A model portfolio is a collection of assets that can be attributed to an investors portfolio and continually managed by professional investment managers. Model portfolios employ a diversified investment approach to target a particular balance of return and risk or portfolio objective.
There are two main ways to access a model portfolio. Firstly, a Practice can select a fully outsourced approach whereby the model is built and managed by platform providers and third party providers such as institutional investment managers. Alternatively a Practice can adopt a ‘do it yourself’ approach of using their own financial service licence to offer model portfolios.
Regardless of the approach, all model portfolios hold an advantage over traditional unitised investment vehicles because the individual assets are not collectivised and can be directly owned by the clients.
A Win For You and Your Clients
Models are designed to address a variety of investor needs and have the potential to:
- Free up time allowing model portfolio users to save time, and reallocate their energy to cultivate relationships and grow their practice.
- Diversify clients investments in an easy-to-use and easy-to-understand package.
- Reduce investment management costs and taxes when using low-cost, tax-efficient exchange-traded funds (ETFs).
- Benefit from access to institutional investment management with deep asset allocation and research expertise.
- Optimise client tax outcomes with transparency of underlying assets.
- Reduce administrative burden while adhering to regulatory and compliance requirements.
Understanding Managed Accounts
Typically, Australian investors access model portfolios via managed accounts. Managed accounts is the general term that refers to the type of product or service where the underlying securities can be attributed to the end investor.
Managed accounts can be implemented in different structures, creating flexibility for the model portfolio users. Variations include separately managed accounts (SMAs), managed discretionary accounts (MDAs), unified managed accounts (UMAs) and the more bespoke individually managed accounts (IMAs).
SMA
In simple terms, an SMA is a financial product consisting of underlying financial investments. It is a non-unitised managed investment scheme governed by a constitution and offered under a product disclosure statement. The product issuer is legally responsible for the trading, custody, and account level administration.
MDA
MDA refers to a contractual relationship between an Adviser and client where the Adviser obtains continuous discretion to manage and implement client portfolios. Unlike an SMA, an MDA is classed as a service agreement rather than a financial product, with the planner authorised to provide both advice and discretionary investment management within parameters agreed to by the client.
An MDA licence can be attached to the dealer group’s licence. Advisers can also use a third party’s MDA licence not related to the dealer group, whereby the third party retains all risk in relation to the MDA.
UMA
A UMA is an integrated view of an account that includes multiple investments such as equities, cash, SMAs, ETFs, managed funds and term deposits. Seen as a reporting solution for Advisers, a UMA is reliant upon data feeds and client authorisation to receive all client investment holding data. This one view can support efficient management of a client’s portfolio.
IMA
An IMA is a model portfolio tailored to a specific client’s needs, therefore the portfolio is managed at a client level. Generally this structure is offered under an unregistered scheme with high minimum investment requirements, therefore wholesale investors are the typical investor.
FAQs
A model portfolio is a collection of assets that can be attributed to an investors portfolio and continually managed by professional investment managers. Model portfolios employ a diversified investment approach to target a particular balance of return and risk or portfolio objective.
What are model portfolio solutions? ›
Model Portfolios Solutions give clients easy access to BlackRock's index and alpha investment capabilities. The model portfolios are managed based on principles of: Active asset allocation. Use of cost-efficient building blocks. Robust risk management.
What is needed in a modeling portfolio? ›
A modeling portfolio should showcase your best work and highlight your unique look. It should include a variety of photos, such as head shots, full-body shots and lifestyle shots. You may also want to include some of your runway or print work.
What is considered a good portfolio? ›
A diversified portfolio should have a broad mix of investments. For years, many financial advisors recommended building a 60/40 portfolio, allocating 60% of capital to stocks and 40% to fixed-income investments such as bonds. Meanwhile, others have argued for more stock exposure, especially for younger investors.
Are model portfolios worth it? ›
Financial Planning and Time Efficiency
A significant 77% of wealth managers acknowledged that model portfolios help manage risk while providing a more customized client experience.
What do models call their portfolio? ›
Book. A model keeps all of their best photos in a book to show clients. A model book is also known as a portfolio.
What does a good model portfolio look like? ›
What does a good model portfolio look like? A good model portfolio is a well-organized collection of high-quality images that showcase the model's best work and versatility. The images should be well-lit, well-composed and edited to perfection.
Who pays for a models portfolio? ›
Many people, especially new models, often assume that when you sign to an agency, the cost of things like your portfolio, comp cards, or test shoots will be fully covered by the agency. The reality is, though, that these are the exact things that a model may be expected to pay for out of pocket.
Who uses model portfolios? ›
Typically, financial advisors or investment managers offer a variety of portfolios to correspond with your financial goals and objectives. Model portfolios allow investors to use simple and effective investment methods that require minimal management effort.
What is needed in a portfolio? ›
It should include an insight into skills you have, methods you've used, the impact of your work, along with any relevant outcomes and/or lessons you've learned. Identify relevant examples and evidence that best match the jobs or development opportunities you're seeking.
A portfolio is a compilation of academic and professional materials that exemplifies your beliefs, skills, qualifications, education, training, and experiences.
Why is portfolio important for Modelling? ›
When trying to start a career as a model, it's typical to send your portfolio to modeling agencies to highlight your skills and strengths. A modeling portfolio can help an agency review your appearance and experience to see if you're a good fit for their clients and organization.
What is the difference between a model portfolio and a fund? ›
One key difference is that while you can buy into mutual funds and ETFs on your own, you need to work with a professional investment advisor to get access to most model portfolios. Model portfolios could also include more types of investments.
What is an example of a model investment portfolio? ›
Model portfolios typically have target allocations for each asset type. One common example is the 70/30 portfolio, a generic model portfolio consisting of 70% stocks and 30% bonds. Portfolio managers typically attempt to keep asset allocations constant over time by rebalancing the portfolio regularly.
What do models wear to a portfolio? ›
A Full-Length Body Shot
Clothes should be form-fitting and simple. Skinny jeans and a t-shirt are just fine. The model should not be wearing long dresses, skirts or too many layers as these will distract and cover up exactly what the agents and clients are trying to see.
