Not every advisor needs or wants model portfolios. Some advisors use them as a cost-efficient way to serve lower-net-worth clients and prefer to personally handle the portfolios of their larger clients. “They want to provide a higher-touch service to those types of clients, and aren’t willing to completely outsource that,” says Papagiannis from Northern Trust.
Scott Smith from Cerulli sees the use of model portfolios as a growing long-term trend. “New people coming into the advisor industry will more likely focus on financial planning than portfolio management,” he says. “So I think we’ll see this grow through attrition, as younger advisors are more likely to see financial planning as their alpha opportunity.”