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Mannequin portfolios could also be dropping their attraction for monetary advisors serving prosperous purchasers, whereas individually managed accounts look like gaining floor, in keeping with a latest report.
Fewer advisors count on to extend their allocations to mannequin portfolios within the 12 months forward, whereas advisors plan to improve allocations to SMAs, in keeping with information from a Cogent Syndicated report by Escalent, an information analytics and advisory agency.
Solely 22% of advisors surveyed anticipate relying extra on mannequin portfolios within the subsequent 12 months, a drop of 5 proportion factors from 2022, in keeping with the report. Issues about underperformance and charges, mixed with the necessity for personalisation and extra complete fund choices, are inflicting mannequin portfolio progress to stall, Escalent discovered.
In the meantime, advisors plan substantial will increase of their SMA holdings over the subsequent two years, with common allocations anticipated to achieve 26% in 2025, up from 18% right this moment. The pattern is larger amongst advisors serving high-net-worth purchasers, who count on their common allocations to climb to 31% in 2025 from 23% in 2023.
The findings come from Cogent Syndicated’s Advisor Use of Mannequin Portfolios and SMAs report, which tracks advisors’ use of mannequin portfolios and SMAs, in addition to perceptions of main mannequin portfolio suppliers and SMA managers. The report examines the aggressive panorama for third-party mannequin suppliers and asset managers and the way suppliers can encourage broader mannequin portfolio adoption.
“The extent to which advisors make use of mannequin portfolios and SMAs has the potential to considerably influence how asset managers function throughout the wealth administration trade,” stated Meredith Lloyd Rice, vice chairman at Escalent. “Regardless of expectations that advisor reliance on mannequin portfolios would develop, we’re seeing a leveling off in adoption. Advisors are reevaluating whether or not mannequin portfolios supply the efficiency and class their more-affluent purchasers demand.”
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