Advice companies in the US are adopting the use of model portfolios to help advisers better serve clients and develop their business, according to research by Cerulli Associates.
This comes years after many markets across the globe have already adopted model portfolios as a key part of their business.
The Cerulli Edge study found that US advisers think model portfolios can be an “effective tool” that can free up time, allowing them to reallocate that toward other “highly valuable functions”.
Cerulli said it expects that the industry’s slow and steady transition toward a financial planning-oriented service model will be a “powerful impetus for the adoption of model portfolios”.
Advisers found using model portfolios helps reduce their time commitment to investments to less than 10%.
“This saved time can be put toward client-facing activities, a particularly important activity, for example, for younger advisors that are focused on asset gathering and building a book of business,” said Brad Bruenell, associate analyst at Cerulli Associates.
“The effective use of model portfolios can increase advisor efficiencies and service offerings in both maturing and fully mature practices, in a variety of ways depending upon the preference of the practice. We anticipate this trend will continue to gain traction among advisors in the future as they seek to improve their scale and service differentiation.”
