Australian investor awareness and satisfaction with model portfolios has increased, highlighting benefits such as lower fees, closer portfolio monitoring and greater advisor involvement.
Latest news from State Street Global Advisors (SSGA) Model Portfolios: Adaptive Solutions for Advice Growth report, surveying 250 individual investors with investable assets of more than $780,000 and working with a financial advisor, found that awareness and adoption of this investment vehicle had increased significantly over the past five years .
Model portfolios consist of a range of assets, including ETFs, stocks and bonds, providing access to diversified, professionally managed investment solutions with a focus on achieving specific financial goals .
More than two-thirds (67%) of Australian investors said they were now aware of model portfolios, a notable increase from just 47% in 2019, the survey found.
Additionally, 84 percent of investors report holding assets in model portfolios, up from 56 percent in 2019.
“With more than half of Australian financial advisors now using managed accounts, it’s great to see the benefits extending to investors,” said Kathleen Gallagher, head of model portfolios for EMEA and APAC at SSGA.
The study further highlighted that Australian investors highly value the benefits of placing their assets in model portfolios. Nearly 90 percent said they benefit from increased monitoring of their portfolio and more time spent with their financial advisors.
Some 79 percent said portfolio track record is an advantage, although that figure is down from 91 percent in 2019.
The benefits of model portfolios extend beyond cost and time efficiency, with the survey finding that investors who know they hold assets in model portfolios report greater satisfaction with their financial advisors, including regarding transparency, problem solving and optimization of portfolio performance.
Tim Bradbury, head of intermediaries in Australia at SSGA, noted that advisors are able to create additional efficiencies by providing model portfolios to their clients when it comes to investing.
“Advisors who use managed accounts reported that they, or their support staff, saved an average of 22.8 hours per week. Model portfolios allow advisors to optimize their time, allowing them to focus on providing holistic advice that is most important to their clients,” he said.
“Advisors create additional efficiencies by providing model portfolios to their clients on investment platforms. The powerful combination of this technology, coupled with model portfolios, is a key development in providing investment solutions and advice in a cost-effective manner.
According to the survey, Australian investors holding assets in model portfolios are more likely to recognize the value of an advisor beyond better returns and lower fees, with around 44 per cent noting the benefit of having more of advisor time and 33 percent highlighting greater flexibility on the part of investors. advise them on their needs.
“Model portfolios are transforming the way Australian financial advisors serve their clients,” Gallagher added.
“By leveraging ETFs as building blocks, financial advisors now offer ready-to-use solutions that fully optimize portfolio management and compliance work – almost as if providing the cake to investors, rather than just the ingredients.
“This approach not only delivers meaningful and effective investment strategies, but also means financial advisors can spend more time on what matters most: building stronger client relationships.”
