Displaying items by tag: models

Advisors are increasingly adopting outsourced model portfolios as a way to streamline investment management and redirect their time toward deeper client relationships and higher-value planning work. 

Research from Cerulli shows that model users spend just over 10% of their time on investment oversight, enabling them to devote more than 60% of their time to client-facing activity and business development. The trend is especially pronounced among younger advisors running leaner practices, many of whom lack in-house investment staff and rely on models to achieve greater efficiency. 

These advisors view outsourced portfolios as a strategic tool, using the time savings to focus on complex planning, attract wealthier households, and sharpen their competitive positioning. High demand for product education, best practices, and access to portfolio managers underscores the need for model providers to keep advisors well-informed. 

Finsum: While some advisors avoid models due to concerns about customization or added fees, the overall shift highlights how outsourcing has become central to scaling a modern advisory practice.

Markets entered 2025 on strong footing but were quickly rattled by earlier-than-expected U.S. tariff actions, delaying anticipated rate cuts and fueling volatility across equities, Treasuries, and currencies. AllianceBernstein expects moderate—not recessionary—growth in the second half, with fiscal and trade policy, Fed actions, and geopolitics serving as key macro drivers. 

Credit markets have shown resilience, and despite tighter spreads, elevated yields make high-quality issuers—particularly BB-rated bonds—attractive for income and risk management. With inflation expected to peak by the third quarter, the firm favors short-to-intermediate bond maturities to balance yield opportunities against interest-rate risk. 

Equity markets, while volatile in early 2025, have since broadened beyond U.S. tech leaders to global and value-oriented sectors, especially in Europe where banks and dividend payers stand out. 

Finsum: Multi-asset income strategies as well-positioned for this uncertain backdrop, combining yield, diversification, and adaptability amid shifting policy and market conditions.

Investors’ demand for tax-efficient investing is fueling rapid growth in separately managed accounts (SMAs), which now top $500 billion in tax-managed assets—up 67% since 2022. Unlike mutual funds or ETFs, SMAs allow investors to directly own securities, enabling personalized tax management such as loss harvesting. 

Direct indexing remains the most popular strategy, but providers are expanding into active equity and fixed-income SMAs to capture additional tax alpha. Challenges arise with active managers, since balancing loss harvesting with stock-picking discipline can dilute investment ideas, though new approaches like substitute stock lists aim to resolve that. 

Fixed-income SMAs offer fewer opportunities, but rising rates in recent years did create harvesting potential, while model portfolios are also integrating tax-aware transitions to ease client moves without triggering large gains. 

Finsum: Overall, tax-managed SMAs are expanding across asset classes and portfolio models, giving advisors more tools to reduce investors’ tax burdens.

Model portfolios have transformed from basic investment templates into versatile, sophisticated tools that support a wide range of advisor and client needs. Today, assets in model portfolios are projected to grow to $11 trillion by 2028, fueled by the rising demand for customization and outcome-oriented investment strategies. 

The most common models remain asset allocation portfolios, especially those built with open architecture, which allows advisors to incorporate both in-house and third-party managers for added diversification and cost efficiency. 

Alongside these, outcome-oriented models—such as those focused on income generation, downside protection, or tax optimization—are gaining popularity for their ability to align with specific client goals. Building block models, which emphasize a particular asset class or investment objective, also offer advisors greater control in tailoring portfolios around their core expertise. 

Finsum: As the model portfolio landscape matures, advisors are increasingly choosing providers that offer a full spectrum of solutions to enhance both operational efficiency and client personalization.

Francois Rochon once observed that true investing success comes not from avoiding market volatility but from using it to one’s advantage—a mindset that resonates deeply today. 

Markets, by nature, swing between extremes, and the recent months have been no exception, testing the patience of even seasoned investors. Rather than reacting emotionally to these shifts, investors are increasingly turning to structured approaches that bring consistency to decision-making. 

One such approach is factor-based investing, which allocates capital based on specific attributes like profitability, low volatility, or long-term momentum. This strategy reduces reliance on market timing and instead builds portfolios grounded in time-tested characteristics. 

Finsum: In uncertain environments, such disciplined frameworks can offer clarity and help investors stay focused on enduring outcomes rather than short-term noise.