Is Direct Indexing Right for You? Tailored Strategies for High-Net-Worth Investors in Tampa Bay

Direct indexing enables targeted tax-loss harvesting, allowing you to “harvest” losses from certain stocks in order to offset the capital gains of others. This can significantly reduce your overall tax liability and maximize after-tax returns.

With direct indexing, you own the individual stocks rather than shares of a pooled fund, which means you can harvest losses at the individual security level. This creates more opportunities to offset gains and reduce your tax bill throughout the year—something ETFs and mutual funds can’t offer.

Yes. Direct indexing allows you to gradually reduce a concentrated stock position over time without triggering large capital gains taxes, helping you manage risk while maintaining tax efficiency.

Direct indexing offers several advantages over traditional ETFs and mutual funds, including potential tax savings, greater customization, and the ability to manage concentrated stock positions effectively. Unlike mutual funds or ETFs, you can tailor your portfolio to your financial goals, exclude certain stocks or sectors, and optimize for tax savings by utilizing tax-loss harvesting.

Direct indexing involves owning the individual securities in an index. Custom indexing allows investors to design a personalized index from scratch based on specific investment criteria. Both approaches offer flexibility and tax benefits, but choosing between custom indexing and direct indexing will depend on your particular needs and goals.

Yes, direct indexing can be valuable for estate planning and charitable giving. By implementing tax-efficient investing strategies, you may be able to more effectively transfer highly appreciated stock and other assets to your loved ones after death and minimize capital gains taxes.

With direct indexing, you can customize a range of portfolios, including those based on popular indices like the S&P 500, NASDAQ, MSCI, along with WATB’s Dividend Growth portfolio. Additionally, you can set restrictions on specific sectors or stocks, adjust for tax efficiency, and implement concentrated stock strategies to diversify over time. This flexibility makes direct indexing an excellent choice for investors seeking custom indexing solutions tailored to their individual goals.

The time it takes to transition a portfolio using direct indexing depends on several factors, including your portfolio size, tax considerations, and the complexity of concentrated stock positions. Typically, it can take anywhere from 3 to 5 years to fully adjust a portfolio in a tax-efficient manner, especially when managing overconcentration within a portfolio.

We typically work with individuals and families who have at least $1 million in investable assets, though our technical account minimum is $100,000. Most of our clients come to us with more complex financial needs—often with portfolios ranging from $2 million to $5 million or more.

If you’re wondering whether we might be a good fit, feel free to give us a call at (813) 642-7730 or contact us—we're always glad to point you in the right direction.