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When it comes to model portfolios, an interesting scenario is at play. May advisors have questions, but so do clients.
Let’s get one of advisors’ big concerns about model portfolios out of the way early. There’s a preponderance of data confirming that model portfolios are good for business. If anything, this form of asset allocation is a client acquisition/retention tool, not something that chases business away. As highlighted by Morningstar’s 2026 US Model Portfolio Landscape report, model portfolio assets under management more than tripled in less than five years.
Obviously, that’s good news, but that doesn’t mean the conversation ends when an advisors informs a client about model portfolio usage. When accounting for today’s clients being more educated and sophisticated than ever before, some level of model portfolio inquisition is plausible, if not downright likely.
Let’s explore some likely client concerns and questions when it comes to model portfolios.
Brands Matter
Whether it’s with ETFs, mutual funds or financial institutions, clients and customers often find comfort in recognizable brands. It’s human nature and it’s a scenario that plays out in the world of model portfolios -- a point worth raising to clients that are rightfully wondering where there money is going.
(Image: Morningstar)
“BlackRock remained the dominant force in the model portfolio market, overseeing $308 billion as of March 31, 2026, which is nearly double its total from the prior year,” notes Stephen Margaria of Morningstar. “The firm’s model offerings also accounted for roughly one-third of total third-party assets, up 26% over the trailing year. Strong off-the-shelf models led by portfolio manager Michael Gates, growing custom mandates, and a vast network of financial advisor relationships continue to drive growth.”
When going further down the model portfolio list highlighted in the image above, advisors need not fret because chances are that clients, even the “newbies,” have heard of at least two or three, if not more, of the other firms. Said another way, lack of brand awareness isn’t a model portfolio issue, broadly speaking.
Likewise, the ranking drives home another important point: ETFs are the dominant tool of choice within model portfolios.
“ETFs have overtaken mutual funds in models. As of March 2026, ETFs accounted for 55% of the average model portfolio’s underlying holdings, up from 43% five years earlier,” adds Margaria. “ETFs’ intraday liquidity, tax efficiency, and lower costs have driven the increase. Mutual funds now represent 34% of assets on average.”
Private Markets not Problematic
Following the “Saaspocalypse” earlier this year, clients are understandably concerned about exposure to private markets and semi-liquid assets. Indeed, more than two-thirds of the nearly 30 model portfolios surveyed by Morningstar offer exposure to such assets.
Typically, the percentage of semiliquid exposure in a model portfolio isn’t excessive and the big-name providers partner with other highly recognizable firms to deliver private market/semiliquid access. But on this front, it may be advisors with concerns that match or surpass those of clients.
“The trend is not without friction. Despite growing adoption, semiliquid private market vehicles have disadvantages relative to public market funds, including reduced liquidity, more complex valuation processes, operational oversight challenges, and higher fees,” concludes Margaria. “Nearly 40% of advisors surveyed in the 2026 Morningstar Investor Perspectives said they are not very familiar or not familiar at all with semiliquid fund structures, which could slow adoption.”
Related: The Biggest Risks Facing Investors in the Second Half of 2026