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March 31, 2022 at 09:55 AM
Charles Schwab says it expects to give RIAs and DIY investors a direct indexing tool by late April.
The firm, which announced plans for Schwab Personalized Indexing in October and filed regulatory documents for the offering Thursday, says the program should give advisors and investors “powerful tax management and portfolio management capabilities.”
Unlike with ETFs and index mutual funds, direct indexing involves direct ownership of securities and thus can involve a greater level of tax management for investors, it explains.
The program will have an account minimum of $100,000, compared with $250,000 and up at some other firms (like Goldman Sachs), though Fidelity said earlier this year that it aims to roll out a direct indexing product with a $5,000 minimum.
Schwab’s direct indexing fees start at 0.40%, which matches the planned Fidelity Managed FidFolios. FidFolios is set to go live tomorrow for investors seeking a professionally managed direct indexed offering; it includes fractional shares with direct indexing capabilities, according to Fidelity.
“Direct indexing has long been available to ultra-high net worth investors and institutions able to meet very high investment minimums,” according to Schwab President Rick Wurster. “But now, … we’re able to lower the barriers to direct indexing for more investors and the advisors who serve them.”
