Custom models, off the shelf models, and everything in between – that’s what we do day in and day out.  Fortunately, we are busy. We’ve carved out a niche to provide service and economics for advisors exploring how to leverage the efficiency that models potentially bring to their business.  There’s no shortage of advisors looking. This content is relevant for advisors and clients considering hiring a financial advisor. 

Some advisors view “models” as a bad word for clients to hear.  “I want to avoid using the word models because my clients want customization” – some form of that sentence is shared quite often.  Is that really what clients want?

Here’s the difference in models and custom portfolios that’s not made enough:

  • Model portfolios are thought about.  They are monitored, updated, and discussed consistently. 
  • “Custom” accounts on the other hand, are on an island. Only looked at a couple hours before meetings to jog the advisor’s memory. 

I’m generalizing what I’ve seen, maybe, but not by much.  Here’s why:

The typical financial advisor works with multiple families, at least 50, and sometimes a whole lot more.  Each of those families will have an average of 2 to 3 accounts with the advisor and each of those families will come with a list of planning demands.  Some complex, some simple.  

The best financial advisors are the ones that spend their time with clients to think and communicate through financial planning issues of all shapes and sizes.  They simplify the complex, shift focus to the things that matter, and facilitate control of the controllables. That doesn’t get accomplished during one meeting. 

To think advisors can customize each account they manage and performing the necessary due diligence on each holding assumes they have the time and resources to do so.  They don’t, it’s why our business exists. If they tell you they are doing both, planning and investment wizardry, I’d think twice before signing that paperwork. Deductive reasoning (a fancy way of saying common sense) tells us otherwise. 

Rather than think about what clients don’t want, we think about what they do want.  A trusted advisor and the comfort that their portfolio is being monitored and thought about consistently.  We’ve built the infrastructure and team to help advisors deliver both.  

Thanks for reading and please keep in mind, Simple Beats Complex.