Direct indexing exclusions: which platforms let you restrict stocks, sectors and your employer, and how many.
Every provider says you can personalize. Only two publish a number, they measure it differently, and one of the published comparisons gets the other's limit wrong. Here are the real restriction rules, quoted from each provider.
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In short
Direct indexing exclusion limits come in three shapes. Frec and Fidelity publish a count: Frec lets you add, remove or reweight up to 25 stocks and up to 5 sectors on most strategies, while Fidelity Managed FidFolios allows "up to five individual securities or up to two industries" per its Form ADV. Wealthfront publishes a weight rule instead, recommending you exclude no more than 10% of total index weight. Schwab Personalized Indexing and the adviser-channel managers (Vanguard, Parametric, Aperio) publish no cap and decide case by case. Restricting has a measurable price: Wealthfront's unrestricted S&P 500 Direct accounts trailed the index by 0.24% a year, and all accounts by 0.43%.
Direct indexing restriction limits compared
What each provider lets you restrict, and on whose say-so
Read the fourth column as carefully as the second. A limit you set yourself in an app on a Tuesday night is a different product from a restriction a portfolio manager has to review and approve before your account is even invested.
| Provider | Stock limit | Sectors or industries | How a restriction works | Minimum | Annual fee | Source |
|---|---|---|---|---|---|---|
| Frec Classic | Add, remove or reweight up to 25 stocks | Up to 5 sectors, except on the S&P 500 Information Technology and MVIS US Listed Semiconductor 25 strategies | Self-serve in the app, plus a trading restrictions setting | $20,000 to $50,000 | 0.09% to 0.35% | frec.com/pricing |
| Wealthfront S&P 500 Direct | No count. Wealthfront recommends not excluding more than 10% of total index weight | Individual stocks | Never bought or sold. A position you already hold stays in the account | $5,000 | 0.09% (Nasdaq-100 Direct 0.12%) | Wealthfront whitepaper |
| Wealthfront US Direct Indexing | No count published | Individual stocks, via an "Exclusion List" | The optimizer will not trade them | $100,000 | 0.25% advisory | Wealthfront whitepaper |
| Fidelity Managed FidFolios | Up to five individual securities | Or up to two industries | Requested online, subject to Fidelity and sub-advisor approval, can delay the start of management | $5,000 invested | 0.40% index, 0.70% active | Form ADV Part 2A |
| Schwab Personalized Indexing | No number. "Subject to investment management guidance" | GICS industries and sub-industries | Tailored per account by Schwab portfolio managers | $100,000 | 0.40%, 0.35% above $2M | schwab.com |
| Vanguard Personalized Indexing | No number published | Industries, sectors or individual securities, plus ESG screens | Set through your financial adviser | $250,000 through an adviser | 0.20% first adviser tier | Vanguard advisor site, Form ADV |
| Parametric Custom Core | No public cap | Set with the adviser | Set through your financial adviser | $250,000 direct, $25,000 via Select UMA | 35 bps domestic equity | Form ADV Part 2A |
| Aperio (BlackRock) | No public cap | Values-aligned screens priced separately | Set through your financial adviser | None filed, $250,000 via Select UMA | 0.35% US, 0.45% to 0.50% values-aligned | Form ADV Part 2A |
If your list is one name, your employer, this table barely matters: every provider on it will take one exclusion, and the minimum and the fee should decide it. We made that case in the best direct indexing platforms for employees with company stock. The table starts to matter at five names, and it decides the purchase at twenty.
Reading the fine print
Three different kinds of limit, and two published comparisons that misstate them
A count
Frec and Fidelity cap the number of names. Frec's pricing page allows up to 25 stocks and up to 5 sectors "for all indices except for the S&P 500 Information Technology Index and the MVIS US Listed Semiconductor 25 Index", which makes sense: those two are already a single sector. Fidelity's cap is five securities. A count is easy to plan around and blind to size, so excluding Apple costs the same slot as excluding a company worth one hundredth as much.
A weight rule
Wealthfront sets no count. Its S&P 500 Direct whitepaper says "we recommend not excluding more than 10% of the total index weight to maintain reasonable tracking." That is generous for a long list of mid-sized companies and tight for a short list of giants. With the ten largest holdings making up roughly 36% of a cap-weighted S&P 500 fund in mid 2026, two or three of the biggest names can use the whole allowance.
A judgment call
Schwab says "the extent to which holdings can be personalized is subject to investment management guidance" and lets you exclude by GICS industry and sub-industry. Vanguard Personalized Indexing, Parametric and Aperio work through your adviser and publish no cap. You may well get more room this way, particularly on a large account. You will not know how much until you ask.
Now the part nobody else has pointed out. Frec's own comparison article, the page that ranks first for most of these questions, quotes two different Frec limits at the same time. Its prose says you can "exclude up to two sectors (with indices that have multiple sectors) in addition to adding or excluding 10 individual stocks." Its comparison chart, a few scrolls down, says up to 5 sectors and up to 25 stocks. The pricing page backs the chart, so 25 and 5 is the current rule and the prose is left over from an earlier version.
