Update 1/4/25: Extended until December 31, 2025
The Offer
- Brokerage Frec is offering a $250 bonus to both parties when the person being referred opens a new direct indexing account. The direct indexing account has a $20,000 minimum
The Fine Print
- . There is a limit of four (4) referrals or $1,000 in bonus amount per
qualifying brokerage customer per 12-month rolling month period - Each person referred should be someone you have a direct, personal relationship with. You may not distribute a Referral Link or otherwise solicit anyone through mass email, any form of commercial advertising or other similar means. Furthermore, Frec reserves the right to seek reimbursement from any customer (including by deduction from their brokerage account) of amounts paid as Referral Bonuses to customers solicited via mass solicitation. Please note that in certain circumstances the deduction of such amounts from your account may result in a negative balance.
Our Verdict
Pricing is 0.1% or $20 annually for $20,000. You’re limited to 4 referrals ($1,000) per account. Feel free to share your referrals in the comments below.
Smooth process. I used gadget’s link. Here is mine: https://frec.com/referral/RPPEUPEM
PSA: when you earn a referral bonus it goes into a “Cash” account (non interest bearing). You will want to either invest it (e.g. move into your index) or transfer out. I incorrectly assumed it would be automatically invested and lost out on some market gains the past couple weeks.
Frec early adopters… be on the lookout for an email from Frec.com.
Subj: Quick reply needed: the Frec team has a gift for you!
The rep asks you to reply to confirm your mailing address so they can send you a gift. I assume it will be a coffee cup or something silly to take places to promote their biz. Didn’t ask my shirt size, so I doubt it’s anything to wear.
Be my friend! Used a fellow posters code to sign up two days ago, currently 0/4, will update regularly.
https://frec.com/referral/JRNMAAMC
if you want to share referral bonus with me, please message me.
DP: it takes exactly 3 months from they confirming the bonus and they posting it
DP:
Gadget 🕵️♂️ Bank Bonus Geek 🔗 (thanks!)
joined 7th Oct with 20k using referral from
invested in CRSP US Large Cap index (lowest fee choice) with a few mods
$250 ref bonus is pending as of today
portfolio up 2.97%
Tax loss harvested $729
fees $4.83
For all those posting and considering using posted referral links here, this is expressly prohibited in their terms… https://docs.frec.com/250_referral_terms.pdf
no idea if they will enforce this but would be easy to if/when they choose to do so, all they’d have to do is google “Frec referral link” and it will bring them to this page, I would not be surprised to see them refuse to pay or claw back as it gets more popular. If you are more paranoid (like me) and looking for a “clean” referral you can contact me via linktree by clicking on my name. I see a few other frequent posters have this option as well. Which ever way you go, good luck and happy (tax loss) harvesting !
P1 Payout DP:
S&P 500 index (w/ modifications)
Opened with $20,001 ACH on 10/5/2024
Direct Index Portfolio “ready” on 10/8/2024
Current balance at $20,398.29 (not including bonuses)
Tax losses harvested $720.52
Fees paid $4.90
$250 SUB paid out today, 1/6/2025, and one $250 referral bonus as well, posted to Cash Balance, not the portfolio. I requested withdrawal just now via ACH and that is pending. (so, it’s not required to invest the bonuses)
Bonuses did not payout until sometime this evening (9 PM Eastern?), even though the tracker showed they were “completed” this morning.
P2 status update:
CRSP ISS US Large Cap ESG index (w/ modifications)
Opened with $20,001 ACH on 10/11/2024
Direct Index Portfolio “ready” on 10/14/2024
Current balance at $21,103.12 (no bonuses yet)
Tax losses harvested $533.08
Fees paid $11.84
How would you calculate total gains if you were to cash out now (outside of any referrals)? Is it as simple as:
$20,398.29 – $20,001 – $4.90 = $392.39, and you don’t pay taxes on that plus 328.13 (720.52 – 392.39)? Assuming tax rate of 22%, you’d save $72.19.
So 392.39 + 72.19 = 464.58?
I am utterly confused. My portfolio is up by $700 but have only harvested $248. So if I were to cash out now, I would pay taxes on 452, leaving me with 353.56 (.78×452)?
