No model solution for individual portfolios

Harry Katz

I think your lead story on model portfolios is entirely suitable. However, it is not only the restriction in the number of portfolio providers, it is also about the use of models at all.

Even the best firms that utilise these have no more than about five model portfolios. Given that each client is individual, with their own unique circumstances, preferences and risk appetite, how can any model (as opposed to a bespoke offering) be justified? Are not all model portfolios just an example of shoe-horning? “Well, your risk profile works out as a three, so we will stuff you into this model. Never mind that you might prefer more global exposure, this is what you get. Investment trusts? You must be kidding.”

It would seem that the larger the firm, the more likely you are to find model solutions. After all, it is more uniform, easier to manage, less fuss and therefore more cost-effective for the firm that has an individually tailored (with the client’s input) solution. Never mind that it might not be the best outcome for the client.

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Harry Katz


HA7 Consulting, Middlesex