By using models in your practice — whether your own or that of strategists — you can gain capacity in your practice and potentially provide clients more value.

Have some reservations? Perhaps one of your concerns are based in real challenges. Certainly, there are always challenges with shifting your approach to portfolios. On the other hand, maybe you’ve heard one of many model myths.

Take a look at the myths below to see if maybe dispelling them will put your concerns to rest.

Myth: I will lose out on value by not providing custom portfolio management for each client.

Reality: Clients value your advice, not customization. In many cases, clients may value your advice, relationship management, and personalized planning strategy, more than individual investment selection. If this is the case, reallocating time from portfolio management tasks to relationship management becomes a priority.

Using models can enable you to expand your financial planning services, but they also allow you to continue providing clients your experience, unique knowledge of investments, and process, which are likely the reasons your clients chose you in the first place. It may be worth asking your clients what they value most.

Highlighting all the things you’re doing — and your thoughtful model build and selection process — will help clients understand how much value you actually do provide. 

Myth: Models won’t allow me to offer enough customization for my clients.

Reality: Customization isn’t always necessary. While all clients have different concerns and feelings about investing, generally speaking, you can often bucket them into certain categories. Plus, if two clients essentially look the same, as a fiduciary, your approach should likely be the same for both.

Most clients don’t need extreme customization unless they’re high-net worth or have issues like concentrated stock options or complex tax challenges. If you have clients like that, they’ll likely be outliers and may warrant a different approach anyway.

Even large endowments and foundations, which would seem to require the highest level of customization, use models. They put their best thoughts, ideas, and implementation efforts all in one spot. It’s a good mantra to follow — put your best thinking into a handful of models.

Advisor thinking about models

Myth: It’s too hard to transition into a models-based practice.

Reality: It can be done — with a thoughtful plan. If you currently have bespoke models for each of your clients, there’s no question that transitioning to models will be a process requiring a thoughtful plan. But it can be done, and potentially easier than you might think.

After you have your models in place, you can immediately transition your retirement accounts, since there won’t be tax consequences. Next, create a strategy to transition your non-qualified accounts over the next three to five years.

Making the move to financial models

There are trade-offs in any decision, and the same is true with using models. What you give up in customization, you may get back in the form of value-added services for clients. Plus, what you’re giving up, might not be all that important to your clients. Consider setting aside an hour or two to examine your book of business to determine if your clients might be best served by a models-based approach.

As always, we’re here to help you. LPL advisors can reach out to our Advisory Consulting team can provide you a Business Analysis Report to make it easier for you to examine your practice today.

Previously in the models-based practice series

The Model Practice for Financial Advisors

Coming next

  • Are You Ready to Move Your Financial Practice to a Models-Based Approach?
  • How to Implement a Models-Based Approach for Your Financial Practice
  • Introduce Your Clients to Financial Models

For more on a models-based practice, LPL advisors can access the whitepaper, A New Model for Today’s World,” posted to the Resource Center.


This material has been created for a Financial Professional audience. The content is designed for licensed financial professionals and may not include the level of detail, explanation and disclosure needed for a general audience to accurately evaluate the facts.