WA MAGAZINE JanFeb PDF A - Flipbook - Page 29
2024 Wealth Advisor Subscriber Survey
hile a slim majority (57%) of the advisors we polled this year have adopted some
form of direct index solution, it’s clear that participation was voluntary, and those
who know most about this approach to wealth management are overrepresented in the
numbers. These are the pioneers.
And they skew a little bigger and a lot more diverse than the control group. Advisors
who say they’re using direct indexing report 43% more AUM than those who don’t.
The popularity of this approach increases with scale. Focus on advisors in the
$500 million bracket, direct indexing is no longer an exotic niche looking for mass acceptance. It’s already the mainstream. When you hit $1 billion, fund wraps get rare.
Adoption goes across all channels. The rationale is loud and clear. Direct indexing
automates and outsources the part of the wealth management platform that can be
automated and outsourced: the portfolio itself.
W
the right partners in place, the complexities they create can be overcome. The
advisor simply needs to embrace the new
approach, understand its potential (and
its limits), and deploy it in circumstances
that make sense.
YOUR COMPETITIVE EDGE
Direct indexing is gaining a lot of attention because many major players in the
industry see this as a crucial approach to
wealth management and want to capitalize on its future potential.You are their
target customer.
Although direct indexing is clearly a
popular bit of jargon supported by significant marketing budgets, all that money
has failed to give advisors a clear explanation of what is going on here, why it
matters, what types of clients can benefit,
and whether it makes sense for you.
After all, advisors tend to be problem solvers. When a new approach to
managing money fails to clearly identify
the problems it was designed to solve,
advisors find it hard to recognize the new
approach as a “solution” rather than a
complication or at best a distraction from
more pressing problems.
When we polled our audience of
wealth managers, nearly all (90% plus)
remembered hearing something about
“direct indexing” in the past year. The
term resonated. Everyone knew it’s a
factor in the modern industry.
Barely 30% felt confident enough
about this stuff to be able to define it in
their own words. These are the smartest
advisors on the planet. That’s a problem.
But it’s also an opportunity if you’re in
that elite 30% of the industry who knows
what’s going on, how to deploy these capabilities for various client segments, and
how to communicate why it’s better.
Most advisors are behind the curve
and need a better grasp on how to stay
relevant.You all want help finding a partner who can streamline your operations
instead of making the investment process
exponentially harder.
Cut through the noise. Get moving.
THEWEALTHADVISOR.COM
Does your firm use a direct index solution?
70%
60%
50%
40%
30%
20%
10%
0%
NO
YES
Why do you use your current direct index solution?
I wanted to focus my time on
attracting new clients
34.04%
Meeting with existing clients and
focusing on client retention
35.58%
Operational cost savings and
gained efficiency
33.33%
Focus more on holistic
financial planning
34.04%
Limit risk of being sued for poor
investment performance
7.88%
Gain better investment
performance for my clients
28.27%
What do you wish your current
direct index solution would do?
12.66%
12.1%
27.99%
36.15%
53.16%
17.3%
ESG
investing
Biblically
responsible
investing
401(k)
solutions
Income
investing
Tax-loss
harvesting
Gains
budgeting
