Many advisors have embraced model portfolios as it frees them from a portion of their portfolio management responsibilities. Instead, they are able to focus more time and energy on areas like client relationships, prospecting, and planning which are shown to be more important to building a successful practice, client retention, and helping clients reach their goals.

However as covered by Jeff Benjamin for InvestmentNews, some advisors are rejecting this approach. Instead, they believe that they can add value to their clients by remaining involved in portfolio management. Many of these advisors apply their expertise when it comes to selecting individual stocks for their clients’ portfolios. 

For instance, Ryan Johnson of Buckingham Advisors will manage the large-cap equity portion of clients’ portfolios, but when it comes to small-caps, international, or fixed income he relies on mutual funds and ETFs.  

Many of these advisors cite reasons such as tax management, higher concentration, and greater client involvement in their portfolios. That being said, these advisors acknowledge that it’s more work and comes with greater risk. Yet, they are willing to accept the tradeoff. 

Finsum: Model portfolios are taking a greater share of the industry as it frees advisors up from portfolio management responsibilities. Yet, some are not so eager to embrace the trend.