How does Frec Make Tax-Efficient Investing Easy for Everyone?

Tax-efficient investing is not something overly familiar to many of us. Today we're going to pop the hood on Frec, a platform that's looking to simplify tax-efficient investing for just about everyone. We've spoken with Frec's very own Amberly Jones, Head of Growth, who's helped break down why Frec, who it's for, and how it works. What's become clear is that Frec really distinguishes itself in a market filled with traditional ETFs and robo-advisors. Their approach to direct indexing and tax loss harvesting provides a unique and effective way for investors to benefit.

We'll peel back the layers of Frec's platform and help you discover the intricacies of their fee structure and why it matters to your financial growth. We'll dig into how Frec ensures your investments and personal data remain protected. Join us as we unpack these questions, offering you a clearer picture of how Frec aligns with your investment goals and personal values.

"Direct indexing allows for a level of tax management that ETFs and most robo-advisors simply can't match," Amberly Jones, Frec - Head of Growth.

Frec's approach to direct indexing allows investors to own individual stocks within the index they want to track and facilitates strategic buying and selling of the underlying stocks to realize tax losses. This capability can significantly outpace traditional ETFs, where investors only own shares of a fund, not the underlying assets. This distinction is crucial for tax purposes as it allows Frec to implement tax loss harvesting more effectively.

Robo-advisors, while automated and generally efficient, typically operate at the ETF level and can't dive into the granularity allowed by direct indexing. They swap ETFs to harvest losses, which can lead to less precision and potentially greater tracking error relative to the index. In contrast, Frec's method involves daily monitoring and trading of individual stocks, ensuring closer adherence to the index and more opportunities for tax optimization.

For investors, this means potentially greater savings and a more efficient portfolio. The ability to claim losses on individual stocks and offset them against capital gains can provide a tangible financial benefit, reducing taxable income and enhancing overall returns.

"Frec's fee structure is designed to democratize access to sophisticated tax-efficient investing strategies," Jones states.

By charging as low as 0.10% annually, Frec positions itself competitively against traditional financial advisors and platforms, which often charge higher fees. For example, Wealthfront charges 0.25%, and traditional brokerages can charge even more, especially for personalized direct indexing services [1].

This lower fee structure can significantly impact investment growth over time. Consider two scenarios where an investor contributes $100,000 to a portfolio:

● With Frec's 0.10% fee, the annual cost is just $100 per $100,000 invested. ● With a traditional advisor charging 1.0%, the cost is $1,000 annually per $100,000 invested.

Over decades, these savings compound, potentially resulting in tens of thousands of dollars more in the investor's pocket. This makes Frec an attractive option for long-term investors looking to maximize their returns while minimizing costs.

Security is rightly paramount at Frec, as Amberly Jones highlights, "We employ robust encryption and two-factor authentication to protect our client's data and assets." Frec partners with Apex Clearinghouse to hold client assets, which provides an additional layer of security. Apex is a well-established financial institution that is required to adhere to regulatory standards that require a higher level of security for your assets than unregulated entities.

As a registered investment fiduciary, Frec is legally obligated to act in its client's best interests, a duty that not all investment platforms are bound to. 

Additionally, Frec's broker-dealer is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). For details, please see www.sipc.org.

The combination of advanced security technology, strategic partnerships, and strict regulatory compliance helps Frec build a trustworthy environment for its users, ensuring that both their data and investments are secure.

One of the standout features of Frec is its ability to customize investment portfolios to align with individual investment goals or beliefs. Jones shared, "Our platform allows investors to exclude specific stocks or sectors, making it possible to personalize portfolios to align with personal investment goals or beliefs." An example where this comes into play might be a socially conscious investor who may want to avoid industries that don't align with their values, such as fossil fuels or tobacco.

Frec provides the tools and flexibility needed to tailor investments:

• Exclude up to two sectors from any index that has multiple sectors. 
• Add or remove up to ten stocks from any index.

This level of customization allows investors to invest according to their ethical preferences and helps them manage risk by diversifying their holdings more precisely according to their risk tolerance and financial objectives.

Transferring existing investments to Frec is designed to be a smooth process, with support available every step of the way. "We understand that transferring portfolios can seem daunting, which is why we provide detailed guidance and direct support to ensure a seamless transition." Frec's platform facilitates both full and partial transfers, allowing investors to move existing stocks or ETFs efficiently.

Potential challenges during the transfer process can include managing the timing of sales to avoid tax implications and ensuring that investments remain aligned with the investor's strategy during the transition. Frec addresses these challenges by:

● Providing clear timelines and expectations for transfers. ● Offering a custom portfolio analysis that outlines different options for getting started.

By supporting investors through this process, Frec ensures that they can start benefiting from its direct indexing and tax optimization strategies without unnecessary stress or complications.

Frec's innovative approach to direct indexing and tax loss harvesting seems to stand out from traditional ETFs and robo-advisors, offering investors a more precise and efficient way to manage their portfolios. By owning individual stocks within an index, Frec users benefit from tailored tax management strategies that can significantly enhance financial returns. Coupled with a competitive fee structure, Frec democratizes sophisticated investment strategies so that these benefits are accessible at a fraction of the cost typically associated with high-end financial advisors.

Security measures and customization options are another key benefit and feature that shows Frec's commitment to providing a secure, personalized investment experience. Whether you're a socially conscious investor looking to align your portfolio with your values or someone seeking to optimize financial growth, Frec provides the tools necessary to achieve your goals. As you consider the array of investment opportunities, remember that the right platform is crucial for realizing potential. Frec seems well-positioned to really shake things up here.

If you are interested in getting started you can sign up here or book a free zoom consultation. If you get started by November 1st, you'll earn a $250 sign on bonus.

Disclaimer: Money Made is not a Frec customer. Frec paid a one-time fee for this article. This article is for informational purposes only and does not constitute investment advice. Investing involves risks, including the potential loss of principal. We are not registered investment advisors and do not recommend the purchase or sale of any securities. Always conduct your own due diligence and consult with a licensed investment professional before making any investment decisions. Frec's direct index strategy aum fees range from 0.1-0.45% and minimum investment amount ranges from $20,000 to $50,000.

References: [1] Direct index to retail aum fees of others are: Fidelity: 0.40%, Wealthfront: 0.25% and wealth advisors average 1% based on 2023 Advisory HQ report.