Direct indexing has emerged as an important wealth management strategy, giving advisers a powerful way to personalise portfolios and help improve after-tax outcomes for clients.
Direct indexing combines technology innovation with competitive market dynamics, enabling advisers to build customised, low-cost and efficient portfolios for their clients. In some cases, these portfolios closely track major indices; in others, they reflect a customised version tailored to the client’s needs.
As direct indexing gains momentum, FTSE Russell’s third annual survey of US financial advisers finds that 41% now use the strategy, up sharply from 33% a year ago. The growth story is not over: among advisers who have not yet adopted direct indexing, 42% plan to do so within the next 12 months, signalling that industry momentum is continuing to build.
What is driving adoption? Our research points to growing demand for personalisation, tax management and tools that can help advisers compete for high-net-worth (HNW) clients. It also highlights where growth is happening fastest and the challenges that could shape the next phase of adoption.
Adoption accelerates, with younger advisers and larger firms leading the way
Direct indexing adoption is growing, and some parts of the adviser market are moving faster than others. Wirehouse/traditional advisers lead the way, with 63% now using direct indexing, compared with 33% of independent broker-dealer advisers and 30% of registered investment advisers.
Younger advisers also stand out. Among advisers under 45, 77% say they are extremely or very familiar with direct indexing. Firm size matters, too: 68% of advisers with practices of US$500 million or more in assets under management (AUM) report being familiar with direct indexing, compared with 53% at smaller firms.
Advisers are also expanding where they use direct indexing. Ninety-seven percent of users apply direct indexing to US large-cap equities, while 43% now use it for international developed market equities and US small-cap equities. Across the survey, 83% of advisers agree that AI and automation will help drive future growth.
Tax management and personalisation strengthen the value proposition
As use grows, advisers increasingly see direct indexing as an important part of their client offering. More than half (57%) say it is essential for remaining competitive, rising to 65% among advisers under 45 and 69% among wirehouse/traditional advisers.
Tax-loss harvesting remains the leading benefit of direct indexing, cited by 66% of advisers. But its appeal extends beyond tax management:
- 82% agree direct indexing delivers a level of personalisation that ETFs and mutual funds cannot match.
- 87% say it enables coordination of investment and tax management across multiple accounts within a household.
- 83% agree that direct indexing has helped them grow or strengthen their HNW client business.
Opportunities in education and implementation
Education is one area where providers can add value. Nearly nine in 10 advisers (86%) are interested in building their knowledge of direct indexing, while 32% are not yet confident discussing it with clients. Advisers are interested in a range of learning formats, including one-to-one training with asset managers or platform providers.
Operational challenges also remain: 59% say integrating direct indexing with their technology stack is challenging, while just 15% describe implementation as “very easy”. Making direct indexing simpler to implement and integrate, while helping advisers build their knowledge, could support the next stage of adoption.
Explore the full findings
Read the full report to explore the findings and what they could mean for the next phase of direct indexing growth.
Your index matters
FTSE Russell works across the market with direct indexing platforms and wealth managers, delivering innovative index solutions spanning the asset classes increasingly in demand from direct indexing users. Our consultative approach fosters partnerships, drawing on the learnings and market intelligence gained from supporting direct indexing clients and constructing transparent, well-recognised global indices. The index you use matters, and we are here to provide time-tested solutions that advisers and their clients can trust.
About the research
The survey was conducted by 8 Acre Perspective and gathered views from 400 financial advisers between 19 May and 9 June 2026. Respondents represented wirehouse/traditional, independent broker-dealer and registered investment adviser channels. Fifty-eight percent worked at firms with US$200 million or more in assets under management, with an average of US$578 million across the full sample.
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