No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Friday, October 10, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home Financial Planning

Direct indexing keep clients invested in volatile markets

by TheAdviserMagazine
5 months ago
in Financial Planning
Reading Time: 3 mins read
A A
Direct indexing keep clients invested in volatile markets
Share on FacebookShare on TwitterShare on LInkedIn


“Everyone has a plan until they get punched in the face.” — Mike Tyson

Advisors are all too familiar with the best laid financial plans getting KO’d by market volatility. When the market is turbulent, it can lead to investors making emotionally charged trading decisions driven by the basic human need to seek safety. 

Greg Kanarian, investment strategist at Natixis

We know that this is counterproductive to long-term goals and that “time in the market” beats “timing the market.” Morningstar data spanning a decade reinforces the point that trading in and out of the market can be costly and that investors routinely underperform their own investments.

The research, spanning 2014 to the end of 2023, found that equity fund investors earned a dollar-weighted return of 10%, while the category’s total return was 10.8%. In other words, investors lost 0.8% per year by not adhering to a buy-and-hold strategy.

READ MORE: ​​Direct indexing’s biggest lure isn’t a customized investment portfolio

The study further distinguishes between active and passive investments, showing that active equity funds returned 10.4% and passive funds returned 11.2%. Active investors underperformed by 1.2% while passive investors underperformed slightly by 0.2%. Passive investors seem more likely to buy and hold, minimizing the performance gap.

table visualization

Navigating volatile markets

Direct indexing, an equity strategy that seeks to match the performance of an index on a pretax basis and outperform on an after-tax basis, is often lauded for its tax efficiency. Less recognized is the important role it plays in the behavioral aspect of investing, specifically how it helps clients stay invested during volatile markets.

When I present talks on the benefits of direct indexing, I share this quote from “The Simple Path to Wealth” by financial writer JL Collins: “Everybody makes money when the market is on the rise. But what determines whether it will make you wealthy or leave you broken and bloody at the side of the road is your ability to stay the course and ride out the storms.” 

Financial advisors play a crucial role in helping clients navigate market drawdowns. They listen to client concerns, offer empathy, counsel, perspective and can prevent them from making rash decisions. Advisors know that volatility is the price of admission and double-digit drawdowns are common, even in great years.

READ MORE: Tariffs, taxes and market tumult: Navigating uncertain, volatile times

Fully invested

But lacking this perspective, a client’s urge to do something, anything, to stop the bleeding is real. This is when clients second-guess their investments and their advisors and look to raise cash or sell out of risk assets altogether. 

Direct indexing helps clients stay invested during sell-offs by scratching that itch to do something while maintaining market exposure. When volatility rises, the direct indexing manager has more tax-loss harvesting opportunities, allowing them to turn unrealized investment losses into tax write-offs.  

Importantly, when a stock is sold for a loss, it’s immediately replaced with another index constituent to avoid the wash sale rule, keeping the client fully invested. Since direct indexing accounts are separately managed accounts, the client has full transparency and can see the loss-harvesting trades in real time.  

While each direct indexing manager sets their own loss thresholds, they all systematically and proactively tax-loss harvest accounts. Realized losses that exceed the $3,000 ordinary income deduction limit can be carried over to offset future gains when the market eventually recovers.

Being able to see tax-loss harvesting trades reassures clients that their advisor has set them up for success regardless of market conditions. Advisors can illustrate to clients the benefits of ongoing tax management and refocus them on long term financial goals. They can also short-circuit clients’ goal-jeopardizing urge to act emotionally.



Source link

Tags: ClientsdirectindexinginvestedmarketsVolatile
ShareTweetShare
Previous Post

Key highlights from Advance Auto Parts’ (AAP) Q1 2025 earnings results

Next Post

FIFA Joins Ava Labs To Launch Its NFT Blockchain On Avalanche

Related Posts

edit post
How RIAs use LinkedIn and other social media

How RIAs use LinkedIn and other social media

by TheAdviserMagazine
October 9, 2025
0

This is the 21st installment in a Financial Planning series by Chief Correspondent Tobias Salinger on how to build a...

edit post
32 Degrees Prime Deals Sale: Up to 80% off Winter Clothing!

