Wealth Advisor Magazine September 2024 Edition - 30

MODEL PORTFOLIO & SMA STRATEGISTS
Model portfolios have also become
increasingly popular due to their flexibility
and cost-effectiveness, especially
when using low-cost, tax-efficient
exchange- traded funds. Unlike mutual
funds, model portfolios do not have
tradable tickers but serve as blueprints
for asset allocation and fund selection.
Large fund companies often offer these
models for free, as they generate revenue
from the underlying fund fees.
Outsourcing investment manageStreamline
Investment
Management with
Model Portfolios
M
odel portfolios offer a strategic
solution for wealth
managers to deliver
diversified, cost- effective,
and tax- efficient outcomes
for clients. These portfolios consist of a
collection of assets managed to achieve
specific investment goals, balancing
risk and return. Unlike mutual funds,
where investors own shares, model
portfolios allow investors to directly
own the underlying assets, providing
benefits such as time savings for wealth
managers, simplified diversification,
and access to institutional investment
expertise.
In our 2024 Model Portfolio & SMA
Strategists showcase, we have curated
a selection of top-tier model portfolio
and separate account managers to
provide you with a comprehensive
overview of the strategies available to
enhance your practice. These options
range from large, established managers
to emerging boutique firms, each
offering unique advantages to give
your clients a competitive edge.
30 | SEPT/OCT 2024
Wealth managers can access model
portfolios through managed accounts,
using either fully outsourced models
managed by third-party providers
or in-house models created under
their financial license. The appeal of
model portfolios has grown as markets
have become more volatile, and
inflation returns to historical norms.
As self-directed investors gain access
to sophisticated tools, the demand for
professional wealth management has
shifted towards advanced, personalized
solutions.
OUTSOURCING ADVANTAGES
Professional wealth managers can now
offer retail investors access to strategies
previously reserved for ultra-highnet-worth
families and institutions.
This democratization of investment
management has been enabled by
outsourced solutions, such as turnkey
asset management programs (TAMPs),
which provide efficient portfolio management
while allowing advisors to
focus on client relationships.
ment, such as through TAMPs, has
proven beneficial, especially during
market volatility. For instance, during
the COVID-19 market turmoil, advisors
who outsourced their portfolio management
reported improved performance
and were able to focus more on
client relationships, resulting in new
business growth.
The trend towards outsourcing is
particularly evident among retirement
plan sponsors, who increasingly use
managed accounts to offer personalized
investment strategies within
tax-advantaged retirement plans.
These managed accounts consider
individual factors such as financial
goals, risk tolerance, and timelines to
create customized portfolios, improving
retirement readiness and workplace
productivity.
Wealth managers must conduct due
diligence when outsourcing to ensure
that the selected models align with
their clients' needs. Whether through
marketplace models, separately
manage accounts, or unified managed
accounts, the choice of model portfolio
should be driven by performance, cost,
and the specific requirements of highnet-worth
clients.
The evolving wealth management
landscape requires a focus on advanced,
outsourced portfolio structures
that enable wealth managers to
provide exceptional value and stay
competitive. By leveraging model
portfolios, wealth managers can meet
diverse client needs, optimize tax outcomes,
and maintain a strong focus on
client relationships.
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Wealth Advisor Magazine September 2024 Edition

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