Frec review 2024: Low-cost direct indexing and individual stock trading
- Stock trade fee
- $0
- Minimum deposit
- $20,000
Our verdict
Automated, direct index investing with tax-efficient strategies, individual stock trading and a high-yield Treasury account.
Frec's a low-cost direct indexing platform first and foremost. It offers five direct indexing strategies, with exposure to large-cap, mid-cap and small-cap US company stocks. Frec then steps in with automatic tax-loss harvesting, automatic portfolio rebalancing and automatic dividend reinvestment. Its five strategies include the S&P 500, S&P 500 Information Technology, CRSP US Large Cap, CRSP US Small Cap indexes and MVIS US Listed Semiconductor 25 Index. All for 0.10% in annual advisory fees and a $20,000 minimum investment, both of which are significantly lower than most competing direct indexing platforms. Meanwhile, trade individual stocks — available with fractional share trading — or earn a 5% yield on your cash with a Frec Treasury account. But unlike other direct indexing platforms, Frec doesn't yet offer a mobile app or access to human financial advisory services.
Best for: Low-cost direct indexing.
Pros
-
Low-cost direct indexing
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Select from five index-based strategies that span large and small US companies
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Automatic tax-loss harvesting
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Invest in individual stocks and ETFs
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Earn up to 5.01% on your uninvested cash with a Frec Treasury account
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Access a portfolio line of credit with competitive margin rates
Cons
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No mobile app
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No international strategies
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No access to human financial advisory services
Frec at a glance
| Feature | Rating | Details |
|---|---|---|
| Management costs and account minimums | ★★★★★ | Annual advisory fee of 0.10% and a minimum investment of $20,000 required for direct indexing. A $100 minimum is required for self-directed trading. |
| Investment options | ★★★★★ | Five direct indexing strategies, with exposure to large-cap, mid-cap and small-cap company stocks and the ability to exclude up to 10 stocks and 2 sectors from its S&P 500 index strategy. Also trade stocks, ETFs and money market funds. |
| Indexing dashboard | ★★★★★ | View your account value, portfolio performance, tax losses harvested, short- and long-term capital gains and losses and fees paid, with the ability to modify your holdings online. |
| Features and amenities | ★★★★★ |
|
| Customer support | ★★★★★ | Schedule a 30-minute call with a licensed Frec team member during normal business hours or contact support via email at help@frec.com. |
| Account fees | ★★★★★ | Low margin rates at 6.33% and an outgoing account transfer and outgoing wire transfer fee that’s on par with the competition. |
| Account types and signup process | ★★★★★ | Individual, trust and business margin accounts, with an account opening process you can complete online yourself. |
| Mobile app rating and security | ★★★★★ | Frec has no mobile app, but it offers two-factor authentication for customers to secure their online accounts. |
| Cash account | ★★★★★ | Frec’s Treasury account pays up to 5.01% yield as of July 2024, but customers are required to open a separate product and make manual transfers to earn the rate. |
To learn how our star ratings are calculated, read our methodology.
Frec is best for tax-minded investors looking for a low-cost direct indexing platform.
Frec offers a competitive, low-cost solution for investors interested in direct indexing. With two index-based strategies to choose from, Frec steps in as a potentially worthwhile platform for investors looking to take advantage of direct indexing’s many benefits. Its automatic tax-saving strategies let you harvest more losses than with traditional ETF-focused robo-advisors, and its annual fee undercuts many other direct indexing platforms.
What we like about Frec
Frec stands out for its low-cost direct indexing, user-friendly and informative indexing dashboard and high-yield Treasury account for uninvested cash. Its indexing strategies are growing in number and its individual stock trading with fractional shares lets customers build out their portfolio beyond indexing.
Low-cost direct indexing
Frec undercuts most of the competition with its low annual advisory fee and competitive minimum investment requirement. At an annual fee of 0.10% — similar to S&P 500 index funds — Frec comes in well below the annual costs of Fidelity’s, Charles Schwab’s and Wealthfront’s direct indexing products.
At $20,000, Frec’s minimum investment is also one of the most competitive. Take a look:
| Provider | Annual fee | Minimum investment |
|---|---|---|
| Frec | 0.10% | $20,000 |
| Fidelity Managed FidFolios | 0.40% | $5,000 |
| Schwab Personalized Indexing | 0.40% | $100,000 |
| Wealthfront Direct Indexing Portfolio | 0.25% | $100,000 |
Growing list of indexing strategies
Frec launched in late-2023 with two indexes available — the S&P 500 and the S&P 500 Information Technology indexes. It’s since added more.
In addition to these two S&P 500 indexes, Frec customer have access to the CRSP US Large Cap Index, the CRSP US Small Cap Index and the MVIS US Listed Semiconductor 25 Index. Between these five indexes, customers can get exposure to large-cap, mid-cap and small-cap US company stocks. You can also exclude up to two sectors when direct indexing into the S&P 500 and add or exclude up to 10 stocks from your chosen index. Meanwhile, Frec automatically checks for daily tax loss harvesting opportunities and automatically rebalances your portfolio.
