How Advisors Are Using ETF Model Portfolios to Help Grow and Scale Their Practice
Published June 10, 2019
Head of RIA Portfolio Solutions Distribution & Specialists
This article is relevant to financial professionals interested in model portfolios. WisdomTree ETF model portfolios are only available to financial professionals through various portfolio platforms.
For financial advisors there often aren’t enough hours in a day. Streamlining client portfolios and outsourcing some, or all of the portfolio construction to outside asset management firms could help give an advisor some hours of their day back. Those hours can add up and potentially provide more time to devote to engaging with existing clients or focusing on acquiring prospects.
Let’s look at how some financial advisors are using model portfolios today, to help grow and scale their practice.
Advisors who have benefited from ETF model portfolios are typically:
1. Those focused on growing and scaling their business. Model portfolios can provide a consistent, defined investment process to use across all client accounts—hence scalability.
2. Those aimed at keeping up with regulatory reforms relating to a lack of defined investment process and the potential perils that could stem from such.1
3. Those motivated to combat continued fee compression. ETF model portfolios can help reduce overall fees for advisors’ clients through the investments themselves or the economics of scalability and value-adds such as behavioral coaching.2
How Can ETF Model Portfolios Benefit Advisors and Their Practice?
The chart below uses a hypothetical example to contrast the possible experience of an advisor before and after utilizing ETF model portfolios.
How Can ETF Model Portfolios Benefit Advisors and Their Practice?
How Does WisdomTree Participate in this Trend?
WisdomTree, a pioneer in the industry as an Index developer and ETF sponsor, has constructed a suite of ETF model portfolios that best reflect WisdomTree’s current asset allocation preferences and investment thesis.
Using a blend of both well-suited WisdomTree products and an open-architecture approach enables WisdomTree’s Asset Allocation Committee to integrate best-of-breed ETFs into a holistic solution, incorporating both traditional “cap-weighted beta” ETFs and factor-tilted Modern Alpha™ exposures.
Are ETF Model Portfolios Right for Your Practice?
If you are a financial advisor, nobody knows your business better than you! There are many potential benefits to transitioning to an ETF models-based practice and we believe this trend will continue to develop.
Financial professionals can learn more about WisdomTree Modern Alpha™ ETF model portfolios here.
1There is no guarantee that adapting to a models-based practice will prevent or reduce any business or regulatory risk.
2ETFs can be less expensive than mutual funds but there is no guarantee. The economics of scalability is up to the execution of the individual firm, and value-adds such as behavioral coaching are subjective.
Important Risks Related to this Article
This content is for information only and is not intended to provide, and should not be relied on for tax, legal, accounting, investment or financial planning advice by WisdomTree, nor should it be considered or relied upon as a recommendation by WisdomTree regarding the use or suitability of any model portfolio or any particular security. This content is intended for use only by a financial advisor as a resource in the development of a portfolio for a financial advisor's clients. The financial advisor is solely responsible for making investment recommendations and/or decisions with respect to its clients without input from WisdomTree, including with respect to investing in accordance with any model portfolio or any particular security. WisdomTree is not acting in an investment advisory, fiduciary or quasi-fiduciary capacity to any financial advisor or its client and is not providing individualized investment advice to any financial advisor or its client based on or tailored to the circumstances of any individual financial advisor or its individual client.
This material has been prepared without regard to the individual financial circumstances and objectives of any investor, and the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investors and their advisors should consider the investors’ individual financial circumstances, investment time frame, risk tolerance level and investment goals. Investors should consult with their own advisors before engaging in any transaction. Using an asset allocation strategy does not ensure a profit or protect against loss, and diversification does not eliminate the risk of experiencing investment losses. There is no assurance that investing in accordance with a model portfolio’s allocations will provide positive performance over any period. The model portfolios are provided “as is,” without any warranty of any kind, express or implied. Information and other marketing materials provided to you by WisdomTree or any third party concerning a WisdomTree model portfolio, including allocations, performance and other characteristics, may not be indicative of an investor’s actual experience from an account managed in accordance with a model portfolio’s strategy.
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About the contributor
Head of RIA Portfolio Solutions Distribution & Specialists
Ryan drives the commercialization of model portfolio solutions and supports advisor growth strategies. He plays a central role in WisdomTree’s Model Portfolio Research Study, advancing insights on model adoption, advisor behavior and prospecting opportunities. Ryan's passion for third-party model portfolios and investment outsourcing was cultivated during his tenure at a Registered Investment Advisor, where he held roles across research and operations. He also brings WisdomTree’s research on advisor online presence to life through high-impact programming that turns key findings into practical guidance for improving digital credibility and prospect engagement. Ryan is a CFA charterholder and a graduate of Loyola University of Maryland.