When entering the site and if cookies are prevented from being saved, a message must be displayed
in a popup message box informing the user that their local browser settings are preventing
cookies from being saved and that cookies are required for the site to work. Exact text
to be provided for UAT. On OK click of the message, the user should be redirected to
the global landing page (currently ssga.com).
Improve Your Productivity and the Client’s Wealth Management Experience
New research shows that outsourcing portfolio management can help advisers who place a higher value on bespoke services.
Investors are focused on achieving their financial goals, whether that strategy is managed in-house or not.
Advisers often generate more excess returns for clients from financial planning and improved decision-making.
It takes time to provide personalised, actionable and impactful financial advice. This is time well spent when it adds value for clients, deepens relationships, and grows the business. But the competitive structure of wealth management has shifted and client needs are evolving, calling for a more efficient service model.
The introduction and wide-scale availability of outsourcing options has been influential in growing a financial adviser’s capacity to spend more quality time with clients, create investment process efficiencies, and strengthen the menu of services offered. Ultimately, this helps to achieve scalability.
What does it mean to outsource portfolio management? A third-party model portfolio manager handles the investment functions for the strategy, including research, risk management and administration. Outsourcing does not mean opting out of investment responsibilities on behalf of clients. Advisory practices maintain their rigorous process for selecting portfolios that reflect client goals and risk tolerances, using transparency into the strategy’s investment objectives and portfolio construction in their decision process.
Recognising the challenges facing advisers in proficiently running client portfolios and in ceding discretion, my team at State Street Global Advisors set out to reveal the usage and perceptions of outsourcing, along with the impact on practice development, adviser value and the client experience. Our new research finds that advisers are, on average, spending more time on portfolio management tasks than on activities that support either of their top business goals—deepening relationships with current clients or client acquisition.1
Investors understand model portfolios and recognise their benefits The advice industry has long moved away from selling outperformance. Adviser value is better measured by the impact of services on investors’ financial outcomes.2 Case in point: In our research, most investors with assets in model portfolios agree that “My financial adviser understands my financial needs and goals,” while the fewest investors reported “My financial adviser’s only responsibility is to construct portfolios to match my risk tolerance.”
There is a perception that investors are either unaware of or opposed to outsourcing portfolio management and using model portfolios as an investment vehicle. In reality, the majority of investors are aware,3 and only 10% are opposed.4
While it may sound counterintuitive, investors with assets in model portfolios feel better about their advisory relationship and are actually more satisfied with the wealth management experience.5 The combination of greater personal attention from their adviser and high confidence in their investment portfolio generates strong feelings of trust and satisfaction among clients.
Investors see the bigger picture when it comes to model portfolios. They recognise specific benefits related to performance, risk and fees.
Investors Recognise the Benefits of Model Portfolios
My portfolio is being constructed by asset managers with more knowledge of the markets
My adviser can focus on what really matters to me
My portfolio has a track record that fits my risk tolerance
My adviser can spend more time helping me make more intelligent financial planning decisions
My adviser can be more flexible to my needs
I am better protected by a robust compliance structure
There is more robust due diligence on my portfolio
Source: State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019. Q: Is the following a benefit to you because your advisor has your assets in a model portfolio? (select all that apply; base 25; summary of “yes, a benefit”).
Outsourcing doesn’t diminish the advisor’s role in the eyes of the client Most advisers see that clients want more than portfolio management. Offering advanced financial planning services or helping clients maintain healthy decision-making in the face of market volatility are just two ways advisers can deliver meaningful improvements in clients’ financial lives.
For their part, advisers told us they are in this business to do more than manage investments. Many say that building long-term relationships with clients is their favourite part of the job.
Adopting an outsourced portfolio management strategy that aligns with the practice’s investment management philosophy can help advisers pivot to grow. The decision really comes down to economies of scale and capacity.