High-yield Treasury account
Cash accounts are becoming a staple for many robo-advisors, giving customers a place to hold uninvested cash and earn a competitive interest rate on their money.
Frec’s Treasury account, which is a portfolio of money market mutual funds, pays a 5.01% interest rate as of July 2024.
This is the yield you’ll receive after the 0.20% annual fee for its Treasury account is deducted. Its treasury portfolio currently invests in the Schwab US Treasury Money Fund (SNSXX) and the Invesco Premier US Government Money Portfolio (FUGXX).
Trade individual stocks
Like other direct indexing platforms, Frec lets customers trade individual stocks in addition to direct indexing.
Individual stock trading can complement direct indexing by offering additional flexibility and customization to an investment portfolio.
According to Frec, it offers trading of most mega-cap, large-cap, and mid-cap stocks, as well as ETFs, exchange-traded notes (ETNs) and American depository receipts (ADRs) traded on major US exchanges.
Modern, informative and easy-to-use platform
Frec offers a modern investing platform that’s aesthetically appealing, intuitive and concise.
From your account dashboard, view your total assets and your different accounts, transfer funds or toggle over to the trade function to buy and sell individual stocks and ETFs. Here, you’ll find basic charts, trade volume data, open and close prices and simple buy and sell functions with market orders and limit orders.
Frec’s indexing dashboard’s got a number of helpful metrics to keep you informed of not only the performance of your portfolio in terms of returns but also your tax savings. Here are some of the features you can view and access from your Frec dashboard:
- Account value
- Portfolio performance
- Tax losses harvested
- Short- and long-term capital gains and losses
- Fees paid
Dashboard view
Trading view
Direct indexing setup
What is direct indexing?
Direct indexing is an investing strategy that involves investing directly in the individual stocks within a given index instead of investing in an index indirectly through an exchange-traded fund (ETF) or mutual fund.
With direct indexing, you own the underlying stock of the index instead of a fund tracking the index. This lets investors bypass fund management fees and gives investors a greater level of customization and control. Direct indexing also lets investors harvest tax losses at an individual security level and potentially lower their tax bills even further than tax-loss harvesting at the fund level.
Where Frec falls short
Frec continues to add new index-based strategies to its lineup. However, it doesn’t yet offer an international strategy like Schwab Personalized Indexing or Fidelity Managed FidFolios.
Frec also doesn’t have a mobile app, which is a must in today’s mobile-focused age. The company says it’s working to launch one, but until then, it’s one of the platform’s major drawbacks.
Lastly, Frec doesn’t offer access to any financial planning tools or human financial advisory services like its competitors.
Frec’s fees
| Minimum investment for direct indexing | $20,000 |
| Minimum investment for self-managed stocks | $100 |
| Direct Indexing annual fee | 0.10% |
| Treasury annual fee (Frec’s published Treasury interest rate is shown with this deduction included) | 0.20% |
| Self-managed portfolio trade fees | US-listed stocks, ETFs, ETNs and ADRs: $0 Mutual funds: $20 per trade |
| Portfolio line of credit | 6.33% |
| Wire transfer (domestic) | $25 |
| Returned check, ACH or stop wire transfer fees | $30 |
| Outgoing account transfer fee | $75 for full and partial account transfers |
Is Frec legit?
Yes, Frec is a legitimate company and is a registered broker-dealer and investment advisor. Frec was founded in 2021, is based out of San Francisco and is backed by investors from companies like Google, Meta, Brex and Greylock. Frec is also a fiduciary, so it’s legally bound to act in your best interest.
In terms of platform safety, Frec encrypts sensitive information and uses measures like two-factor authentication and auto-logout for additional security. The company’s transactional safety processes are also regularly audited by third parties.
Customer experience
Having only recently launched, Frec’s online customer feedback is sparse. It doesn’t have a Better Business Bureau (BBB) profile, nor is it reviewed on Trustpilot. Frec is mentioned throughout various subreddits, but, again, feedback is limited. However, the most recent comments from Redditors generally reflects satisfaction with its services and products — specifically with its low pricing and and user-friendly platform.
Frequently asked questions
What is a stock index fund?
An index fund is a mutual fund or exchange-traded fund that aims to mirror the return of a particular market index, such as the S&P 500, by investing in the stocks of companies included in the index.
How we rate trading platforms
★★★★★ 5/5 — Excellent
★★★★★ 4/5 — Good
★★★★★ 3/5 — Average
★★★★★ 2/5 — Subpar
★★★★★ 1/5 — Poor
We analyze top online direct indexing platforms and rate them one to five stars based on factors that are most important to you. These factors include fees, investment options and customer support, among others.
For a complete breakdown of how we score each category, read the full methodology of how we rate direct indexing platforms.
Your reviews
Matt Finder
Editor, Investments
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