Wells Fargo Advisors has relaunched its exchange-traded-fund model portfolios for its more than 15,000 advisers, streamlining the various offering it had and lowering the costs of some models.
Previously,
Wells Fargo offered about 40 different ETF model portfolios with 100 ETFs, which it largely inherited when its parent,
Wells Fargo & Co. acquired Wachovia Corp. in 2008 and from the firm’s acquisition of A.G. Edwards & Sons Inc., said Kurt Loreck, senior vice president and director of internally managed accounts at
Wells Fargo Advisors.
“The
consolidation will make it easier for the financial adviser to navigate the differences between the models,” Mr. Loreck said.
The new Allocation Advisors platform is a streamlined version of the various offerings the firm offered, Mr. Loreck said.
Wells Fargo’s advisers can choose among 27 models between three categories: tactical; cyclical and strategic. The nine models within each category range from long-term growth to conservative income.
The cyclical models are based on outlooks over a three- to five-year time period. The strategic models are based on the firm’s capital markets assumptions over a 7-to 10-year outlook. The tactical-allocation strategy is based on short- to medium-term opportunities in different segments of the market, Mr. Loreck said.
Wells Fargo also has lowered the costs of some of the models to 2%, from 2.25%. Its Allocation Advisors program has over $8 billion in assets under management.
More advisers are turning to ETF model portfolios as they look for help with asset allocation, said Jeff Strange, an analyst at Cerulli Associates Inc. “The market crisis put greater emphasis on risk management within portfolios,” he said. “The traditional 40/60 split in the portfolio is being replaced by bringing in more asset classes, and ETFs are a good way of doing that.”
And it makes sense for a firm to offer a wide — but not too wide — array of choices for model portfolios of ETFS, Mr. Strange said. Even though advisers use these models so that they don’t have to manage the money themselves, they can still justify their fee by choosing the right model for clients, he said.
“This way, the adviser can still prove the value proposition to the client by explaining why he is choosing a specific model,” he said.
