Morningstar brings competing model portfolios onto its proprietary platform

Morningstar is taking another step toward financial advisors by letting model portfolios from leading asset managers sit alongside its own models on its Morningstar Wealth platform.

“This is an important milestone in the strategic evolution of the U.S. Wealth platform,” said Daniel Needham, president of Morningstar Wealth, which launched a year ago as a wealth technology and investment management provider for financial advisors.

The addition of model portfolios from BlackRock, T. Rowe Price and Clark Capital was announced Tuesday in Chicago at the annual Morningstar Investment Conference.

John Harris, head of platform distribution at Morningstar, said model portfolios from other popular investment managers, including Fidelity Investments, will be added in coming weeks.

The addition of model portfolios from outside money managers was promoted as a means of helping financial advisors scale their businesses.

During a presentation on the models, Harris referenced the shrinking number of financial advisors along with the increasing need for advice among consumers who expect more from their advisors.

“The most successful advisors in the future,” he said, will be those willing to outsource select pieces of their business.

Rob Schlegel, divisional sales manager at Clark Capital, made the case for outsourced asset management by comparing the limited resources of an advisory firm to the resources of an asset manager focused solely on managing portfolios.

“Rarely do we see clients leave their advisors over investment performance,” he said, making the point that outsourcing all or some of the asset management work can “free up an advisor’s time to spend more time with clients.

"It adds a ton of value because it puts more time back in your day,” he added.

Som Priestley, portfolio manager and multi-asset solutions strategist at T. Rowe Price, cited research showing that financial advisors on average spend about 18% of their time working on investments.

That 18%, he said, “is both good and bad,” because it’s time away from servicing clients and it’s not much time spent managing portfolios.

“It’s becoming an increasingly complex world for financial advisors,” Priestley said.

Eve Cout, managing director at BlackRock, said model portfolios don’t have to be an all-or-nothing approach, especially for advisors who have a certain passion and expertise when it comes to investing.

“We just want to complement the advisor’s practice,” she said. “You can use a model as a core and spend your time on more complex products.”