Welcome to a New Era of Model Portfolios

Maybe one size really can fit all.

As financial and investment advisors face rising client loads and portfolio complexity, the challenge is no longer simply building portfolios, but turning them into consistent and customized strategies. That’s leading some advisors to take another look at model portfolios. Sometimes models have been dismissed as commoditized, one-size-fits-all solutions, but as the wealth industry has evolved, so too have model portfolios. Rather than forcing every client into the same allocation, today’s products are dynamic, outcome-oriented frameworks that help RIAs implement their best thinking more consistently.

By providing a repeatable foundation for portfolio construction, they can reduce ad hoc decision-making, improve communication around portfolio changes and create greater flexibility to accommodate client-specific preferences and circumstances. We’ve heard it before, but the result is that advisors can spend less time manually building portfolios and more time delivering the advice clients increasingly value.

But not every customization is right for every client, and advisors need to serve as gatekeepers to ensure that adjustments are creating value rather than simply introducing additional complexity, implementation burdens and costs. 

Changing Landscape

For years, model portfolios were viewed as useful for efficiency but limited in their ability to reflect the nuance, judgment and personalization that RIAs work hard to deliver. That critique made sense in a different environment, when model portfolios were more rigid and advisors had fewer clients with less complex expectations. As advisors sought to differentiate themselves, many leaned into custom portfolio construction as a core part of their offering. Personalization became a competitive advantage, and model portfolios were sometimes seen as standing in the way of that promise.

But the advisory landscape has changed. As investment management has become more commoditized, client expectations have expanded beyond portfolio construction to encompass financial planning, tax strategy, estate planning, retirement income planning and behavioral coaching. At the same time, advisors are juggling larger books of business, more account types, new asset classes and increasing complexity across this broader scope of responsibilities.

Along with the industry, models themselves have evolved from static allocations to customizable frameworks. Increasingly, advisors are using them not as finished portfolio solutions, but as implementation tools that support a disciplined investment process while still leaving room for advisor discretion where it matters most. Rather than replacing advisor judgment, new models are designed to help advisors implement that judgment consistently, efficiently and at scale.

All About the Execution

An advisor may have a clear view of how a client’s portfolio should be positioned, but turning that strategy into real-world implementation is where complexity builds. A household may have taxable and qualified accounts, legacy positions, concentrated holdings, charitable goals, liquidity needs, preferences around certain exposures or different timelines for different parts of the portfolio. Multiply that across dozens or hundreds of client relationships, and even a strong investment strategy can become fragmented in practice.

Clients experience portfolios through implementation, not investment philosophy, and they expect their advisor’s best thinking to be reflected in their portfolios regardless of account type, market conditions or where they sit within the firm’s client base. Model portfolios can help advisors deliver on that expectation by providing a consistent, repeatable core framework that is the basis for more customized optimization. Models can also help advisors explain portfolio changes more clearly and keep clients focused during periods of volatility, when they are more likely to question their plans, react emotionally or ask why their portfolios are changing. 

Not From Scratch. As personalization has become more sophisticated, it has also become harder to execute manually and consistently at scale. Today’s portfolios can be tailored across tax optimization, direct indexing, client-specific restrictions, values-based screens, customized exposures or access to asset classes that were once reserved for larger institutions. The challenge is no longer a lack of customization options, but determining which align with a client’s objectives, circumstances and long-term plan. Model portfolios can also help support that discipline:

• They give advisors a consistent foundation that can be customized based on each client’s needs and preferences, guided by the advisor’s professional judgment. 
• This allows advisors to focus their portfolio-building time on the areas that can create meaningful value for each client.

As the industry becomes more competitive, advisors need to be clear about where they truly differentiate. For many, the answer is not manually assembling every portfolio line by line but delivering advice that consistently reflects their best thinking and is personal, comprehensive and actionable. Used well, model portfolios can give advisors the structure to implement their advice more consistently while freeing time for the parts of the client relationship that matter most: understanding goals, identifying planning opportunities, coaching clients through uncertainty and helping families make better long-term decisions.

Phill Rogerson, SVP and Head of RIA Channel, AssetMark