Every advisor has a version of the same pitch conversation. The market is volatile, you need to justify your fees, and clients want something that feels built for them—not assembled off a shelf. For a growing number of RIAs and independent advisors, direct indexing is becoming the answer to all three pressures at once. Industry projections put the segment on a path toward $800 billion in assets—and by most accounts, adoption is still in its early stages.
Alpha Vee Solutions sits at the center of the direct indexing movement—a financial technology firm whose portfolio infrastructure aims to make personalized, tax-efficient investing accessible at scale, not just for institutional players but for independent advisors and the clients they serve every day.
In conversation with The Wealth Advisor’s Scott Martin, Leigh Eichel, AlphaVee Co-Founder and CEO, and Brentt Shropshire, Managing Partner, Integrated Advisors, break down what direct indexing looks like in practice: what it delivers, how the implementation works day-to-day, and why the advisors who haven’t made the move yet may want to reconsider.
What Direct Indexing Is (and Isn’t)
Direct indexing is mischaracterized often enough that Eichel begins by defining what the approach is—and isn’t. It’s not a clever arrangement of ETFs, and it’s not active stock picking. At its core, he explains, direct indexing is “an investment strategy where the investor holds individual securities that make up an index,” held in a separately managed account rather than a pooled vehicle like an ETF or mutual fund.
Owning individual names—rather than a wrapper around them—unlocks all the flexibility direct indexing is known for. Without access to the underlying securities, an advisor has few levers to pull when it comes to taxes, values-based screening, or unwinding a concentrated position. The pooled fund structure keeps those levers out of reach by design.
There’s also a persistent myth that direct indexing is only for high-net-worth clients. Tech has advanced the opportunity well past that cohort of investors. Alpha Vee’s minimum is $50,000, and with fractional share capability, accounts can go as low as $5,000. “It’s not for just high-net-worth individuals anymore,” Eichel says. “The tech is there now, everyone. Please take a close look at it.”
The Tax Alpha Argument
Ask Eichel which benefit he could talk about all day, and the answer is immediate: tax-loss harvesting. It’s the most tangible, most measurable, and arguably easiest value-add an advisor can deliver—and direct indexing is uniquely positioned to maximize this tax-saving strategy.
When a client’s portfolio is built of individual securities, an advisor can identify positions sitting at a loss and harvest them to offset gains elsewhere, without liquidating the overall portfolio or disrupting market exposure. In contrast, a mutual fund investor has no control over when distributions are recognized or which positions are sold. The advisor is essentially a passenger.
The alpha generated through disciplined tax-loss harvesting tends to land between 1% and 2% annually, Eichel points out—returns that compound meaningfully over a client relationship. That’s “probably the easiest alpha to give your clients,” he says, and it doesn’t require a market call or a concentrated bet to achieve.
Alpha Vee’s strategies are built to pursue that tax alpha systematically—continuously monitoring individual positions and seeking to capture losses in a way that a model created with pooled vehicles simply cannot replicate.
“Tax-loss harvesting is a great differentiator, helps justify fees, easy to implement with the right tech and the right investment strategies,” Eichel says. “At the end of the day, holding individual securities allows some flexibility for tax-loss harvesting. And for a lot of client accounts, that can make a lot of sense.”
Personalization Beyond Performance
Tax efficiency gets a lot of attention, but it’s only one dimension of what makes direct indexing feel different to clients. The ability to construct a portfolio that genuinely reflects someone’s values, sector preferences, and existing holdings objectives is harder to quantify—but it’s what deepens a relationship.
Alpha Vee’s approach seeks to take a 360-degree view of each client at the portfolio construction stage. That can mean tilting toward ESG factors, screening out an employer’s stock, excluding specific sectors, or building in a factor preference—all without sacrificing the index-tracking discipline underneath. The customization is built into the model, not bolted on afterward. “The client feels connected with you,” Eichel says, “that you understand their desired goals and outcomes.”