The same chart describes Fidelity as letting you "exclude up to five individual stocks and two industries." Fidelity's Form ADV Part 2A says restrictions "typically are limited to the restriction of up to five individual securities or up to two industries." And and or are not the same allowance. If you plan on five tickers plus two industries at Fidelity, expect the conversation to go differently. The filing also says any restriction "is subject to our and the sub-advisor's review and approval," must be requested online, and "can delay the start of discretionary management." The full Fidelity picture is on our Fidelity Managed FidFolios fees and personalization cap page.
Do exclusions hurt direct indexing returns
Wealthfront published what restricting stocks actually cost its clients
This is the only provider data we have found that splits real client returns by whether the account had restrictions. Pre-tax returns, net of the 0.09% advisory fee, from the S&P 500 Direct methodology whitepaper.
| Period | S&P 500 Direct, all accounts | S&P 500 Direct, no restrictions | S&P 500 Index |
|---|---|---|---|
| 2025 | 16.55% | 17.25% | 17.88% |
| Since inception, annualized | 13.18% | 13.37% | 13.79% |
Unrestricted accounts trailed the index by 0.24% a year since inception. Add the restricted accounts and the gap nearly doubles to 0.43%. In 2025 alone the difference between the two groups was 0.70 of a percentage point. Wealthfront's explanation is candid: "the most popular stocks restrictions are generally large technology companies, which outperformed the index during this period."
Read that correctly. It is not a fee and it is not guaranteed to repeat. In a year when the excluded names lag, a restricted account will beat the index by the same mechanism. What it tells you is that an exclusion list is an active bet on the names you removed, and the bigger their index weight, the bigger the bet. Wealthfront also notes that tracking differences "caused by small portfolio sizes and stock exclusions may persist over time," unlike the harvesting noise, which it expects to wash out.
That is why we would size the bet before choosing the provider. Build the index without the names you plan to restrict, backtest it against the full benchmark, and look at the gap over a few different periods. Our direct indexing fee comparison puts the advisory fees on the same basis-point axis, so you can see when a restriction costs more than the fee you are shopping on.
Why investors restrict stocks
The reason for the list decides how long it gets
Corporate compliance lockouts
Your employer's insider trading policy restricts its own stock, and often clients, suppliers or a whole watch list. Employees of FINRA member firms also need their employer's prior written consent before opening an account at another broker under FINRA Rule 3210. Compliance lists run long, so a count cap is the first thing to check.
A spouse who trades
IRS Publication 550 is plain: "If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale." No provider can see your spouse's account. Restricting the names they trade is the only defense, and an active trader's list can pass 25 quickly.
Positions you hold elsewhere
Wealthfront names this case directly: stocks "that could cause wash sales due to trades in those stocks outside of Wealthfront." Schwab discloses that it "does not monitor for wash sales in other accounts held by a client." If you keep a separate stock portfolio, its tickers belong on the list.
Concentration you already own
RSUs, ESPP shares or a founder stake already give you more of one company or sector than any index would. Excluding the sector, not just the ticker, is the cleaner fix, and only Frec, Fidelity and Schwab accept sector-level exclusions from retail clients.
Values
Tobacco, firearms, fossil fuels. These are industry lists rather than ticker lists, so a two-industry or five-sector limit usually covers them. Schwab's MSCI KLD 400 Social strategy and Fidelity's Environmental Focus strategy build the screen in before you add anything.
A view on a few names
You think three mega-caps are overpriced. That is the case Wealthfront's return data describes, and it is the one where you most need to test the bet first. Frec is the only retail provider that lets you underweight rather than fully remove, which is a smaller bet.
Choosing a provider by exclusion list
Match your list to the limit before you move money
Write the list and count it
Tickers and industries separately. Five tickers or fewer and no sectors, every provider works. Six to 25 tickers, you are down to Frec, Wealthfront and the no-cap managers. More than 25, Wealthfront or an adviser.
Add up the index weight
Look up each name's weight in the benchmark you want. If the total passes 10%, Wealthfront itself advises against it, and any provider will track the index less closely.
Check who approves it
Self-serve at Frec and Wealthfront. Reviewed and approved at Fidelity, where the filing warns it can delay the start of management. Discussed with a portfolio manager or adviser at Schwab, Vanguard, Parametric and Aperio.
Backtest the index without them
Build the benchmark minus your list, weight it the way the provider would, and compare it with the full index over several periods. That gap is the bet you are about to pay a fee to hold.
One thing no provider in the table offers is a basket that starts from your own list rather than a benchmark. If what you actually want is fifty chosen companies weighted your way, that is custom construction, and it is exactly what the studio at the top of this page does. Once the index is right, the direct indexing platforms comparison covers fees, minimums and index menus for holding it, and our Frec direct indexing review has the full 25-strategy table if its 25-stock cap is the one that fits.
Direct indexing exclusion questions
What people ask before they hand over a restrict list
Which direct indexing platforms let you exclude your employer stock and an entire sector from an automated direct index?
