays off—ETFs revolutionized access to low-cost, diversified portfolios. But other times, in its eagerness to scale institutional tools for a broader market, Wall Street misreads the actual users—especially financial advisors and their clients.
We’re now seeing this play out again with direct indexing.
On paper, the idea is powerful: customization, tax efficiency, control—the ability to own the index, not just invest in a fund that tracks it. And for ultra-high-net-worth clients and institutions, direct indexing is effective. It was created specifically for them.
But as the industry rushes to bring direct indexing downstream to the retail and mass…
