The index, rebuilt around your client
For most of the past two decades, the story of wealth management has been the story of the ETF. Low cost, diversified, easy to implement. It won the argument against high-fee active management, and it deserved to.
But in the United States, where the ETF revolution started, something is emerging alongside it. Advisers serving high-net-worth clients are increasingly asking a different question: why should my client own a unit in a fund that holds the index, when they could own the index itself?
That is direct indexing. And the latest data from FTSE Russell suggests it has moved from a niche tool for ultra-wealthy family offices to a core capability of modern advice.
What the FTSE Russell 2026 survey found
In September 2026, FTSE Russell published its third annual direct indexing survey, drawing on responses from 400 US-based financial advisers across wirehouse, independent broker-dealer and RIA channels.
The headline is simple: adoption is accelerating on almost every measure.
• Usage rose from 33% to 41% of advisers in a single year.
• Allocations grew from 13% to 17% of adviser AUM.
• The share of clients per adviser using direct indexing rose by a quarter, from 16% to 20%.
• 83% of advisers are using it now or plan to within 12 months, up from 76% in 2025.
• Usage in the independent RIA channel doubled, from 15% to 30%.
But the more telling numbers are about why:
• 83% of current users say direct indexing has helped them grow and strengthen high-net-worth relationships.
• 82% believe it offers personalisation not available through traditional ETFs and managed funds.
• 87% see it as a valuable tool for coordinating investment and tax management across multiple accounts within a household.
• 57% now say it is essential to remain competitive in wealth management, rising to 69% in the large traditional firms.
This is not a story about a product. It is a story about how advisers are differentiating themselves with their most valuable clients.
It also sits on top of a longer trend. Cerulli Associates projected back in 2021 that US direct indexing assets would grow at around 12% a year through 2026, ahead of ETFs, managed funds and separate accounts. The FTSE Russell data suggests that forecast was, if anything, conservative on adoption.
So what exactly is direct indexing?
With an ETF, your client owns units in a trust. The trust owns the shares. Your client gets the index return, but they also inherit the fund's structure: its tax position, its holdings, and its one-size-fits-all approach.
With direct indexing, your client owns the underlying shares directly, in their own name or entity, in a portfolio engineered to track a chosen benchmark such as the ASX 200 or a global index. Technology handles the heavy lifting: rebalancing, tracking error management, and tax-lot optimisation across dozens or hundreds of individual positions.
The result is index-like returns with something an ETF can never offer: a portfolio that belongs to one client, not to every unitholder at once.
Five reasons Australian advisers should be paying attention
1. Tax management that's actually personal
Tax efficiency topped the list of benefits in the FTSE Russell survey, and for good reason. When a client owns individual shares, every position has its own cost base. That opens up genuine, year-round tax management:
• Realising capital losses on individual stocks that have fallen, even in a year when the index itself is up, to offset gains realised elsewhere. In Australia, unused capital losses can be carried forward indefinitely.
• Managing the timing of gains around the 12-month CGT discount (50% for individuals and trusts, one-third for complying super funds).
• Selecting which parcels to sell when rebalancing or raising cash, rather than accepting whatever a fund's distribution happens to deliver.
Inside an ETF, losses on individual holdings stay trapped inside the trust. Your client can't use them.
A note on doing this properly: the ATO has been clear (TR 2008/1) that selling and immediately repurchasing the same asset primarily to generate a tax loss, a "wash sale", may attract the anti-avoidance provisions. Well-designed direct indexing addresses this by replacing a sold holding with a similar, not identical, exposure, so the portfolio keeps tracking its benchmark while the loss stands on its own. This is exactly where good technology and good governance matter.
2. Solving the concentration problem Australian portfolios are known for
The Australian market is famously top-heavy. A handful of banks and miners dominate the ASX 200. Many HNW clients already have large exposures to those same names through employee share schemes, legacy holdings, or a career spent in one sector.
