Arizona Tribune - FTSE Russell Announces Directing Indexing Survey

LONDON, UNITED KINGDOM / ACCESS Newswire / May 27, 2025 / FTSE Russell, the global index provider, announced today the findings from its second annual direct indexing survey. The results, based on the responses of over 400 financial advisors, suggests continued strong growth for direct indexing. The report, provides insights that could help mitigate barriers to adoption and uncovers different advisor perceptions by age and channels.

Ryan Sullivan, Head of Buy-Side Americas at FTSE Russell, said: "Direct indexing providers need to identify the next wave of advisor use cases and make access to technology tools easier. Our survey suggests that younger advisors and those from the wirehouses are increasing their use of direct indexing and providers need to address the challenges of implementation and integration to stay competitive in the wealth market."

Advisors Signal Strong Growth for Direct Indexing

In a sign that advisors have accepted direct indexing as a product offering with distinct client benefits, the majority plan to use it more over the next 12 months. Of the third (33%) of advisors already using direct indexing, most (67%) intend to increase usage in the next 12 months. Additionally, more than four in 10 (43%) advisors plan to start using it during this time. Just a quarter (24%) of advisors aren't using direct indexing and don't plan to. The vast majority (81%) of advisors expect advancements in AI and automation will help drive the growth of direct indexing.

Usage was highest among wirehouse advisors, with 49% using direct indexing. Among all advisors using direct indexing, wirehouse advisors are most likely to plan to increase usage at 82%, compared to 60% for traditional full-service advisors, 60% for advisors at independent broker-dealers and 53% for RIAs.

NextGen and Wirehouse Advisors View Direct Indexing as Vital to Remain Competitive in Wealth Management

While a majority (52%) of all advisors agree at least somewhat that direct indexing is "becoming an essential offering to remain competitive in wealth management," 63% of NextGen advisors, defined as those under age 45, agreed with this statement versus just 47% of advisors over age 55. The disparity was even greater across channels with 69% of wirehouse advisors supporting this view versus 49% of traditional, 53% of independent broker-dealers and 34% of RIA advisors.

Most (74%) also agree direct indexing is an essential offering to have available for HNW/UHNW clients and prospects. The majority of advisors view the strongest level of opportunity for direct indexing with wealthier clients, with 86% indicating a "moderate" or "strong" opportunity for ultra-high-net-worth ($10M+) and 85% for high-net-worth ($1M-$9.99M) clients. Fewer than half (49%) of advisors see a moderate or strong opportunity with affluent ($250,000-$999,999) clients and just 20% see opportunity with the mass affluent ($100,000-$250,000) segment.

Familiarity Breeds Adoption

Almost all (92%) advisors have some familiarity with direct indexing, with NextGen and wirehouse advisors reporting the highest level of familiarity. Not only are NextGen advisors more likely to be using direct indexing than advisors over age 55 (44% vs 26%), but they are more likely to indicate they are "extremely" or "very" familiar with direct indexing.

Perceived Implementation Challenge

The majority of advisors are aligned on the main benefit of direct indexing: tax management. Almost three quarters (72%) view tax-loss harvesting as a benefit, with over six in 10 (62%) seeing tax efficiency as a benefit. However, advisors have a perception that implementation is a significant challenge. Only 13% of advisors expect implementation will be "very easy" while 79% of advisors say they "expect some level of friction" and 52% agree that "integrating direct indexing into my existing technology stack is challenging." However, 89% of advisors currently using direct indexing indicated implementation is "very easy" or "somewhat easy," likely suggesting that providers should refocus educational efforts.

Barriers to Entry

Advisors noted several barriers reflecting a combination of educational and operational challenges. When asked about barriers to using direct indexing with a client, "lack of client demand" was the top response (45%), followed by "complexity makes educating clients difficult" (34%) and "my understanding and knowledge of direct indexing" (27%).

Despite feedback on lack of client demand, advisors indicated that their clients are actually seeking the benefits of direct indexing. "Tax-efficient investing strategies" as well as "volatility" and "risk management" rank high on the list of services and planning topics clients ask about most often.

To review the full report, please click here

ENDS

Notes to editors:

The 2025 FTSE Russell Direct Indexing Survey was an online quantitative survey of 402 financial advisors from a mix of channels (wirehouse, traditional, independent broker-dealer and RIA) who had some familiarity with direct indexing. The respondents were aged 25+ with $20M+ AUM. 44% of respondents had $200M+ AUM with an average AUM across the total sample of $419M. The survey responses were collected between March 7^th and March 24^th, 2025. The survey was conducted by independent research firm 8 Acre Perspective.

Contacts:
Simon Henrick/Gexler Diaz
+44 (0) 20 7797 1222 
[email protected]

About FTSE Russell, an LSEG business

FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide. FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 70 countries, covering 98% of the investable market globally.

FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $18.1 trillion is benchmarked to FTSE Russell indexes. Leading asset owners, asset managers, ETF providers and investment banks choose FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives.

A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance and embraces the IOSCO Principles. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering.

FTSE Russell is wholly owned by London Stock Exchange Group.

For more information, visit FTSE Russell.

About LSEG

LSEG (London Stock Exchange Group) is a leading global financial markets infrastructure and data provider, playing a vital social and economic role in the world's financial system. With our open approach, trusted expertise and global scale, we enable the sustainable growth and stability of our customers and their communities. We are dedicated partners with extensive experience, deep knowledge and a worldwide presence in data and analytics; indices; capital formation; and trade execution, clearing and risk management across multiple asset classes.  LSEG is headquartered in the United Kingdom, with significant operations in 65 countries across EMEA, North America, Latin America and Asia Pacific. We employ over 26,000 people globally, more than half located in Asia Pacific. LSEG's ticker symbol is LSEG

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SOURCE: FTSE Russell

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A.Ruiz--AT