Why Some Advisors Refuse to Use Model Portfolios

Why Some Advisors Refuse to Use Model Portfolios

The case for model portfolios has never been better. Investment managers are expanding their model portfolio offerings while turnkey asset management platforms continue to grow. Since portfolio management is just one piece of a financial plan, why wouldn’t advisors want to take advantage of model portfolios to free up time to spend with their clients? However, some advisors have a reason for resisting this trend and insist on managing portfolios themselves. For instance, Ryan Johnson, managing director at Buckingham Advisors told InvestmentNews, “By managing our own portfolios, we’re adding value.” Johnson added that they feel they have a lot of control over the individual stock selection, especially when it comes to tax planning. Paul Schatz, president of Heritage Capital also mentioned control as to why he builds client portfolios from scratch. He stated, “Control is a huge driver.” Robert Steinberg, chief executive at RIA Blue Chip Partners told the magazine that they focus on individual securities since “clients are more involved, it’s easier to tax-loss harvest, they know what they own.” While a 2020 research report from InvestmentNews cited numerous reasons for outsourcing portfolio management such as freeing up time, some advisors still see portfolio management as a core component of financial planning. The report also listed the top reasons for not using a model portfolio such asinvestment researchstrength, flexibility, and cost.


Finsum:While model portfolios continue to gain steam among financial advisors, there are still some that prefer to build portfolios themselves due to control, adding value, and getting clients more involved.

  • advisors
  • model portfolios
  • portfolio management
  • clients

    The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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