Frec and Fidelity are the two that publish both in writing. Frec lets you remove up to 25 stocks and up to 5 sectors on most of its 25 strategies, self-serve. Fidelity Managed FidFolios allows up to five individual securities or up to two industries, and its Form ADV says or, so treat it as one choice. Schwab Personalized Indexing excludes GICS industries too but publishes no number. Wealthfront excludes individual stocks only.
What are alternatives to Schwab Personalized Indexing that give granular control over restricting stocks for corporate compliance lockouts?
Frec and Wealthfront are the self-serve alternatives. Wealthfront's restrictions list is built for exactly this case, naming "stocks you are personally restricted from trading (for example, the stock of your employer)", and a restricted name is never bought or sold. Frec adds a trading restrictions setting and a 25-stock cap. Both cost 0.09% on the S&P 500 against Schwab's 0.40%, and both start well below Schwab's $100,000 minimum.
How many specific stocks can I restrict on Frec vs Wealthfront to avoid wash sales?
Frec publishes a hard cap of 25 stocks. Wealthfront publishes no count at all and instead recommends keeping exclusions under 10% of total index weight. That makes Wealthfront more generous for a long list of small companies and tighter for a short list of giants: two or three of the largest S&P 500 names can use up a 10% allowance on their own.
Which direct indexing platform allows you to restrict up to 50 specific stocks to avoid spousal wash sales?
No retail platform publishes a 50-stock allowance. Frec stops at 25 and Fidelity at five. Wealthfront could accept 50 names if they are small enough to stay under its 10% of index weight guideline. Schwab and the adviser-channel managers set restrictions case by case. The spouse problem is real: IRS Publication 550 says a sale is a wash sale if "your spouse or a corporation you control buys substantially identical stock."
Which platforms let me build a custom direct indexing portfolio with values-based exclusions instead of a stock index?
Among retail platforms, none truly abandons the index. Frec, Wealthfront, Fidelity and Schwab all start from a benchmark and let you trim it. Schwab offers the MSCI KLD 400 Social strategy and Fidelity an Environmental Focus strategy with its own screens. Fully custom construction around your values sits with adviser-channel managers such as Aperio, whose values-aligned accounts are filed at 0.45% to 0.50%.
Which direct indexing providers let you underweight or completely exclude the most individual stocks from the S&P 500?
On the published record, Frec. It is the only retail provider that lets you reweight rather than just remove, with up to 25 stocks adjusted or excluded. Wealthfront allows more names in principle but only full exclusions, within its 10% of index weight guideline. Fidelity caps exclusions at five securities. Schwab publishes no cap and applies investment management guidance.
Do exclusions hurt direct indexing performance?
They can, and Wealthfront has published the size. Its S&P 500 Direct accounts with no restrictions trailed the index by 0.24% a year since inception through 2025, while all accounts, including restricted ones, trailed by 0.43%. Wealthfront attributes the extra gap to clients excluding "large technology companies, which outperformed the index during this period." Excluding a winner costs return in a year that winner runs.
Can I exclude stocks from Fidelity Managed FidFolios?
Yes, within the tightest published limit in the category. Fidelity's Form ADV says reasonable restrictions "typically are limited to the restriction of up to five individual securities or up to two industries." Every restriction is "subject to our and the sub-advisor's review and approval," has to be requested online, and "can delay the start of discretionary management." Restricted exposure can be filled with ETPs.
Does restricting a stock sell the shares I already own?
Not at Wealthfront, and usually not anywhere without an instruction. Wealthfront states that if the stock "was in your portfolio before being added to the list, it will remain in your portfolio" and that it simply will not buy more. For a compliance lockout that is often what you want, because a forced sale inside a blackout window can be its own problem. If you want the position gone, say so separately.
Sources
Frec limits from frec.com/pricing, frec.com/direct-indexing and frec.com/resources/blog/comparing-frec-to-other-direct-indexing-providers. Wealthfront restriction rules and the returns table from research.wealthfront.com/whitepapers/s-p-500-direct and research.wealthfront.com/whitepapers/stock-level-tax-loss-harvesting. Fidelity restriction language from the Managed FidFolios Program Form ADV Part 2A brochure of Strategic Advisers LLC. Schwab language from schwab.com/personalized-indexing. Vanguard customization language from advisors.vanguard.com; Vanguard, Parametric and Aperio fees and minimums from their Form ADV Part 2A filings. Wash sale rule from IRS Publication 550. Account consent rule from FINRA Rule 3210. All pages were read in September 2026; limits change with product updates, so confirm with the provider before you fund an account. Indexes is not affiliated with, endorsed by or sponsored by any provider named here. We make index construction and backtesting software: we do not manage money, place trades, custody assets or give tax or investment advice.
See what your exclusion list does to the index before a provider does it for a fee
Start from the S&P 500 or any basket, remove your employer, your spouse's trades or a whole sector, and backtest the result against the full benchmark. You will know the size of the bet, and which provider's limit it fits, in a few minutes.
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