In contrast, among advisors who conduct in-house portfolio construction said that in the aftermath of the COVID-19’s worst impact on the market, over half said they’re just as confident using their own strategies, while 42% are even more confident in the wake of the COVID-19 downturn.
With their confidence in third-party model portfolios shaken, advisors will have to be more careful in weighing the benefits of using outsourced investment strategies against those of managing clients’ portfolios themselves. Survey data showed a 72% consensus among third-party model users that they are able to spend more time with clients and prospects, while 40% of those using in-house strategies acknowledged that they have less time to interact with clients and prospects.
On the flip side, 71% of advisors who outsource portfolio management agreed that it leads to a lack of personalized service, while 90% of those who build and manage portfolios themselves say they’re better able to give clients personalized service.
Shopping for a good third-party model portfolio is an additional struggle for advisors. Among all respondents, 52% agreed that making apples-to-apples comparisons is the hardest aspect of evaluating options for externally managed portfolios, while 44% cited one-sided marketing material as a substantial hurdle.
“Whether advisors are opting to become more involved in portfolio management or are confident in their outsourcing strategies, it’s imperative that they have tools and data at their disposal to help them make smart investment decisions and are able to effectively communicate with clients regarding their investment strategies,” said YCharts President and CEO Sean Brown.