Change is challenging, but evolution and innovation also represent an attractive upside if objectively evaluated and engineered to work in concert with the vision for the practice. To learn more about how model portfolios can create essential value for the practice and for advisory clients, read our full report: Model Portfolio Solutions and the Client Experience.
1State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019. On average, advisors are spending more time on portfolio management (23.1%) than on either client-facing activities (14.7%) or prospecting new clients (11.3%). 45% plan to deepen relationships with existing clients and 54% plan to focus on client acquisition. Qs: What are your business goals over the next 3-5 years? (Select all that apply). What percent of your time is allocated to each of the following…? (Sum must equal 100%; activity reported as sum of mean percent). 2Morningstar, The Value of Advice: What Investors Think, What Advisors Think, and How Everyone Can Get on the Same Page, 2018. 3State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019. 62% of investors are aware of model portfolios. Q: Is this consistent with what you have heard about model portfolios?/Have you heard of this investment vehicle? Does your advisor have any or all of your assets in a model portfolio? (Select one). 4State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019. 10% of investors would not like it and would find another advisor if their assets were put into model portfolios. Q: How would you feel if your advisor wanted to put your assets in a model portfolio? (Select one). 5State Street Global Advisors’ Practice Management Global Study, Advisor Productivity: Embracing Asset Allocation Models, 2019. Overall, 85% of investors with assets in model portfolios are satisfied with their advisor, as opposed to the 75% of investors who’s assets are not in model portfolios that are satisfied with their advisors. Q: How satisfied are you with your financial advisor? (5-point scale).
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
The views expressed in this material are the views of the State Street Global Advisors Practice Management Group through the period ended September 30, 2019 and are subject to change based on market and other conditions. The opinions expressed may differ from those with different investment philosophies. The information provided does not constitute investment advice and it should not be relied on as such. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.
This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441) ("SSGA, ASL"). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia · Telephone: 612 9240-7600 · Web: www.ssga.com.
State Street Global Advisors, Australia Services Limited (ASL) (AFSL Number 274900, ABN 16 108 671 441) is the issuer of interests and the Responsible Entity for the ETFs which are Australian registered managed investment schemes quoted on the AQUA market of the ASX or listed on the ASX. This material is general information only and does not take into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. You should seek professional advice and consider the product disclosure document, available at www.ssga.com/au, before deciding whether to acquire or continue to hold units in an ETF. This material should not be considered a solicitation to buy or sell a security. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF's net asset value. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index. Investing involves risk including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss. Holdings and sectors shown are as of the date indicated and are subject to change. This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown. It is not known whether the sectors or securities shown will be profitable in the future. Sector ETF products are also subject to sector risk and non-diversification risk, which generally results in greater price fluctuations than the overall market. SPDR and Standard & Poor's® S&P® indices are trademarks of Standard & Poor's Financial Services LLC and have been licensed for use by State Street Corporation. The Dow Jones Global Select Real Estate Securities Index is a product of S&P Dow Jones Indices LLC and has been licensed for use by State Street Global Advisors, ASL. MSCI indices, the property of MSCI, Inc. ("MSCI"), and ASX®, a registered trademark of ASX Operations Pty Limited, have been licensed for use by State Street Global Advisors, ASL. SPDR products are not sponsored, endorsed, sold or promoted by any of these entities and none of these entities bear any liability with respect to the ETFs or make any representation, warranty or condition regarding the advisability of buying, selling or holding units in the ETFs issued by State Street Global Advisors, ASL. State Street Global Advisors Trust Company (ARBN 619 273 817) is the trustee of, and the issuer of interests in, the SPDR® S&P 500® ETF Trust, an ETF registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 and principally listed and traded on NYSE Arca, Inc. under the symbol "SPY". State Street Global Advisors, ASL is the AQUA Product Issuer for the CHESS Depositary Interests (or "CDIs") which have been created over units in SPY and are quoted on the AQUA market of the ASX. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors, ASL's express written consent.