Subject: Re: Direct Indexing with Tax Loss Harvesting

Here comes the rain on the parade. ;-) Sorry.
I have learned that the first thing to consider is "how can this go wrong?" When somebody is trying to sell you something, they never tell you of the problems or downsides.

" There’s no better sign of optimism for future growth than a rush of asset managers to add direct indexing to their toolkits."

No, this is just the normal behavior of asset managers swarming to do whatever people seem to be wanting. Not unlike streetwalkers. They'll happily do what you want, whether it makes sense or not.
Whatever is the latest fad, there will be plenty of companies in the industry who will provide it.


"But Telling Them Apart Can Be Difficult"

Like I said above.


"direct-index offerings to retail investors with minimum investments as low as $5,000 ... $100,000 ... $250,000"

Get real. Any account less than tens of millions is going to get a cookie-cutter portfolio, with the option of potentially naming stocks or industries to omit or overweight.

Heck off the top of my head here's a way to do it. Fred wants S&P500 but no tobacco companies. Sam wants S&P500 and double allocation to tobacco stocks for the high dividend yield. So the advisor buys S&P500 and allocates those stocks away from Fred and to Sam. Just an entry in a spreadsheet.


Look at the fees. $250,000 at 0.35% is $875 a year. What kind of personalized treatment are you going to get for $875? For comparison, that's about 1 1/2 hours of a cheap lawyer's fee.



Tax Loss Harvesting

I think Tax Loss Harvesting is largely just paper trickery to flummox people, using cherry-picked numbers. A good portfolio has very few holdings at a large loss. And for small losses, pfft, who cares? Not enough to make a difference. And now you've restarted the holding period clock and reset it to short-term.
A portfolio with stocks that have been held for several years will have almost everything being a gain.