Direct indexing is becoming a core capability for wealth managers, FTSE Russell survey finds

FTSE Russell, LSEG’s global index provider, today announces the findings from its third annual direct indexing survey. The results, based on the responses of 400 US-based financial advisors, suggest direct indexing is now a mainstream capability for wealth management, although implementation, integration and education remain key barriers to broader adoption. Adam Gebler, Head of Wealth, Americas, at FTSE Russell, said: “As advisors’ familiarity with direct indexing increases, we are seeing a corresponding rise in adoption across virtually all measures over the last year. Future growth depends less on the benefits of direct indexing and more on solving educational and technology challenges. “Advisors are looking for practical support that can help them understand the investment case, select appropriate benchmarks and translate the benefits of personalisation and tax management into client conversations. As a global multi-asset index provider, FTSE Russell can support that effort with curated research and educational resources - including videos and webinars - that help providers equip advisors with the knowledge and confidence to implement direct indexing successfully.” Direct indexing adoption continues to accelerate Well over half of advisors (57%) report being extremely or very familiar with direct indexing, up from 49% last year. Usage has increased from 33% to 41%, allocations increased from 13% to 17% of advisor AUM, and the average percentage of clients per advisor increased by 25% (from 16% to 20%), indicating that direct indexing is becoming more deeply embedded in advisor practices. As expected, tax benefits topped perceived benefits with over four in 10 current users (42%) mentioning tax efficiency/tax-loss harvesting as a reason they expect to increase their use of direct indexing over the next 12 months. Most advisors (83%) are currently using or plan to use direct indexing in the next 12 months, up from 76% in 2025. Current and planned usage by channel jumped significantly, with wirehouse/traditional firms rising from 47% to 63% and the RIA channel doubling from 15% in 2025 to 30% this year. There is also broad confidence (83% of advisors) that advancements in AI will accelerate the growth of direct indexing, up from 81% in 2025. Implementation challenges limit adoption Overall, 78% of advisors still report some friction in implementation. More than half (59%) say integrating direct indexing into existing technology stacks is challenging, up from 52% last year. Independent broker-dealers face the greatest integration challenge, with 65% reporting difficulties compared to 51% at wirehouse/traditional firms. Despite growing momentum, only 15% of advisors say implementation is “very easy,” up slightly from 13% in 2025. However, perceptions rise sharply with experience: 45% of advisors who are “extremely familiar” with direct indexing say implementation is “very easy.” Direct indexing is increasingly viewed as a necessity in modern wealth management An increasing majority of advisors agree that direct indexing is essential to remain competitive, rising from 52% in 2025 to 57%, which was strongest among wirehouse/traditional channels at 69%. Most advisors (83%) also agree that direct indexing has helped them grow and strengthen high-net-worth relationships. Perceived benefits for wealth clients beyond tax optimisation reinforce this view. Most advisors (82%) believe direct indexing offers personalisation not available through traditional ETFs and mutual funds, up slightly from 2025 (79%). Advisors with larger practices ($500M+ AUM) were more likely to strongly agree with this view. Further, nearly nine in 10 (87%) agree that direct indexing is a valuable tool for coordinating investment and tax management across multiple accounts within a client household. Younger, larger-practice advisors leading direct indexing movement More than three in four (77%) advisors under 45 are extremely or very familiar with direct indexing, compared to 57% of advisors ages 45–54 and 49% of those 55+. They are also more likely to see it as strategically important, with 65% agreeing direct indexing is essential to remain competitive in wealth management, versus 54% of advisors ages 45–54 and 55% of those 55+. Over two thirds (68%) of advisors at practices with $500M+ AUM are extremely or very familiar with direct indexing, versus 53% among smaller practices. They are more likely to view it as essential to stay competitive (61% vs. 55%), more confident discussing it with clients (78% vs. 64%), and, among current users, more likely to plan to increase usage over the next 12 months (77% vs. 61%). Education gap offers significant opportunity for direct indexing providers and partners The majority of advisors (86%) expressed interest in building their knowledge of direct indexing, with 30% indicating they are “very interested”, underscoring an opportunity for providers. Interest in direct indexing education is highest among younger advisors (45%) and wirehouse/traditional channels (44%). Over two thirds (68%) indicated they are at least “somewhat” confident talking to clients about direct indexing. Confidence is higher among younger advisors (82%), larger practices (78%) and wirehouse/traditional channels (80%). Cost emerging as a significant barrier Barriers to adoption are evolving, with “cost” rising cited by 29% of advisors up from just 19% in 2025. Conversely, “lack of client demand,” which was the top response (45%) in 2025, fell notably to 35% in 2026. “Complexity makes educating clients difficult” (33%) and “my understanding and knowledge of direct indexing” (31%) remained among the top challenges. Notes to editors: The 2026 FTSE Russell Direct Indexing Survey is an online quantitative survey of 400 US-based financial advisors from a mix of channels (wirehouse/traditional, independent broker-dealer and RIA) who have some familiarity with direct indexing. The respondents are aged 25+ with $20M+ AUM. 58% of respondents have $200M+ AUM with an average AUM across the total sample of $578M. The survey responses were collected between May 19th to June 19th, 2026. The survey was conducted by independent research firm 8 Acre Perspective.

Direct indexing is becoming a core capability for wealth managers, FTSE Russell survey finds

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