WisdomTree Study Reveals Investors View Model Portfolios as More Sophisticated Approach to Asset Allocation, Yet Adoption Rem...
June 23 2020 - 9:00AM
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.
“WisdomTree is committed to innovation in the
advisor solutions space and with the proliferation of model
portfolios over the last five years, we believe we’ve completed the
most in-depth research study of its kind to help advisors
understand investors’ perceptions of models – which will ultimately
help them growth their business,” said Jarrett Lilien, President
and COO at WisdomTree. “We’re particularly excited about how the
data we produced will shape the industry going forward and increase
adoption of third-party model portfolios.”
Investors view each applied model portfolio
as a tailored response to their unique investment
goals
- More than 90% of investors see the advisor as a critical part
of their financial success and third-party models can help position
them as the quarterback of the relationship
- 58% of investors would switch advisors if they properly
promoted a models-based practice
- 86% of investors welcome model portfolios and nearly half of
investors believe their advisor is already using one
Investors believe that with the use of model
portfolios, the advisor is applying the appropriate technical
approach by accessing valuable research and data from asset
managers and combining it with their intimate knowledge of the
client’s specific needs.
About the ResearchA hybrid
approach was applied to the research including quantitative and
qualitative methods. The research was conducted with Investors and
Financial Advisors. The robust Investor quantitative work was
fielded in January 2020 with a 2.3% margin of error and relaunched
in March of 2020 (post-volatility). Both phases were fielded among
over 2000 high net worth, multi-generational targets. More details
on the research can be viewed on the WisdomTree Model Portfolios
site here.
There are risks involved with investing, including
possible loss of principal. This information is not personalized
investment advice or an investment recommendation from WisdomTree,
and is intended for use only by a third party financial advisor,
with other information, as a resource to help build a portfolio or
as an input in the development of investment advice for its own
clients. Such financial advisors are responsible for making their
own independent judgment as to how to use this information.
WisdomTree does not have investment discretion over or place trade
orders for any portfolios or accounts derived from this
information.
Investors and their advisors should
consider the investment objectives, risks, charges and expenses of
the funds included in any model portfolio carefully before
investing. This and other information can be obtained in the fund’s
prospectus by visiting www.wisdomtree.com for WisdomTree Funds.
Please read the prospectus carefully before you invest in a fund.
WisdomTree Asset Management Inc. does not endorse and is not
responsible for or liable for any content or other materials made
available by other ETF sponsors.
WisdomTree Funds are distributed by Foreside Fund
Services, LLC, in the U.S. only.
WTPR-20200619-0079
About WisdomTree
WisdomTree Investments, Inc., through its
subsidiaries in the U.S. and Europe (collectively, “WisdomTree”),
is an exchange-traded fund (“ETF”) and exchange-traded product
(“ETP”) sponsor and asset manager headquartered in New York.
WisdomTree offers products covering equities, fixed income,
currencies, commodities and alternative strategies. WisdomTree
currently has approximately $57.9 billion in assets under
management globally. For more information, please visit
www.wisdomtree.com or follow us on Twitter @WisdomTreeETFs.
WisdomTree® is the marketing name for WisdomTree
Investments, Inc. and its subsidiaries worldwide.
Contact Information:Media
RelationsWisdomTree Investments, Inc.Jessica Zaloom / Amie
Lauder+1.917.267.3735 / +1.416.459.6835jzaloom@wisdomtree.com /
alauder@wisdomtree.com
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