Core Insights - Model portfolios utilizing exchange-traded funds (ETFs) are increasingly favored in the financial advisory sector, with a significant portion of assets allocated to these models [2][3]. Group 1: Market Trends - An estimated $36 trillion is allocated to model portfolios across financial intermediary channels, with 65% ($23 trillion) managed in-house by firms creating their own models [2]. - The trend towards model portfolios is expected to continue due to their cost-effectiveness, diversification, and ease of rebalancing, making them suitable for various life stages [2][3]. Group 2: Benefits for Financial Advisors - Model portfolios help financial advisors maintain consistency in investment strategies, reducing the temptation to time the market or pursue short-term trends [3]. - The ability to scale portfolio management processes is a key advantage for advisory firms, allowing them to leverage practice-level resources effectively [4]. Group 3: Outsourcing and Asset Management - For advisory firms that prefer not to manage their own models, outsourcing options are expanding, including broker-dealers, asset managers, and third-party strategists [5]. - Among the 35% of model portfolio assets that are outsourced, there is a mix of purely outsourced assets and those modified by advisors or clients [5]. Group 4: ETF Advantages - ETFs are appealing due to their low costs, comparable to the cheapest mutual funds, and their tax efficiency, which is a significant benefit for end users [6]. - While liquidity is often highlighted as a benefit of ETFs, it is less critical in model portfolios designed for long-term, buy-and-hold strategies [6].