Advisors Prioritize Risk-Adjusted Returns as Models Claim Half of Client Assets

Nearly half of surveyed advisors build their core models from scratch, while usage of third-party model providers is expected to grow 32% over two years.

By the Family Office Real Estate Daily Desk·Thursday, September 3, 2026·2 min read

Editorial summary of reporting byWealthManagement.com Our editorial standards →

Advisors Prioritize Risk-Adjusted Returns as Models Claim Half of Client Assets — Image: editorial illustration · Story sourced from WealthManagement.com

Risk-adjusted returns remain the primary portfolio construction goal for financial advisors, with 45% of respondents naming it their top priority, according to the August Trend Monitor report from FUSE Research Network. The survey of approximately 560 advisors found that 43% prioritize maximizing long-term wealth growth, 42% focus on maximizing diversification and asset class coverage, and 35% aim to minimize downside risk.

The distribution channel shaped which objectives advisors emphasised. Maximizing risk-adjusted returns was the primary driver for 53% of wirehouse advisors and 48% of RIAs. Independent broker-dealers placed greater weight on long-term wealth growth, with 47% identifying it as their primary goal compared with 43% who prioritised risk-adjusted returns.

Wirehouse advisors and broker-dealers both ranked diversification highly, at 47% and 45% respectively, while only 31% of RIAs named it a top goal. Cost minimisation mattered most to RIAs, cited by 20% of respondents in that channel, compared with 12% of independent broker-dealers and 7% of wirehouse advisors.

Models have claimed a growing share of advisor portfolios, now representing 47% of client assets and client accounts. RIAs reported higher adoption, with 55% of client assets and 56% of client accounts managed using models.

Advisor-built models dominate, accounting for 51% of model assets. Home-office models represent 20% of the total, followed by standard third-party models at 17% and third-party custom models at 12%. Advisors expect to increase the number of third-party model providers they use from 2.2 today to 2.9 over the next two years, the firm said.

The majority of advisors, 56%, build their core models from scratch. The remainder customise home-office models, at 29%, customise third-party models, at 28%, or use portfolio construction software to build models tailored to client risk preferences, at 27%. Six percent do not build models at all.

ETFs and mutual funds continue to drive most models, used by 89% and 76% of advisors respectively. Fifty-nine percent include individual stocks in their models, and 37% use individual bonds or separately managed accounts. Twenty-three percent use direct or custom indexing solutions. Private funds and limited partnerships are used by 16% of advisors, interval or tender offer funds by 11%, business development companies by 9%, and collective investment trusts by 4%.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

The survey data point to a structural arbitrage. If 47% of advisor assets now sit in models but advisors plan to expand third-party provider rosters by 32% over two years, that creates openings for programmatic capital partnerships with model providers who can demonstrate repeatable alpha or tax optimisation. Family offices pursuing a platform-capital strategy should evaluate asset managers building advisor-facing model infrastructure, not just end-client products.

The breakdown of model construction suggests differentiated entry points by channel. RIAs customise more and prioritise cost control, which argues for co-investment vehicles structured as low-fee separate accounts or fee-only model overlays. Wirehouse and broker-dealer channels lean on home-office models and diversification, favouring turnkey solutions that plug into existing custodial rails. A family office seeking exposure to advisor flows should match the structure to the channel's workflow, not impose a one-size approach.

Private funds and limited partnerships reach only 16% of advisors today, and the survey shows most models remain anchored to liquid exchange-traded products. That 16% cohort likely skews to larger practices with accredited clients and operational bandwidth for K-1s and capital calls. A direct co-GP commitment to an interval or tender-offer fund targeting the advisor channel offers exposure to the semi-liquid middle ground, where adoption is rising from 11% but infrastructure costs remain high. The underwriting question is whether distribution scale justifies the fee drag and liquidity concessions inherent in retail wrappers.

Original reporting

WealthManagement.com

Read the original at WealthManagement.com →

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