For clients with restricted stock units or inherited portfolios carrying significant embedded gains, direct indexing might also offers a path forward that traditional portfolio rebalancing can’t replicate. Rather than triggering a taxable event by selling a concentrated position outright, individual losses within the direct index can be harvested over time to offset those gains incrementally. Eichel calls this approach a “tax-neutral unwinding strategy”—one that aims to reduce tax exposure without forcing the client’s hand.
The Differentiation Question Every Advisor Should Be Asking
There’s a competitive angle to direct indexing that doesn’t always make it into the product conversation, but Eichel believes it belongs front and center. Adoption among advisors remains relatively low—meaning the majority are still delivering similar-looking ETF portfolios with limited room to explain what makes their approach worth the fee.
Direct indexing changes that calculus. It gives an advisor a concrete, demonstrable reason why a client’s portfolio is built differently—and it creates natural opportunities to show that work over time, through tax reports, customization conversations, and rebalancing updates. “If everyone’s putting their clients in SPY and a couple of ETFs,” Eichel asks, “how are you different?”
The advisors who have adopted direct indexing, he observes, are consistently among the faster-growing practices. The strategy is reaching a point where not offering it will be harder to explain than offering it.
How It Works on the Ground
Theory aside, a lot of advisors have hesitated because they assume personalized portfolio management at scale means complexity at scale. Shropshire’s experience suggests otherwise.
Using iRebal® within the Schwab platform, Shropshire’s workflow begins with a template. He provides that spreadsheet to Eichel’s team, they complete it based on the agreed-upon strategy for that client’s risk profile, and Shropshire reviews and uploads it. From there, the model populates within iRebal, the underlying securities and allocations are visible, and rebalancing can be set up as a partial or full adjustment on whatever schedule makes sense.
Timeliness is usually the first objection, and Shropshire takes a direct approach. The first time, working through four to five models manually, Shropshire estimates the process took about 30 minutes. After that, “it was less than five minutes.” Four rebalances a year at five minutes each. The math is hard to argue with.
Shropshire’s recommendation to any advisor setting up with Alpha Vee for the first time is to get all the right people in the room: “Whether you’re with Schwab, whether you’re with Fidelity, whoever you custody with, the first time you do it, ask Leigh or someone from his team to join you. Then get someone from their team, and let them walk you through the process.”
Alpha Vee’s strategies are available across a wide range of custodial platforms—including Schwab, Smartleaf, FusionIQ, Advyzon, Amplify, and several others—and the onboarding friction that advisors might expect simply isn’t there.
“You’ll probably be amazed at how simple it actually is, but it’ll allow you to move past any headaches or speed bumps that you may have later,” Shropshire says. “Plus, the first time, you are dealing with people’s money, so you want to be as accurate as you potentially can.”
Building a Practice Around the Model
Where direct indexing is heading isn’t just toward individual client customization—it’s toward full model portfolio construction using multiple direct indexes layered together. Alpha Vee has developed what Eichel describes as a “next level” approach in which an advisor can build a set of model portfolios—conservative, moderate, aggressive, and variations in between—each composed of blended direct indexes, and apply those models across clients of different sizes and sophistication levels.
Shropshire uses exactly this approach, blending Alpha Vee strategies to create allocation models he can apply consistently while still adjusting within each account as needed. It means the quarterly rebalancing is just as clean for a $75,000 account as it is for a $750,000 one. The personalization scales; the operational overhead doesn’t.
“No one fits into one bucket,” Eichel notes. “Everything can be completely scaled, completely customized for every single client.”
A Window That Won’t Stay Open
The advisors adopting direct indexing now are building a meaningful head start. The technology is accessible, the minimums are low, and the implementation is genuinely manageable—even for a solo practice or small team. But the window for differentiation narrows every year.
As Eichel notes, “The question, whether you ask it now, I’m convinced you’ll ask in a year or two, is: Are you falling behind if you don’t go down this path and start looking at it?”
He and his Alpha Vee team are available for one-on-one conversations and live demos—and given that the hardest part, by most accounts, is simply getting started, a first call costs a lot less than another year on the sideline.
“It’s a relatively seamless process once you understand it and know it and are comfortable with it,” Shropshire says. “And so for someone like me, working with Leigh, it’s a no-brainer.”
