Advisors increasingly rely on home office models, survey says
Most financial advisors base investment decisions on home office models, with new data showing that the profession continues to move more toward planning and customer service.
With a surfeit of models available from home offices and third parties such as asset managers, asset allocation is now all but commoditized, according to a report Monday from Fuse Research Network.
That doesn’t mean that the majority of advisors are relying exclusively on home offices to tell them how to allocate clients’ assets. Instead, most use models as a starting off point and customize them to various extents, according to Fuse. Only 10% of all the advisors the firm surveyed said they use home office models with little to no modifications.
“There is no question that wirehouse advisors are the most influenced by home office models,” said Fuse partner Mike Evans, the firm’s director of advisor and benchmark research.
Those at RIAs and independent broker-dealers are much more likely to build their own allocations from scratch, with 36% in each group saying as much, compared with just 9% of wirehouse advisors, according to the report.
Regardless, “it’s the great majority [of all advisors who] fall into that umbrella in the middle, where it is a core input or tangential input,” Evans said.
The findings are the latest to show the proliferation of models, but other surveys have shown even higher usage. A 2019 report from Broadridge, for example, found that 85% of advisors use them, with 78% saying at the time that clients value planning more than performance.
By focusing less on investment decision-making, advisors can put more energy into growing their businesses, a report last year from Cerulli noted. While advisors who customize portfolios for
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