State Street Global Advisors Study Finds Assets in Model Portfolios Rising as Advisors Focus on Efficiency, Holistic Planning and Client Satisfaction

• Overwhelming majority of advisors are leveraging models: less than 1-in-20 advisors do not use model portfolios at all
• Investors who have assets in models are more satisfied with their advisor

BOSTON--(BUSINESS WIRE)-- State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT) today released the results of its Model Portfolios: Adaptive Solutions for Advisory Growth research, in which advisors report having an average of 39% of current assets under management in model portfolios - up from 32% three years ago.

“Model portfolios have evolved into a powerful tool for advisors seeking to scale their practices efficiently while enhancing the quality of personalized, client-centered wealth management,” said Brie Williams, Global Head of Advisory Solutions and Wealth Intelligence at State Street Global Advisors. “By streamlining portfolio management, these solutions enable advisors to focus on delivering holistic financial planning and high-impact advice, positioning their practice for sustainable growth in an ever-changing market.”

Model Portfolio Utilization and Use-Cases

More than half of surveyed advisors (54%) utilize custom (self-built) models for clients while 45% source models available on their home office/broker-dealer platform, and 53% source from third-party providers.

The top factors advisors consider when selecting model portfolio partners include commitment from providers (30%), performance (29%), and price (27%). Notably, 85% of advisors believe tax personalization is a benefit of using models.

The research finds that the types of model portfolios utilized do not differ significantly between investors’ net worth or age, but rather on clients’ goals and other aspects of their financial situation. This tracks with what investors see as top benefits of having their assets in model portfolios:

• My advisor can spend more time helping me make more intelligent financial planning decisions (89%)
• My advisor can focus on what really matters to me (86%)
• My advisor can be more flexible to my needs (85%)

Gaps Between Advisor, Investor Views on Fees, Value

The research also uncovers a sizable perception gap between financial advisors and investors when it comes to understanding fees and being satisfied with value. While most advisors (87%) believe their clients understand their fees, just 58% of clients say they understand. Similarly, 88% of advisors think clients are satisfied with the value for fees paid while 63% of clients feel this way.

When asked what would improve the value of the services they receive from their advisor, clients’ top three responses include:

• Better returns (51%)
• Lower fees (46%)
• More proactive reporting (27%)

Conversely, the top three responses advisors provided when asked what would improve the value of services they are providing to clients include:

• Spending more time helping clients make more intelligent financial planning decisions (40%)
• Portfolio having a track record that fits risk tolerance (38%)
• Portfolio being constructed by asset managers with more knowledge of markets (38%)

Satisfaction With Advisor Higher Among Investors In Models

Investors who know their assets are in model portfolios are more likely to be satisfied with their financial advisor than investors who don’t know or who have no assets in model portfolios.

Nearly all investors in model portfolios (95%) are satisfied with their advisor’s ability to earn their trust and confidence compared to 79% of investors without assets in models. Similarly, 93% of investors in models are satisfied with their advisor’s understanding of their financial goals, compared to 79% of investors without assets in models. Notably, 51% of advisors said clients expect an element of customization/personalization.

Investors with assets in models are also more satisfied with the fees they pay for the value of services they receive, as 79% of model investors are satisfied with their fees compared to 56% of investors without models.

Despite the growth of and satisfaction with model portfolios, investors awareness has not improved during the past five years. Among investors, just over half (57%) of investors are aware of model portfolios - unchanged from 2019.

“There is a sizeable group of investors who need more information and education on model portfolios,” added Williams. “The return on investing in client education is significant for advisors. Not only do model portfolios help advisors manage their time more effectively, but they also create opportunities to meet client expectations in ways that enhance satisfaction and foster long-term relationships.”

For more information, read State Street Global Advisors’ Model Portfolios: Adaptive Solutions for Advisory Growth or visit the State Street ETF Model Portfolios landing page.

About State Street Global Advisors’ Model Portfolios: Adaptive Solutions for Advisory Growth Research, March-May 2024

State Street Global Advisors Research Center, in partnership with A2Bplanning and Prodege, conducted an online survey among 200 financial advisors with assets under management (AUM) of $25M or more and 250 individual investors in the US who work with a financial advisor and have investable assets of $500K.

In the United States, an online survey among 200 financial advisors with assets under management (AUM) of USD 25M or more. Data was collected from May 3–14, 2024.

In the United States and Australia, an online survey of 250 individual investors (each country) who work with a financial advisor and have investable assets (IA) of USD $500K or more. Data was collected from May 3–28, 2024.

The information presented in this press release is specific to the US region.

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About State Street Global Advisors

For over four decades, State Street Global Advisors has served the world’s governments, institutions, and financial advisors. With a rigorous, risk-aware approach built on research, analysis, and market-tested experience, and as pioneers in index and ETF investing, we are always inventing new ways to invest. As a result, we have become the world’s fourth-largest asset manager* with US $4.73 trillion^† under our care.

*Pensions & Investments Research Center, as of 12/31/23. ^†This figure is presented as of September 30, 2024 and includes ETF AUM of $1,515.67 billion USD of which approximately $82.59 billion USD in gold assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. Please note all AUM is unaudited.

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7368170.1.1.AM.RTL Exp. Date: 12/31/2025

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Deborah Heindel

617-662-9927

dheindel@statestreet.com

Source: State Street Corporation