Why Evan, an engineering leader, moved from ETFs to direct indexing
Evan M. is a 37-year-old software engineering manager with a wife and two kids. He’s been investing for a long time. When he first got started, Evan self-managed his portfolio. Then, a few years ago, he got married, and his finances got more complicated, with things like a family trust and college savings accounts.
Before Frec
He thought it was time to hand his portfolio over to professionals, so he and his wife partnered with a financial advisor company. But they wanted to investigate new, modern ways of managing their money
“With our financial advisor, it was mostly hands-off,” Evan says. “They would do a portfolio review quarterly or even once a half.” As far as Evan could tell, their advisor mostly kept them invested in the same funds. “We felt like our money was put in investments, and that was that.”
When they did get updates on their investments, they thought they could get higher performing results, and without high management fees.
So Evan started to look for alternatives.
Why Frec?
Direct indexing appealed to him because he would get similar returns as he was getting from his ETFs, while saving money on advisory and ETF fees. “What really set Frec apart was the fact that they had a really solid product,” Evan told us.
“I think Frec is definitely a really good modern approach on some of these older concepts,” he says. “ETFs are true and tested, and giving folks a different way of investing in the market while saving more money is really appealing.”
Evan now uses Frec for direct indexing, self-directed trading, and making interest on his cash. He’s continued to be impressed. After using Frec for six months, here’s what he has to say:
“My experience with Frec to date has really given me the confidence that my money is very well managed, and as a result I’ve been transferring more and more assets to Frec.”
Returns & savings
Evan’s favorite thing about Frec? “The killer performance that I’ve seen so far.”
He’s used a lot of other robo-advisors and other fintech tools, but “Frec seems to maximize tax loss harvesting opportunities better than any other product that I’ve used.”
Whereas he feels that other tools use a naïve approach to tax loss harvesting, “it’s clear that Frec’s approach is much more granular and effective, which has led me to more savings.”
Diversification
Evan sees the S&P 500 as a good core product to invest in, because it’s historically been pretty stable and performant. But he’s also at a life stage where he and his wife can afford to have an aggressive risk tolerance.
One of their primary investment goals is to have “a very well diversified set of investments for all of our money that we’re saving for our family and our future.”
Luckily, Frec offers not only direct indexing, but also self-directed trading. You can buy and sell shares of ETFs and stocks, and even trade at the individual stock lot level in a tax-aware way. Evan has found that Frec’s direct investing product meets a lot of his diversification goals.
Liquidity
Evan uses Frec’s Treasury feature to keep a buffer of money that he needs to use in the short term, because “it’s a great way to park money without the volatility of a lot of other investment vehicles.”
Before Frec Treasury, Evan would have a lot of money just sitting in a brokerage account, earning virtually no interest at all. But now that he can fund investments directly from his Frec Treasury account, he never has to keep any money in non-interest bearing accounts.
“To me, Frec Treasury is just a no-brainer just because of the yield,” Evan told us. Our APR is 5.01% — 10x the national average for savings accounts.
Transparency
Evan appreciates Frec’s transparency — one of his favorite things about the platform is that “it’s very easy to understand what you’re investing in.”
He also likes that Frec’s fee structure is transparent. “I feel like with a lot of other companies, that’s muddled in with the cost of investments,” he told us, “and you don’t really know how much you’re paying or how much you’re not saving as a result. I think Frec does a really good job of laying all of that out and giving you a true understanding of the cost of these investment products.”
That trust was “extremely critical” to his decision to put more money into Frec.
Recap
- Evan is a family man. He has two kids, and his finances have become complicated with a family trust and college savings accounts.
- He and his wife paid a financial advisor, but felt like they could do better with their money. Management fees were high, and they didn’t have much insight into where they were invested.
- Frec appealed to Evan because direct indexing has similar performance to an ETF, with additional tax benefits. He likes the stability of the S&P 500, and he feels that Frec is a “good modern approach” to investing in it.
- Today Evan uses Frec for direct indexing and making interest on his cash. He’s seen “killer performance” from Frec’s direct indexing, and he finds Frec Treasury to be “a no-brainer just because of the yield”.
As Evan continues to grow his portfolio with Frec, and in his other investments, the losses he harvests through direct indexing will play a crucial role in reducing his tax bill.
Along the way, he’ll still have customized exposure to the market through reliable indexes, while taking advantage of 5.01% APR on idle cash in his Frec treasury account. And come tax season – all he’ll have to do is export a single document from Frec that summarizes all of his trading activity in one click. If you want to benefit from direct indexing just like Evan, click here to sign up for Frec.
This testimonial may not be representative of the experience of other customers. There is no guarantee of future performance or success. The 5.01% yield is based on the highest 7-day SEC yield return for Frec’s Treasury product as of 03/18/2024 and will vary.
Investing involves risk, including the risk of loss. Frec’s Treasury product is provided by Frec Advisers LLC, a registered investment adviser, and is not FDIC insured, not bank guaranteed, and may lose value. Frec’s treasury rate is subject to change. Brokerage services are provided by Frec Securities LLC, member FINRA/SIPC. Securities in your account protected up to $500,000. For details please see www.sipc.org.
Frec Advisers LLC and Frec Securities LLC are both wholly owned subsidiaries of Frec Markets, Inc.
