A first-quarter 2025 “Model Portfolio Trend” report compiled by fintech firm Broadridge Financial Solutions confirms that financial advisors have increasingly gravitated to model portfolios. The report found that model portfolios remain popular for all types of advisors, but grew fastest in the RIA channel. What’s more, model portfolios seem to be particularly well-received with mass affluent clients.
According to Broadridge research, industry-wide, model portfolios held an estimated $7.7 trillion, or 34.2% of all funds sold through the retail intermediary market. By 2029, the firm estimates that assets held in models will grow by 15% annually to $13.2 trillion. In the first quarter of 2025, models provided through financial advisors held the largest share of assets, at 57%, or $4.4 trillion. Third-party models held another 24% of the assets, followed by home offices with 19%.
Broadridge analysts extrapolated the broader industry figure from the volume of model portfolio assets tracked in its dataset. Overall, through its client base, the firm’s direct data set included $3.3 trillion as of the end of the first quarter.
Drilling down by advisor type in Broadrige’s direct dataset, RIAs saw the biggest quarterly jump in model assets, at 5.5%, to $883.5 billion. During the same period, broker/dealers experienced a 1.4% decline in assets to $1.38 trillion. Wirehouses saw a modest 1.6% jump, to $578.9 billion in assets, while the online channel posted a 1% increase to $239.2 billion in assets. Overall, model portfolios now comprise 86% of fee-based business for retail intermediaries.
When Broadridge performed a branch-level assessment of models sold through the retail intermediary market using its proprietary algorithm, it found $3.3 trillion in assets and 44,200 model strategies. Its research showed that the two groups of investors most likely to use model portfolios included the mass affluent and high-net-worth investors. Mass affluent investors held 42.7% of all model assets in the retail channel, while the HNW investor segment held 43.3%. The high adoption rate of model portfolios among the mass affluent is notable because they make up roughly 33% of retail intermediaries’ clients, while high-net-worth investors make up over 47%. Model adoption among the mass market and ultra-HNW investors remains modest, at 5.1% and 8.9% of total assets, respectively.
Passive ETF strategies seemed to be gaining the most traction within the Broadridge-tracked model assets in the first quarter. They saw an uptick of 2.4% to $1.768 trillion. ETFs now account for 54% of model assets, up from 51% in the first quarter of 2024. Both active and passive mutual funds lost traction during the same period, by 0.2% and 0.4% respectively.
Open-architecture model portfolios continue to dominate the industry, accounting for 77.3% of assets as of the end of the first quarter. The figure represents a slight uptick from 76.2% the year before.
The report was generated using a machine-learning algorithm that analyzed trillions of model portfolio assets invested in tens of thousands of models.
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