One of the least understood yet most important differences between wealth managers is how portfolios are constructed.
At a high level, most firms fall somewhere between two approaches: model portfolios and bespoke advice.
What Are Model Portfolios?
Model portfolios are centrally designed investment strategies used across multiple clients. They typically offer consistency, governance, cost efficiency and ease of implementation.
For many investors, particularly those with straightforward needs, model portfolios can be highly effective.
The Limitations of Model Portfolios
Model portfolios also have constraints.
Where Model Portfolios Can Fall Short
They may offer limited personalisation, struggle to accommodate complex tax situations and provide less flexibility around timing or asset-specific preferences. Models are designed for the average client, which may not suit everyone.
Model portfolios are designed for the average client, which may not suit everyone
What Does Bespoke Wealth Management Advice Involve?
Bespoke portfolios are tailored to individual circumstances.
What Bespoke Portfolios Typically Include
This may involve personalised asset allocation, tax-aware structuring, legacy holdings and specific income or liquidity requirements. This approach requires more adviser involvement and often comes at a higher cost.
Hybrid Wealth Management Approaches Are Increasingly Common
Many firms now combine central investment frameworks with individual adjustments. This can deliver a balance of efficiency and personalisation, but execution varies significantly.
Understanding where a firm sits on this spectrum is critical.
Why Investors Often Misunderstand the Difference
Marketing language frequently blurs distinctions. Terms like “tailored” or “personalised” are often used even when portfolios remain largely standardised.
The real question is not what firms claim, but how decisions are made in practice.
The real question is not what firms claim, but how decisions are made in practice
Matching Portfolio Approach to Personal Needs
There is no universally better approach. Suitability depends on portfolio size, complexity, tax considerations and personal involvement preferences.
Problems arise when investors believe they are receiving one type of service while actually receiving another.
In wealth management, clarity around process is often more valuable than promises about performance
How Comparison Brings Clarity
Using findawealthmanager.com allows investors to understand how portfolios are built, how much discretion advisers have and whether services genuinely match personal complexity.
In wealth management, clarity around process is often more valuable than promises about performance.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
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