Direct indexing is a powerful investment strategy that can offer tax benefits over equivalent index mutual funds and ETFs, but its advanced nature is difficult to explain and creates a barrier for most investors. While it could benefit a broad audience, the challenge lies in simplifying the concept for those without a deep investment background. Companies offering direct indexing face the difficulty of crafting succinct messaging that resonates with the average investor.

Fintech companies like Frec tend to focus on the benefits and don't try to explain the internal mechanics to the general public (see https://lnkd.in/girfV4KN ). But most investors will want to know how the black box works before sending money to a company, and -- without this understanding -- investors can also inadvertently make tax mistakes by trading in other accounts.

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