32 Degrees Prime Deals Sale: Up to 80% off Winter Clothing!

by TheAdviserMagazine
October 9, 2025
0

Wow! Don’t miss these hot deals at 32 Degrees this week! For a limited time, 32 Degrees is having a...

edit post
Merrill, LPL say advisor education is key to AI push

Merrill, LPL say advisor education is key to AI push

by TheAdviserMagazine
October 9, 2025
0

Wealth management firms say artificial intelligence could eventually improve nearly every part of their businesses. But when advisors were asked...

edit post
Small Personal Loans: How to Get a ,000 Loan or Less

Small Personal Loans: How to Get a $1,000 Loan or Less

by TheAdviserMagazine
October 9, 2025
0

The average minimum loan amount offered by personal loan lenders that NerdWallet reviews is $2,000. But some lenders offer small...

edit post
Creative Planning to more than double AUM with SageView deal

Creative Planning to more than double AUM with SageView deal

by TheAdviserMagazine
October 9, 2025
0

The RIA giant Creative Planning is acquiring SageView Advisory Group in a deal set to bolster its expertise in retirement...

edit post
Viva Signature Cloth Paper Towels, 12 Triple Rolls only .52 shipped!

Viva Signature Cloth Paper Towels, 12 Triple Rolls only $18.52 shipped!

by TheAdviserMagazine
October 9, 2025
0

Stock up on paper towels with this deal! Amazon has this Viva Signature Cloth Paper Towels, 12 Triple Rolls for...

Next Post
edit post
FIFA Joins Ava Labs To Launch Its NFT Blockchain On Avalanche

FIFA Joins Ava Labs To Launch Its NFT Blockchain On Avalanche

edit post
BNB Rally To All-Time High Grows Strong, But This Crucial Zone Must Hold

BNB Rally To All-Time High Grows Strong, But This Crucial Zone Must Hold

  • Trending
  • Comments
  • Latest
edit post
What Happens If a Spouse Dies Without a Will in North Carolina?

What Happens If a Spouse Dies Without a Will in North Carolina?

September 14, 2025
edit post
Pennsylvania House of Representatives Rejects Update to Child Custody Laws

Pennsylvania House of Representatives Rejects Update to Child Custody Laws

October 7, 2025
edit post
What to Do When a Loved One Dies in North Carolina

What to Do When a Loved One Dies in North Carolina

October 8, 2025
edit post
Does a Will Need to Be Notarized in North Carolina?

Does a Will Need to Be Notarized in North Carolina?

September 8, 2025
edit post
DACA recipients no longer eligible for Marketplace health insurance and subsidies

DACA recipients no longer eligible for Marketplace health insurance and subsidies

September 11, 2025
edit post
Tips to Apply for Mental Health SSDI Without Therapy

Tips to Apply for Mental Health SSDI Without Therapy

September 19, 2025
edit post
What To Expect From Waste Management’s Report

What To Expect From Waste Management’s Report

0
edit post
This  Aldi Find Is a Must-Have for Homeowners

This $15 Aldi Find Is a Must-Have for Homeowners

0
edit post
TCS results, AI bets and metals rally: Parag Thakkar sees value across IT, metals and banking sector

TCS results, AI bets and metals rally: Parag Thakkar sees value across IT, metals and banking sector

0
edit post
Going for Broke | Mises Institute

Going for Broke | Mises Institute

0
edit post
Binance founder CZ receives alert from Google about possible government-backed attacks

Binance founder CZ receives alert from Google about possible government-backed attacks

0
edit post
Are Post Offices Open or Closed on Columbus Day 2025?

Are Post Offices Open or Closed on Columbus Day 2025?

0
edit post
TCS results, AI bets and metals rally: Parag Thakkar sees value across IT, metals and banking sector

TCS results, AI bets and metals rally: Parag Thakkar sees value across IT, metals and banking sector

October 10, 2025
edit post
Alaska Energy Metals settles K in insider debt with share issuance (OTCQB:AKEMF)

Alaska Energy Metals settles $95K in insider debt with share issuance (OTCQB:AKEMF)

October 10, 2025
edit post
China’s property slump this year looks worse than expected, S&P says

China’s property slump this year looks worse than expected, S&P says

October 10, 2025
edit post
Binance founder CZ receives alert from Google about possible government-backed attacks

Binance founder CZ receives alert from Google about possible government-backed attacks

October 10, 2025
edit post
XRP Price Struggles Below  as Futures Interest Drops and Whales Dump 440 Million Tokens

XRP Price Struggles Below $3 as Futures Interest Drops and Whales Dump 440 Million Tokens

October 10, 2025
edit post
REITs and InvITs offer low-risk, mid-teen returns; ideal horizon is 5-10 years, says Embassy REIT CFO

REITs and InvITs offer low-risk, mid-teen returns; ideal horizon is 5-10 years, says Embassy REIT CFO

October 9, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • TCS results, AI bets and metals rally: Parag Thakkar sees value across IT, metals and banking sector
  • Alaska Energy Metals settles $95K in insider debt with share issuance (OTCQB:AKEMF)
  • China’s property slump this year looks worse than expected, S&P says
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.