Model portfolios now hold most RIA client assets

Model portfolios now hold 55% of client assets and 56% of client accounts among the 560 RIAs that responded to a FUSE Research Network survey highlighted in Kitces.com's Weekend Reading. Against a 47% average across the broader advisory channels, the more revealing figure is who built the models: at these firms the wrapper has become the standard way client portfolios are delivered, a benchmark for every RIA still treating adoption as an open question.

Advisor-built models hold 51% of model assets and home-office models another 20%, meaning 71% of model assets run on decisions the RIA itself controls before the third-party sleeves—17% standard and 12% custom—enter at all. That internal share is the survey's sharpest number and easy to miss beneath the adoption headline.

The holdings data points the same way: ETFs appear in 89% of advisors' models, mutual funds in 76%, and individual stocks in 59%, a mix of liquid, fairly standardized holdings that an advisor can assemble into a house view and rebalance without rebuilding the portfolio position by position. The model portfolio becomes a time-saving wrapper that keeps the advisor's opinion in place.

Kitces's write-up frames the shift as a natural companion to comprehensive planning, with portfolio management running on less hands-on time as advisors take on a wider set of planning duties. The FUSE split refines that story: if buying back hours were the only objective, third-party models should carry more than 29% of model assets, since buying an outside strategy is faster and needs the least internal infrastructure. RIAs instead want workflow gains without surrendering the investment call, which is why advisor-built models are the largest category—they preserve the advisor's judgment while outsourcing the mechanics.

That distinction should shape the products custodians and platforms put in front of RIAs. With 71% of model assets in advisor-built or home-office sleeves, the prebuilt third-party strategy is less the deciding factor than the operations around an advisor's own model, where rebalancing discipline, tax-lot accounting, and smooth handoffs when the model changes determine whether the account stays.