Personalize wealth management with model portfolios

Hi, I'm Jay Therrien, managing director of Executive Consulting here at INVESCO Global Consulting, And I'm pleased to have my good friend and colleague, Izaak Mendelson, joining me today for our discussion. Izaac is our head of model distribution for Invesco. Izaak, thanks for being here. 

Thanks, Jay. Pleasure to be here. Excited for the conversation.

So let's dive right in. There's no shortage of things to talk about. And look, it's no secret that financial professionals today are facing a broad range of complexities, which is one of our favorite words when it comes to serving the needs of their high net worth and their ultra high net worth clients. And, you know, quite frankly, what we're finding is that more financial professionals are emphasizing the planning in their practices than they have at any point throughout their careers. In fact, our latest Practice Innovation Index data, which is powered by Cerulli indicates that almost two thirds of those respondents provide either targeted or comprehends of financial planning to their clients. Now, this comprehensive planning approach, quite frankly, it's amplifying a profession that was already battling demands on their time in their capacity. So while time management becomes a bigger challenge as practices grow in client size and the scope of services they offer, quite frankly, the clients are expecting more from their relationships. And you know, Izaac, from your perspective, how is Invesco best armed to help financial professionals combat those challenges?

It's really true, Jay. Clients unique situations are getting increasingly complex and thus are requiring more comprehensive planning, which naturally takes more of an advisor's time. You know, what I often liken it to is advisors having to move up the wealth management value stack into areas like comprehensive financial planning and true wealth management. That time allocation has to come from somewhere. And oftentimes one way for advisors to free up their time is to outsource the construction of model portfolios. Whether it be things like off the shelf models or custom solutions, advisors have more options today than ever before to partner with professional third party model providers. These things, Jay, in terms of outsourcing, it can be to an asset manager. It can be to a TAMP. or their home office. Outsourcing model construction allows for advisors to leverage the expertise of the model provider and potentially improve client outcomes and provides the added benefit of freeing up the advisors time and capacity to focus on the other areas like we talked about in terms of comprehensive planning, but additionally client engagement and new business development. The uptick in advisors providing comprehensive planning is fueling the adoption of model portfolio. And ultimately, I think the big takeaway here is that things like financial planning and wealth management strategies are not independent. They're actually closely interlinked.

Yeah, so, you know, as you know, Izaac, but for the benefit of our friends watching here at Invesco, we spend a lot of our time and energy bringing to life what we like to call our total client experience. And while that sounds like a slogan to folks watching the video, it's really how we embody our deliverables at Invesco. And a large portion of that is driven from our teams collectively researching current industry trends, whether they be financial or non-financial in nature, and really helping financial professionals diagnose their best opportunities to manage and to grow their businesses. Now, I think it's important to share that in that most recent body of research, we're seeing a large increase in the use of models. And based on what you just shared, kind of makes sense, right? Increasing complexity, challenges the capacity. In fact, our latest data shows that about half of the respondents in that diagnostic are utilizing model portfolios. And what's even more fun and candidly, really fun for us, is that that number jumps to nearly 60% when those practices reach a 500 million AUM or higher threshold. So we believe a lot of that increase can be attributed to the fact that you shared. Right, larger practices serving more affluent clients. Those needs become more complex. They expect more from us as a profession. That also means that financial professionals, they need to scale their businesses in order to be able to deliver on all those specialized services for those target clients. And we firmly believe that utilizing models combats both capacity and the complexity challenge, right?

I think it's exactly right, Jay. We believe that outsourcing model portfolios will free up time for the financial professionals and help them better serve their clients, scale their business, and focus on comprehensive planning. In other words, they can spend more of their time on delivering services that we know clients value. Things like estate planning, tax planning, and other services that go beyond the traditional investments and retirement planning that are critical for most affluent clients. Also, something that continues to come up is organic growth, Jay. 

Right

Advisors are struggling to grow organically. And what we're finding is, is that more and more of advisors that outsource to a models based practice are able to dedicate some of that excess capacity into sourcing new clients and their ability to grow organically has absolutely been improved. The goal is that by outsourcing to a professional third party model provider, it not only frees up in advisors time to provide these services and grow their business, but ultimately it helps them deliver better investment solutions for their clients. I really do see it as a win win win across the board.

Izaac, thanks so much for your time today. I really enjoyed our conversation. And for those of you joining us, no matter the size of your clients or your practice, Invesco will deliver a partnership that's designed to help you optimize those portfolios, connect with your clients, and overall enhance your practice. If you're ready to explore the benefits of scaling your business through model portfolios, or if you're looking for additional ideas or actionable solutions to solve for the complexities and the capacity issues that Izaak and I chatted about today, so that you can concentrate more of your energy on strengthening your client relationships and experience, it all starts with the conversation.

Contact your Invesco representative today and talk about how we can help.