If you are making money from payment for order flow (based on transactions) with a direct indexing strategy, you may be incentivized to encourage customers to r

If you are making money from payment for order flow (based on transactions) with a direct indexing strategy, you may be incentivized to encourage customers to rebalance more frequently than they might otherwise in order to accrue fees from those trade transactions. For example, daily rebalancing/tax loss harvesting sounds neat, but how it is implemented can vary -- you would be incentivized to trade client accounts 'trigger happy' whenever possible to maximize fees. I could see that leading to the $1-10k annual revenue per customer that people on this thread are confused about relative to the $1 flat account fee. The potential negatives of this bias that I can see for customers: - tax loss harvesting is more a craft than a science. The goal of investing is primarily to have gains! And no one can predict the future fully. So it's really hard to know if selling a large position at a loss is a good move -- if that position goes up next year you may have missed out (like selling NVIDIA 3 years ago in a dip -- you would have been following the TLH playbook but you would be kicking yourself now). - If this is indeed your business model, this model only works for direct indexing portfolios with many stocks, so you will be biased to suggest portfolios with many companies instead of concentrated holdings, and biased against offering ETFs/funds. Not the end of the world in terms of negatives. But I just wanted to mention that 'churning stocks for fees' is a business model I haven't seen discussed on this thread.