Buying an ASX 200 ETF on top of that simply doubles down. Direct indexing lets you exclude or underweight specific stocks or sectors and let the portfolio compensate elsewhere, keeping it on benchmark while reducing the concentration risk your client actually carries.
3. Transitioning legacy portfolios without a tax bill
One of the most common conversations in advice: a new client arrives with a portfolio of direct shares accumulated over 20 years, with substantial embedded gains. Selling everything to buy a model portfolio means crystallising a large CGT liability on day one.
Direct indexing can absorb existing holdings in-specie, keep the ones that fit the target index, and transition the rest gradually and tax-consciously. For many clients, this alone is the difference between staying stuck in an unmanaged portfolio and finally getting a disciplined strategy in place.
4. Values and preferences, without giving up the index
Whether it's an ethical exclusion, a sector the client doesn't want to own, or a company they have a personal conflict with, direct indexing lets the portfolio reflect the client, without forcing a choice between their values and a low-cost, diversified core.
5. Coordinating the whole household
Australian HNW families rarely hold wealth in one place. There's the personal account, the family trust, perhaps a company, and the SMSF, each with a different tax rate and a different horizon.
That 87% figure from the survey matters here. Direct indexing gives advisers the ability to manage the household as one balance sheet: placing assets in the right entity, tax aware management of positions, and tailoring an SMSF in accumulation differently from one in pension phase.
Why this matters for advisers, not just investors
The survey's most important finding may be this: advisers who use direct indexing say it deepens their high-net-worth relationships.
It's easy to see why. Any adviser can make use of ETFs in their clients portfolios, and increasingly, so can a robo-advice app. A direct indexing portfolio is a demonstration of value: a visible, ongoing record of realised losses, concentration managed, and preferences honoured. It gives advisers something meaningful to talk about in every review meeting.
The survey also found younger advisers and larger practices leading the charge. Among advisers under 45, 77% are extremely or very familiar with direct indexing, and 65% say it's essential to stay competitive. That's the generation that will be inheriting and building the next wave of advice businesses, and serving the clients who will receive the intergenerational wealth transfer now underway.
The barriers are real, and solvable
FTSE Russell is candid that adoption isn't friction-free. In the US, 78% of advisers still report some implementation friction, and 59% say integrating direct indexing into their existing technology is challenging. Cost and education remain the other common hurdles.
But the data also shows friction falls sharply with experience. Only 15% of advisers overall say implementation is "very easy", yet that rises to 45% among those extremely familiar with it. And 86% of advisers want to learn more.
In other words, the barrier isn't the concept. It's having the right platform and the right partner.
Australia is where the US was a few years ago
In Australia, direct indexing is still early. Most advisers know the ETF playbook well, and far fewer have had the tools to offer something more tailored at a comparable cost and scale.
That's why Briefcase exists. We've built the technology to make direct indexing practical for Australian advisers and their clients: Australian tax rules, Australian entities, Australian benchmarks, and the integration and reporting advisers need to run it efficiently across their book.
The US data tells us where this is heading. Early adopters may help shape emerging practices for Australian HNW clients.
Start the conversation
For advisers: If you'd like to see how direct indexing could work across your client base, from legacy portfolio transitions to household tax management, get in touch with the Briefcase team for a walkthrough.
For investors: If you hold significant investments across multiple entities, carry concentrated positions, or simply want a portfolio built around you rather than around everyone, speak to your adviser about direct indexing, or contact us to learn more.
[Book a conversation with Briefcase →]
Sources: FTSE Russell, 2026 Direct Indexing Survey (September 2026), based on 400 US-based financial advisers; Cerulli Associates, direct indexing growth projections (2021).
This article contains general information only and does not take into account your objectives, financial situation or needs. It is not personal financial or tax advice. You should consider seeking advice from a licensed financial adviser and a registered tax agent before making any investment decision.
Direct index portfolios are available through Briefcase to Wholesale Investors through a Managed Discretionary Account (MDA) via their platform of choice.
Briefcase Pty Ltd is an Australian financial technology firm that holds an Australian Financial Services Licence (AFSL number 546257)