The coronavirus pandemic has brought third-party portfolio management into sharp focus for financial advisors, according to research released Wednesday by YCharts, an investment research, analytics and client communications platform.
The study found that surveyed advisors’ comfort levels with using third-party model portfolios has been disrupted by the market volatility caused by the virus outbreak.
Forty-one percent of advisors who transitioned to outsourced model portfolios in the last year said they were now less confident in those strategies. Moreover, 22% of all advisors who use third-party models said they planned to decrease the percentage of assets invested in those models.
In contrast, more than half of advisors who build portfolios in-house said they were no more or less confident using their own strategies after the market downturn caused by COVID-19, while 42% said they were even more confident.
YCharts conducted the survey in July among 319 financial advisors, 76% of whom identified as RIAs or dually registered RIAs, with 24% indicating employment at a broker-dealer.
Leveraging third-party model portfolios versus managing client portfolios in-house confronts advisors with both benefits and trade-offs, the survey showed.
Seventy-two percent of advisors who use third-party models said outsourced portfolio management enabled them to spend more time with clients and prospects.