Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Sunday, 02 June 2024 19:32

How Model Portfolios Can Be a Win-Win

The nature of being a financial advisor has shifted significantly over the past decade. It’s gone from being centered around selecting investments and managing portfolios to financial planning and client service. Model portfolios have been ascending along with this evolution and are forecast to exceed $1 trillion in assets over the next decade.

According to surveys, clients invested in model portfolios are more likely to have higher levels of trust with their financial advisors and believe that volatility is an opportunity to grow assets. Additionally, they are more likely to be interested in other services offered by an advisor. They can also help in terms of aligning the interests of advisors, the firm, and clients. They also free up time and energy for advisors to spend on factors that ultimately drive success for advisors, like client service and prospecting. 

Another benefit is that model portfolios provide an extra layer of due diligence, with 77% of advisors saying that they help with managing risk. In essence, it gives clients access to a higher quality of investment management and a more comprehensive relationship with an advisor.

Models also mean that advisors’ services become more scalable, enabling growth and expansion. In recent years, models have expanded to include offerings from third parties and a wider array strategies, which means there are possibilities for endless customization to fit clients’ unique needs and goals.

Finsum: Model portfolios bring the promise of a win-win for clients and advisors. Clients invested in model portfolios report higher levels of confidence with their advisor and don’t fear volatility. For advisors, they offer the ability to decrease time spent on investment management and focus more on client service and prospecting.

According to Lindsay Rosner, the managing director of multi-sector fixed income investments at Goldman Sachs, fixed income is presenting investors with an attractive opportunity to lock in high yields without compromising on quality. There are some challenges given divergences in central bank policy around the world and increasing uncertainty about the timing and direction of the Fed’s next move. Overall, the firm believes that the status quo of ‘higher for longer’ is likely to prevail.

A major factor is inflation, and the economy proving to be more resilient than expected. As a result, the market is now expecting two quarter-point rate cuts before the end of the year, compared to expectations of 150 basis points in cuts entering the year. The next Fed decision is on July 29. Prior to that meeting, there will be considerable amounts of inflation and labor market data, which could impact its thinking, although the current expectation is for it to hold rates steady.

With rates at these levels, there is increased risk that consumer spending is affected or that a higher cost of capital begins to impact corporate profitability and hiring. This risk increases the attractiveness of fixed income, especially as many investors are looking to rebalance given strong equity performance. Rosner sees opportunity in higher-quality areas such as investment-grade corporate bonds and structured products with AAA or AA ratings, especially given an impressive carry differential over Treasuries.

Finsum: Goldman Sachs sees opportunity in higher-quality segments of the fixed-income market. It believes investors should lock in yields at these levels, given the risk that high rates will eventually sour the economic outlook. 

Goldman Sachs has raised $21 billion for private credit investments, its largest fund yet in this asset class. 


Fresh capital, borrowed funds, co-investments, and SMAs are all a part of the how the firm has secured its newest private lending channel. This initiative is crucial for Goldman to demonstrate its ability to attract substantial external funds, focusing on steady fees instead of occasional large revenues. 


High-net-worth individuals and institutional investors alike are increasing their allocations to alternatives, viewing private credit as a valuable investment. With plans to double its private credit assets to $300 billion in five years, Goldman is leveraging its extensive experience while other banks form partnerships to enter this market.

Finsum: Alternatives are a good way to hedge against the mainstream macro volatility problems looming on traditional portfolios

Summer tends to be slower on Broadway, even more so this year with some theaters being renovated and a lighter schedule for Shakespeare in the Park. However, there are some intriguing new shows that will be opening this summer.

The most highly anticipated is “Oh, Mary!” which is scheduled to open in late June at the Lyceum Theater. The play stars Cole Escola as an ahistorical, comedic Mary Todd Lincoln, who is resentful of her husband for thwarting her stage ambitions even during the Civil War. Conrad Ricamora plays Abe Lincoln. The play was highly lauded during its opening run for its humor and uniqueness. Now, it’s moving into a bigger theater with a larger production budget.

Maggie Siff of Billions and Sons of Anarchy stars in “Breaking the Story,” which is set to open on the Second Stage on June 4. Siff stars as a former war correspondent who is struggling to make the transition back to civilian life. During its preview run, the play received acclaim for its acting performances and its portrayal of internal conflict.

On a lighter note, Cats is returning to Broadway, albeit with a twist. “Cats: The Jellicle Ball” will open at the Perelman Theater on June 13 and is brought by directors Zhailon Levingston and Bill Rauch. The musical is set within the world of New York ballroom dancing and features club music and runway choreography. It will be interesting to see if this can recapture the magic of the original or come off as a tired sequel.

Finsum: This year’s summer season is especially slow on Broadway. However, there are a couple of interesting shows opening in the coming months, including “Oh! Mary” and “Breaking the Story”.

Traditionally reserved for the wealthy, direct indexing has become more widely accessible thanks to technological advancements. This investment strategy involves owning the individual stocks in an index such as the S&P 500, which allows investors to sell off underperforming stocks to generate tax losses—a technique known as tax-loss harvesting.


 According to Frec, a direct-indexing startup, a simulated S&P 500-based portfolio could boost after-tax annual returns by more than 2% over a decade, compared to an ETF, assuming a tax rate of 42.3% and excluding advisory fees. 


Firms like Charles Schwab, Vanguard, and Fidelity now offer direct-indexing services with various account minimums and fee structures, lowering the entry barrier for average investors. With the market for direct indexing expected to reach $825 billion in assets by 2026, this approach is set to become increasingly popular among a broader range of investors.

Finsum: Computing power has drastically driven down the costs of Direct Indexing allowing more investors to gain its tax alpha. 

Page 5 of 948

Contact Us



Subscribe to our daily newsletter

We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…