Packaged portfolios have outperformed advisor-driven portfolios over the past five years, according to research from analytics firm Cerulli Associates.
"Currently representing nearly $900bn in assets, packaged portfolios have become incredibly popular," said Frederick Pickering, research analyst at Cerulli. "Much of the success of packaged portfolios has been driven by a new business model, with direct platforms gathering significant assets without having a traditional advisor force."
Cerulli's latest annual report, Managed accounts 2015: battle for discretion, noted that a key factor in the outperformance of the packaged portfolios is the fact that they remain invested in the markets throughout market pullbacks and recoveries. "The home office is more removed from the daily concerns of clients, and as a result can maintain the resolve to stay invested while advisors feel pressure from their clients, and themselves, to act to avoid short-term losses," Pickering explained.
"While advisors value flexibility, they must remember that portfolio construction is not a part-time job. On average, advisors spend 60% of their time on client-facing activities, 18% on administrative activities and only 17% on investment management."
