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Model Portfolios: A Path to Optimization and Scalable Growth

By:

Head of Practice Management

  • By taking advantage of model portfolios, advisors are able to spend more time on client-facing activities
  • More time on client-facing activities is highly correlated to increased client satisfaction and wallet-share growth

Centralized portfolio management options are integral to scaling advisory practices. By taking advantage of model portfolios — asset allocation strategies aimed at providing a full or complementary portfolio solution comprised of several investment strategy components, including ETFs and/or mutual funds —advisors are able to spend more time on client-facing activities, which is highly correlated to increased client satisfaction and wallet-share growth.1

Although many advisors still believe that portfolio management is at the heart of their value proposition, individual investors are increasingly realizing the value of specialized expertise. Offering comprehensive advice requires that advisors maintain a level of knowledge across multiple topics, thereby limiting the time they can devote to portfolio activities.

Advisors currently spend 23% of their time on portfolio management, while only spending 15% on client-facing activities and 11% on prospecting for new clients.2 This presents advisors with a disconnect to their business goals since client-facing activities and prospecting for new clients are regarded as some of the most important aspects of growing an advisory practice.3  Yet that time is limited if it is spent on portfolio management.

As advisors seek to address the challenges of aligning business goals with optimal time management, outsourcing portfolio management may be a solution. For many advisory teams, the introduction and wide-scale availability of outsourcing options have been instrumental in increasing their capacity to spend more quality time with clients, create investment process efficiencies, and grow the menu of services offered — ultimately achieving scale.

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1Cerulli Associates, The Cerulli Report, U.S. Retail Investor Advice Relationships, 2019.
2State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019.
3State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019.
4Greenwich Associates, 2017 ETF Model Portfolio Study.

Originally Posted on January 11, 2021 – Model Portfolios: A Path to Optimization and Scalable Growth

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