- Overwhelming majority of advisors are leveraging models:
less than 1-in-20 advisors do not use model portfolios at
all
- Investors who have assets in models are more satisfied with
their advisor
State Street Global Advisors, the asset management business of
State Street Corporation (NYSE: STT) today released the results of
its Model Portfolios: Adaptive Solutions for Advisory Growth
research, in which advisors report having an average of 39% of
current assets under management in model portfolios - up from 32%
three years ago.
“Model portfolios have evolved into a powerful tool for advisors
seeking to scale their practices efficiently while enhancing the
quality of personalized, client-centered wealth management,” said
Brie Williams, Global Head of Advisory Solutions and Wealth
Intelligence at State Street Global Advisors. “By streamlining
portfolio management, these solutions enable advisors to focus on
delivering holistic financial planning and high-impact advice,
positioning their practice for sustainable growth in an
ever-changing market.”
Model Portfolio Utilization and Use-Cases
More than half of surveyed advisors (54%) utilize custom
(self-built) models for clients while 45% source models available
on their home office/broker-dealer platform, and 53% source from
third-party providers.
The top factors advisors consider when selecting model portfolio
partners include commitment from providers (30%), performance
(29%), and price (27%). Notably, 85% of advisors believe tax
personalization is a benefit of using models.
The research finds that the types of model portfolios utilized
do not differ significantly between investors’ net worth or age,
but rather on clients’ goals and other aspects of their financial
situation. This tracks with what investors see as top benefits of
having their assets in model portfolios:
- My advisor can spend more time helping me make more intelligent
financial planning decisions (89%)
- My advisor can focus on what really matters to me (86%)
- My advisor can be more flexible to my needs (85%)
Gaps Between Advisor, Investor Views on Fees, Value
The research also uncovers a sizable perception gap between
financial advisors and investors when it comes to understanding
fees and being satisfied with value. While most advisors (87%)
believe their clients understand their fees, just 58% of clients
say they understand. Similarly, 88% of advisors think clients are
satisfied with the value for fees paid while 63% of clients feel
this way.
When asked what would improve the value of the services they
receive from their advisor, clients’ top three responses
include:
- Better returns (51%)
- Lower fees (46%)
- More proactive reporting (27%)
Conversely, the top three responses advisors provided when asked
what would improve the value of services they are providing to
clients include:
- Spending more time helping clients make more intelligent
financial planning decisions (40%)
- Portfolio having a track record that fits risk tolerance
(38%)
- Portfolio being constructed by asset managers with more
knowledge of markets (38%)
Satisfaction With Advisor Higher Among Investors In
Models
Investors who know their assets are in model portfolios are more
likely to be satisfied with their financial advisor than investors
who don’t know or who have no assets in model portfolios.
Nearly all investors in model portfolios (95%) are satisfied
with their advisor’s ability to earn their trust and confidence
compared to 79% of investors without assets in models. Similarly,
93% of investors in models are satisfied with their advisor’s
understanding of their financial goals, compared to 79% of
investors without assets in models. Notably, 51% of advisors said
clients expect an element of customization/personalization.
Investors with assets in models are also more satisfied with the
fees they pay for the value of services they receive, as 79% of
model investors are satisfied with their fees compared to 56% of
investors without models.
Despite the growth of and satisfaction with model portfolios,
investors awareness has not improved during the past five years.
Among investors, just over half (57%) of investors are aware of
model portfolios - unchanged from 2019.
“There is a sizeable group of investors who need more
information and education on model portfolios,” added Williams.
“The return on investing in client education is significant for
advisors. Not only do model portfolios help advisors manage their
time more effectively, but they also create opportunities to meet
client expectations in ways that enhance satisfaction and foster
long-term relationships.”
For more information, read State Street Global Advisors’ Model
Portfolios: Adaptive Solutions for Advisory Growth or visit the
State Street ETF Model Portfolios landing page.
About State Street Global Advisors’ Model Portfolios:
Adaptive Solutions for Advisory Growth Research, March-May
2024
State Street Global Advisors Research Center, in partnership
with A2Bplanning and Prodege, conducted an online survey among 200
financial advisors with assets under management (AUM) of $25M or
more and 250 individual investors in the US who work with a
financial advisor and have investable assets of $500K.
In the United States, an online survey among 200 financial
advisors with assets under management (AUM) of USD 25M or more.
Data was collected from May 3–14, 2024.
In the United States and Australia, an online survey of 250
individual investors (each country) who work with a financial
advisor and have investable assets (IA) of USD $500K or more. Data
was collected from May 3–28, 2024.
The information presented in this press release is specific to
the US region.
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About State Street Global Advisors
For over four decades, State Street Global Advisors has served
the world’s governments, institutions, and financial advisors. With
a rigorous, risk-aware approach built on research, analysis, and
market-tested experience, and as pioneers in index and ETF
investing, we are always inventing new ways to invest. As a result,
we have become the world’s fourth-largest asset manager* with US
$4.73 trillion† under our care.
*Pensions & Investments Research Center, as of 12/31/23.
†This figure is presented as of September 30, 2024 and includes ETF
AUM of $1,515.67 billion USD of which approximately $82.59 billion
USD in gold assets with respect to SPDR products for which State
Street Global Advisors Funds Distributors, LLC (SSGA FD) acts
solely as the marketing agent. SSGA FD and State Street Global
Advisors are affiliated. Please note all AUM is unaudited.
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Deborah Heindel 617-662-9927 dheindel@statestreet.com
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