Hollie Fagan, Managing Director, Head of RIA, BlackRock met with Julie Cooling, Founder & CEO, RIA Channel to discuss trends in model portfolio management.
According to BlackRock, more than $2.7 trillion is being allocated to model portfolios, and roughly 50% of all advisors are using them.
A subscription to the BlackRock research model, for example, gives advisors access to resources such as trade rationale and market commentary, but ultimately the advisor is responsible for implementing trades within the model. On the other end of the spectrum, TAMPs provide a completely outsourced solution. Platforms like Envestnet share in the fiduciary responsibility and handle all aspects of the model management. “Completely outsourced investment management tends to be the most attractive to those who wish to grow,” says Fagan.
When selecting models, advisors often seek out multi-manager options with low-cost and commission-free underlining ingredients. Recently, BlackRock launched ten risk-based models, made up entirely of commission-free ETFs. “We are trying to eliminate as much friction as we can for the financial advisor,” says Fagan.
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