Auto convert your self-managed stocks or ETFs into your direct index

What is the auto conversion feature?

This feature is available within the self-managed stocks account on the web version of Frec’s platform. You’re able to select stocks or ETFs you own and we will monitor the tax lots of those selected positions for when they are at a loss of 3% or more. We review the prices at the morning of each market day. If a position’s price is 3% or less than its tax lot's value, then we will automatically sell it and invest the cash into a direct index.

You’ll see “Sell XXX (Auto conversion)” entries in your Activity page, and a corresponding “Deposit (Auto conversion)” entry in your Direct Indexing Activity page.

How do I set up the auto conversion feature?

You can set this feature up once you have stocks or ETFs in your self-managed stocks account. If you do not own any stocks or ETFs, you will need to purchase stocks or transfer stocks into your account from an external brokerage firm. Learn more about stock transfers (also known as an ACATS transfer) here. 

Once you have stocks or ETFs in your self-managed stocks account, you’ll want to click into that account. On the right-hand side of the screen is a box with the title, “Auto convert stocks into your direct index.” At the bottom of the box, you’ll want to click the hyperlinked words, “Select stocks to auto convert >.” From there, you’ll be taken to a screen where you can select the stocks or ETFs you want to convert into your direct index or indices. 

On this page, you will either already have a defaulted direct index strategy for your auto conversion funds to invest or you will be required to select a strategy prior to completing setup.

• If you are using our direct index allocation feature, then your auto convert will automatically default to distributing the funds from a stock or ETF into your allocation targets.
• If you only have one index strategy, the auto conversion will automatically default to that index.
• However, If you do not have allocation and you invest in more than one index, you will be required to select a direct index strategy before you can complete the auto conversion setup. You can select the strategy by clicking on “Select an account” under the “Convert to” title.

Once you have the direct index or allocation populated under “Convert to,” you will need to select the stocks or ETFs you want to auto convert by clicking the toggle to the right of the position. If you want to select all of the eligible positions, you can click the toggle to the right of the words “All eligible stocks” at the top of your stock and ETF list. 

Note: All ETFs will be eligible, but there will be some stocks that are not eligible to participate in this feature. We do not permit you to auto convert positions that are already a part of your index strategies due to wash sale rules. 

After you’ve made your toggle selections, click the “Save changes” button at the bottom of the screen. After clicking the button, you’ll return to your self-managed stocks account screen. You will then see a box on the right-hand side of the screen with the title, “Auto conversion.” In the box you should see the number of stocks you’ve selected to convert and which index is receiving the converted cash. If you do not see the “Auto conversion” box, please reach out to help@frec.com for assistance.