Model portfolios have gained a lot of traction in the last couple of years, and that’s bearing out in the market with both launches and inflows increasing over the last 3-5 years. However, what are the main advantages of model portfolios for investors and advisors? For investors, they are a series of complete packages that address specific needs simply often times based on preferences, lifestyle decisions, and demographics. They can also address specific problems such as the macro turmoil permeating markets currently. For investors, they offer additional benefits of freeing up time for clients and their personal needs. Studies have found that clients highly value the interpersonal communication that advisors bring, regardless of the age demographic. Models give advisors the flexibility with respect to time to understand their client’s desires and help them navigate financial decisions.

Finsum: Models have huge advantages in sectors because they can match preferences simply rather than combing through individual securities.