I don’t care that much. Money gained is money gained. Just wondering if I made the right or wrong decision by excluding the top two stocks last month.
I am not an accountant, and your math is confusing to me too. If you are up by $700 and sold all, you owe tax on the $700. I think the tax losses harvested would subtract from that total… but we going to have to account for all those transactions to earn that privilege.
Also, it’s going to be complicated, because your numbers would need to be all within the same tax year to be so cut and dry.
The fees were already baked into the account balance. I only brought up fees in my comment because I know sometimes people get hung-up on fees, and want to select the least costly option for a variety of reasons. There is a $700 difference between my P1/P2 balances opened a week apart, and only a $6 difference in fees. (as of yesterday, anyway)
Hindsight is always 20/20, so not much point in fretting in past choices. Mine were not the best either. If the account is up more than it would be than a HYSA, without factoring in bonuses, having to deal with the hassle of tax reporting is worth it to me. Similar investment strategy solutions at Fidelity or Wealthfront like this are not offering a bonus.
And, since we are mentioning taxes, per the referral program, those bonuses will be reported as 1099-MISC, which has a $600 threshold for reporting. Presumably someone who gets one $250 referral and their $250 sign-up bonus will not be receiving a 1099 form. (but, still self-reportable in the tax year the bonus was posted)
https://frec.com/referral/NMIRICHC
0/4 used
if you want to share referral bonus with me, please message me.
Know you’ve made a few requests
AG – if you click on my name I’m happy to share my code with you. Thank you!
Sent you an email. Please let me know.
FWIW — The underlying investment strategy here is “direct indexing.” Fidelity’s version is called Fidelity Managed FidFolios https://digital.fidelity.com/prgw/digital/msw/overview/a.
The basic idea is that in any given year when a index, e.g. S&P 500, goes up x%, some individual stocks included in the index (think Intel and Moderna in 2024) are losers for the year.
If you just own the index as a ETF, e.g., SPY, you can’t access the tax losses on the losers. If, instead, you owned each stock in the index individually, you could sell the losers and keep the winners. This is what they’re touting as “harvesting tax losses” and “tax efficiency.”
Since most individuals can’t realistically built/manage a direct index portfolio themselves, firms like Frec, Fidelity and others effectively do it for you — for a piece of the action, of course.
Also FWIW — Wealthfront has similar product: https://www.wealthfront.com/sp500-direct
All of this is made possible by your friendly AI servants working in the background.
Got wonder at what point the IRS stops allowing this.
Are you referring to tax loss harvesting? If so, what’s so terrible about it that you think it shouldn’t be allowed? At least this is what I’m gathering from your comment.
Personally, I have picked some losers throughout the years. My only solace is knowing that I can offset some capital gains and not lose out even more money to taxes.
Without some fundamental change in law, nothing the IRS can do. You legally own each individual share and , upon sale of that share (by the bot) recognize capital gain or loss. Net losses can be deducted against ordinary income, limit $3k per yr, unlimited carry forward for excess.
Quick answer is “no.” But I have done the “poor man’s version” for a long time, i.e., identify biggest losers in my portfolio near year-end, trigger the loss, then decide to either re-invest in my loser company (after 30d per wash sale rule) or get a new date for the dance.
The IRS can’t “stop allowing it.” Capital losses up to $3,000 are deductible as a result of the Tax Reform Act of 1976, which was passed by Congress. Only Congress can stop allowing it.
I question the business sense of offering bonuses for referrals ($250 each to referrer and referee), and NOT offering a bonus (say, $250) for a “walk-up” customer. They can’t walk and chew gum at same time?
They are using word of mouth advertising, and rewarding loyal customers at the same time.
tuphat
Still doesn’t make sense, at least to me. If I get the message via some interweb site, do a Cartman and ignore the referrals being offered, and go directly to Frec, it’s only gonna cost ’em $250 instead of $500 to get me as a customer.
You get a lot of people sending links to friends, family, and posting on social media which is a lot more appealing than paying for internet ads that likely get blocked. Who knows how many people get exposed to the brand/product that don’t take the bonus but might still get an account later on.