Study finds 85 percent of advisers use model portfolios

Study finds 85 percent of advisers use model portfolios
Broadridge found 78% of advisers believe clients care more about planning than outperformance.
JUN 06, 2019

Eighty-five percent of financial advisers currently use model portfolios, with 54% of advised assets being managed through the tools, according to a study by Broadridge Financial Solutions. Business scalability is a main driver of model portfolio adoption or consideration, according to 65% of advisers using them and 35% of those not using them. Other top reasons advisers use models include leveraging investment management experts (50%), focusing efforts on client building and retention (47%), and better addressing compliance and regulation (36%). (More:Morningstar study says advisory clients are stuck on investment performance) "Seventy-eight percent of financial advisers believe that their clients care more about planning, service and support than outperforming the market," Broadridge said in a release, adding that "83% agree that model portfolios are essential to allowing more time for financial planning." Concerns about model portfolio usage remain, particularly among the 15% of respondents not using model portfolios to any degree, Broadridge found. Of that group, 69% said they will definitely or probably not begin to use models in the next two years; 59% view managing money as part of their value-add for clients and 51% believe that their clients are expressly paying for customized solutions. (More:Outsourcing is route to greater growth, Fidelity study finds) Other concerns: 51% believe that model portfolio usage makes it harder to differentiate themselves from robo-advisors, 46% believe that model portfolios are not as effective in down or highly volatile markets, 45% believe model portfolios make it harder to assess risk, and 35% believe that clients will view them as lazy for using models.

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