Assets in model portfolios increased this year as more advisors are realizing the benefits they provide for their clients. Simultaneously, clients of advisors who use model portfolios are experiencing an increased level of satisfaction with their advisors, according to a recent report published by Boston-based State Street Global Advisors. 

The firm spoke with 200 financial advisors with at least $25 million in assets under management who reported that they have an average of 39% of their current assets under management in model portfolios, which is up from 32% three years ago. 

Brie Williams, global head of advisory solutions and wealth intelligence at State Street, pointed out it is no longer a question of whether advisors are using model portfolios, it’s about how they’re integrating them into their practices. 

“The evolving role of model portfolios allows advisors to deliver personalized strategies while streamlining portfolio management,” she said in an interview. “This supports practice scalability, drives growth, and enhances their ability to meet the diverse needs of clients.”

The clients who work with advisors that use portfolios are overwhelmingly more satisfied with their advisor than clients whose advisor does not use model portfolios, the study found. It surveyed 250 clients with at least $500,000 in assets who work with advisors and found 95% of them are satisfied with their advisor’s ability to earn their trust and confidence. In comparison, only 79% of investors without assets in models said the same thing.

In addition, 93% of investors in models are satisfied that their advisors understand their financial goals, as opposed to 79% of investors without assets in models who said their advisor understands their financial goals.

“Investors who know their assets are in model portfolios report greater satisfaction with the advisory experience, citing enhanced transparency, effective issue resolution, and optimized portfolio performance,” Williams said.

The survey also found that of the investors surveyed, 57% knew about model portfolios while 43% did not. And of those that knew about them, 59% were aware of their advisors’ use of the products, while 19% were not aware and 22% said they did not know if they did use it or not, the study found. 

“When an investor is interested in understanding investment management, that’s a positive sign,” Williams said. “An engaged client is an ideal advisory client, especially when they not only grasp their own financial plans but they also understand the investments and how those align with the desired outcomes.”  

A benefit of the model portfolio is the advisor’s ability to personalize it, something many clients expect—51% of the advisors surveyed said that their clients expect some form of customization or personalization, according to the study. 

There’s a disconnect between advisors and their clients when it comes to fees, however. Eighty-seven percent of advisors believe their clients understand their fees, but in reality only 58% of clients say they do. When it comes to the value they receive from their advisors, only 63% of clients are satisfied with the value of the fees they pay, while, a much higher number of advisors, 88%, think their clients are satisfied with the value they receive for their fees they charge. 

Williams said advisors’ use of model portfolios is an efficient way to manage the assets of multiple clients with the confidence that the investments are working toward their client’s goals. In fact, 78% of advisors surveyed said they prefer investment objective completion models over other versions, including target-date models, which only 45% of advisors said they prefer.  

“For the advisor, it’s about increasing their capacity to serve their clients better, which helps grow the bottom line, but of course helps the clients achieve their desired outcomes across the full spectrum of their life,” Williams said.