Model portfolios using exchange-traded funds are gaining popularity in the financial advisory world. Cerulli Associates reports that $23 trillion of the estimated $36 trillion allocated to model portfolios is managed in-house by firms. Financial advisors see benefits like cost-effectiveness, diversification, easy rebalancing, and tax efficiency in using ETF models.

For financial advisors juggling various roles, model portfolios offer consistency and discourage market timing. The trend is expected to continue as models simplify portfolio management and attract clients seeking low-cost, diversified options.

Model portfolios, whether built in-house or outsourced, provide scalability in portfolio management. Cerulli notes a rise in ETF use in model portfolios, citing tax efficiency and low-cost benefits. Outsourcing options expand to broker-dealers, asset managers, and third-party strategists.

ETF model portfolios offer a consistent, low-cost baseline for advisors and clients, says Anshul Sharma of Savvy Wealth. The core-satellite approach combines ETF models with active managers or tailored solutions. Hybrid platforms focus on ETF models for consistency and scale, with added tools for tax awareness and personalization.

For young professionals, ETF models are preferred over mutual funds due to live price action, says James Norris Eppes of Eppes Wealth Management. Model portfolios are efficient in building scale and providing a consistent investment message to clients, according to Michael Mandelos of Orion Advisor Solutions.

Building client portfolios with individual investments is outdated, says Ron Piccinini of Amplify. He advocates for ETF-based portfolios, citing the statistical improbability of beating professionally constructed portfolios. Model portfolios can enhance an advisor’s value by offering personalized strategies and diversification.

Model portfolios are evolving into sophisticated investment strategies, incorporating direct indexing and less-liquid positions, says Jen Wing of GeoWealth. The surge in demand for custom ETF models highlights the need for personalization in model portfolios. Flexibility and scale redefine how advisors deliver value to clients through model portfolios.

Read more at Yahoo Finance: How Advisors Are Tapping ETFs in Model Portfolios