Model portfolios are now widely used buut investors want more than just easy access to the market—they’re looking for personalised guidance that fits their goals, values, and life plans.
State Street Investment Management has released some new research on the way Australian and US investors and financial advisors are using model portfolios.
Data was collected from 250 individual investors in each country who work with a financial advisor and have investable assets, plus 200 financial advisors in the US.
The findings reveal model portfolio integration is emerging as the next frontier for advisory firms, helping advisors save time, improve client experience and service, and enable scale.
Key findings from the ‘Model portfolios and the evolution of advice’
Model portfolios are mainstream: 96% of advisors surveyed are using model portfolios in some capacity. They are integral to how advisors manage their practices and deliver value to clients.
Tax personalisation is driving interest: the majority of advisors surveyed say tax personalisation is a benefit of using models, and an important part of the models’ overall value proposition.
Model portfolios save financial advisors time: outsourcing allows advisors to spend more time with clients, or build their practice.
- Moreover, clients expect advisors to spend that time on them, their goals, concerns, long-term plans, and portfolios.
- Two-thirds of US and three quarters of Australian investors surveyed want more personalised advice that covers their full financial picture.
Advisor transparency is a significant consideration for clients: of Australian investors surveyed, 88% feel that their portfolio is designed to meet their financial goals.
Price and performance isn’t everything: only 29% of advisors cite performance as their primary reasons for engagement. Rather, they look to see if the model provider supports their investment philosophy, can act as an extension to their team, offers clear communication and transparency.
The report outlines some actions for advisors too, including:
- Educating clients to understand the value of models.
- The importance of clarifying and documenting what differentiates a practice’s value.
- Segmenting clients by planning complexity, account type, and the way they like to engage and communicate for a better overall service.
