One of the primary reasons advisors embrace model portfolios is efficiency. All that time previously devoted to diligently tinkering with client portfolios can now be directed to interacting with prospects, enhancing communication with existing clients and other practice-building pursuits.
Plus, there’s the data confirming model portfolios are a favored tool of younger advisors and investors, indicating that this way of managing money doesn’t chase clients away. If anything, model portfolios act as client retention tools.
That’s good news, but there are still some initial operational considerations with model portfolios, including implementation across the entirety of a client base, but with the right partners, that objective is easily accomplished. Read on to learn more.
It’s Who You Know
Dozens upon dozens of fund issuers offer model portfolios, confirming there’s no shortage of choice, but those offerings aren’t all cut of the same cloth and that’s particularly true when it comes gaining a true partner. The WisdomTree relationship with Quorus solves that conundrum for advisors.
“At a high level, the relationship is straightforward. WisdomTree provides the model portfolios and investment expertise,” notes WisdomTree’s Ryan Krystopowicz. “Quorus provides the implementation engine, handling trading, rebalancing, reconciliation, cash-flow management and tax-aware execution for eligible accounts. For model portfolios, advisors can access WisdomTree CIO-managed model portfolios, as well as custom model variations, with no additional strategist, platform or trading fees.”
As WisdomTree’s director of client solutions observes, “advisors wear too many hats” and one of those real world portfolio implementation. It’s not just tending to the portfolios, it’s updating models, taxes, client withdrawals and other issues that are on the docket, commanding an advisor’s attention, pulling them away from other important pursuits. Quorus solves many of those riddles, providing advisors with the efficiencies they signed up for when getting involved with model portfolios.
“Quorus is built to address that challenge. It is not simply a generic trading utility,” adds Krystopowicz. “It is a technology-powered portfolio management service built around tax-aware management and customization. Portfolios are reviewed daily using tax-lot and market data from custodians alongside target portfolio strategies from asset managers or advisors. Rebalancing and tax-loss harvesting opportunities are evaluated at the lot level, and trades are reviewed before execution by Quorus portfolio managers. Quorus also supports tax-aware portfolio transitions, which can be especially relevant when onboarding taxable accounts with legacy holdings.”
Talking Taxes
Not only does WisdomTree’s partnership with Quorus provide advisors with access to the ETF issuer’s extensive lineup of model portfolios, but Quorus can be tapped through Schwab, Fidelity, Interactive Brokers, TradePMR and Pershing, indicating a large number of advisors enjoy the benefits of this tandem.
Speaking of perks, the WisdomTree/Quorus partnership provides advisors with an avenue for passing along some high-level tax efficiencies to clients without requiring the advisor to put in added work.
“The tax-smart component is also worth highlighting because it goes beyond a surface-level claim. Quorus supports daily tax-loss harvesting, lot-level cost basis handling, wash sale prevention, custom capital gains rules and client-specific restrictions, including values-based, sector and industry exclusions,” concludes Krystopowicz. “Just as important, the tax overlay is designed to work with the target strategy rather than simply override it with blunt rules.”
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