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Advisors - August 21, 2020

Survey Results: Pandemic, Volatility Push Advisors to Rethink Portfolio Management

Portfolio management has long been a cornerstone of relationships between financial advisors and their clients. During a global pandemic, a record-speed market downturn, followed by a record recovery, clients take special note of their portfolio’s performance—and their advisor’s advice.

However, over the past decade’s bull market, client needs have evolved, holistic planning has become a focal point for many advisors, and outsourced investment management via model portfolios has become an attractive option for investing clients’ assets.

Even as the trend in outsourced portfolio management has ramped up in recent years, most advisors have continued to manage their clients’ portfolios in-house. Model portfolios may offer several benefits to advisors, chief among them time savings, but limited personalization and flexibility during turbulent markets can be trade-offs. Those pros and cons have become more noticeable in the wake of COVID-19 and widespread market volatility.

financial advisors model portfolio survey

In light of these emerging trends, YCharts set out to learn how comfortable advisors are leveraging third-party portfolio strategies, and the perceived impact that outsourced investment management has on their relationships with clients. We also wanted to understand how significant market events, such as COVID-19, impact the advisors’ willingness to be hands-off when it comes to their clients’ investments.

Download the full Survey Report to see our findings:

We found that financial advisors are still divided on third-party investment strategies and their likeliness to adopt such solutions. However, the COVID-19 pandemic and its effect on capital markets has added new variables to advisors’ decision between outsourced portfolio strategies and in-house management.

A revealing finding from our Advisor Sentiment Survey: advisors who recently onboarded third-party portfolios are feeling uncertain since the market has become more volatile. In fact, more than 2 in 5 advisors who adopted third-party model portfolios in the last year feel “much less comfortable” with those outsourced solutions in light of COVID-19.

Click to See More Findings

Whether outsourcing or building in-house, advisors need a firm grasp on their clients’ investments

COVID-19 has stoked advisors’ desire and need to have a firm grasp on their clients’ portfolios.

To a greater degree than before, advisors should approach the in-house-or-outsource question with careful consideration. On one hand, managing portfolios in-house is a commitment to your clients, and COVID-19 has made that commitment even more important. On the other, while third-party models alleviate some burdens of portfolio management, they are not fully plug-and-play solutions. Advisors need to be certain that a model strategy is the right fit for their clients, and that the provider is a good match for their firm as a whole.

Survey respondents answered that, similar to the in-house-or-outsource decision, evaluating and comparing third-party model portfolios is not easy. With YCharts, you can evaluate third-party models and compare them head-to-head, or tailor portfolios you’ve built yourself to best meet client needs. For both investment management options, YCharts enables you to clearly explain the strengths, benefits and trade-offs of your investment strategy.


Connect With YCharts

To get in touch, contact YCharts via email at hello@ycharts.com or by phone at (866) 965-7552

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©2020 YCharts, Inc. All Rights Reserved. YCharts, Inc. (“YCharts”) is not registered with the U.S. Securities and Exchange Commission (or with the securities regulatory authority or body of any state or any other jurisdiction) as an investment adviser, broker-dealer or in any other capacity, and does not purport to provide investment advice or make investment recommendations. This report has been generated through application of the analytical tools and data provided through ycharts.com and is intended solely to assist you or your investment or other adviser(s) in conducting investment research. You should not construe this report as an offer to buy or sell, as a solicitation of an offer to buy or sell, or as a recommendation to buy, sell, hold or trade, any security or other financial instrument. For further information regarding your use of this report, please go to: ycharts.com/about/disclosure

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