WisdomTree Study Reveals Investors View Model Portfolios as More Sophisticated Approach to Asset Allocation, Yet Adoption Remains Low

Majority of investors welcome model portfolio usage in their portfolios and identify advisor as critical part of their financial success

NEW YORK, June 23, 2020 (GLOBE NEWSWIRE) -- WisdomTree (NASDAQ: WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager, today released a first of its kind study on the practice management and adoption of third-party model portfolios. The extensive and unique research conducted by WisdomTree found that 86% of investors were open to using model portfolios when communicated properly by their financial advisor, however 65% had a different understanding of their use than reality. 

Perception of model portfolios among investors overwhelmingly positive

• The study found that 56% of investors expect that the model concept will have a positive impact on their portfolio
• 63% believe an advisor would be applying a more sophisticated approach to their asset allocation that is backed by extensive research and technology
• 90% of Millennials and 87% of Gen X were extremely accepting of their advisors if they used a ‘preset investment model portfolio’ with their funds

“In our research, we identified various reasons why investors might not use models and it’s quite surprising what we uncovered – and a major missed opportunity for advisors,” said Brad Shepard, Head of Advisor Innovation at WisdomTree. “The variances between what investors believe versus reality are astounding, and it appears that the benefits and value of models are not being positioned properly by the advisor.”

Investors find comfort in knowing they will have the collective expertise of an asset management firm’s analysts, strategists and PhDs.

According to the study, close to half of investors see the use of models as an updated approach that provides extensive research applied to their portfolio through the advisor. Further, when asked about the most important benefit of using model portfolios, investors cited incorporating a full asset manager team’s research to their portfolio that is facilitated through their advisor (41%):

• 63% of investors believe that advisors who use third-party models are providing a more sophisticated asset allocation approach that is backed by the extensive research and technology of an asset manager’s team
• 60% of investors believe that using models will have a more positive impact on their overall portfolio
• 58% of investors are extremely likely to switch to an advisor who uses model portfolios

While some investors may be prone to changing advisors in the next two years, the influence of model use can be a positive to capture that potential new client.