Using Model Portfolios to Scale Your Practice


Managing client assets has become increasingly complicated for advisors who are trying to grow their business while also remaining connected to their clients’ portfolio outcomes. Financial advisors who go it alone and manage their clients’ day-to-day investment management may find this to be a daunting task. Time spent building, executing and rebalancing custom portfolios, along with complying with the related regulatory issues may have an advisor spending close to half of their time on these tasks. This is time taken away from meeting with clients and prospects to further develop relationships and grow the business.

Today more and more advisors are relying on model portfolios to manage assets so they can focus more on client building and retention activities. Here are some of the benefits advisors are finding when using model portfolios:

  • Outsourcing Asset Management for Scale: Using model portfolios can greatly reduce operational costs and time spent researching and managing clients’ portfolios. Typically processes used to manage portfolios for clients are not scalable as the business grows so may require hiring an assistant or spending more time away from clients to manage this aspect of the business. Model portfolio programs typically offer solutions for simpler performance tracking and account reviews, which also increases the productivity and efficiency of the practice.
  • Value-added Expertise and Advice: Using model portfolios gives advisors and their clients access to institutional-quality money management expertise. This allows advisors to find a managed account solution that aligns with their clients’ specific investment objectives. These experts typically have a long history of managing risk-based portfolios and deep research capabilities, which can help you offer clients more consistent, reliable results over time.
  • More Time to Focus on Business Development: As mentioned earlier, outsourcing the asset management portion of a practice for at least the majority of clients can greatly reduce the amount of time spent on managing clients’ investment portfolios, including ongoing performance reporting and tracking and meeting regulatory requirements. This frees up your time to spend more time in front of clients and prospects to expand your business and demonstrate ongoing value to clients.
  • Positioning Your Practice to Transition or Sell: Whether retirement is 10 years from now or much further in the future, building a business that can be easily transitioned or sold down the road should always be a consideration. Using model portfolios allows an advisor to grow the business more rapidly while also offering a turn-key system for managing clients’ assets that allows for an effortless transition or sale down the road.

Most wealth management firms have relationships with a third-party firm that provides model portfolios and associate performance tracking and reporting. Solutions may include a wide range of separately managed accounts to address the investment needs of many different types of clients, as well as unified managed accounts which allow advisors to create one larger portfolio made up of several model portfolios for clients with more sophisticated needs.

Outsourcing asset management by using model portfolios can be a powerful tool to manage an advisory practice. It provides advisors with the scale needed to increase client interactions and decrease time-consuming, investment-related tasks. It also helps advisors manage tasks related to regulatory compliance and ongoing performance tracking and performance. Finally, it offers access to institutional-quality advice and expertise, which translates into a better experience for clients and gives advisors the time to be there for their clients when they need them most.

Finding a way to differentiate yourself as a financial advisor is not as difficult as you think. Consider implementing these steps to stand out from the sea of sameness, effectively grow your practice and thrive.

The paper/commentary was prepared by Momentum Independent Network (MIN). It is intended for informational purposes only and does not constitute legal or investment advice. The statements within constitute the views of MIN as of the date of the document and may differ from the views of other divisions/departments of affiliate Hilltop Securities Inc. In addition, the views are subject to change without notice.

Momentum Independent Network Inc. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. MIN and HilltopSecurities are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, TX 75201 (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC

For Professional use only.


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