I would like to open a discussion on Advisors who chose to run their own investment models and those who chose to use 3rd party models. Just an open dialog this discussion on the pros and cons!!

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We supervise a whole lot of advisors on the Indy side and to be completely honest, I’ve yet to meet an advisor who is qualified to act as the manager as well. They’re not CFA’s, they’ve never run money professionally, they wouldn’t know where to begin making research calls, never mind the inclination. I’m pretty sure running a few Morningstar reports might not be the best strategy. That’s just hubris.

Additionally, rarely are there any written investment strategies or processes, and even if there are, advisors typically don’t run their practices under some form of corporate governance that compels review of all that goes with money management. For example, SEI has 50+ CFA’s on staff working on research and processes alone. You think you’re better than that? Really?

We believe that to act in your client’s best interest that the actual money management needs to be delegated to folks that actually have the education, systems and experience. Yep, you pay for it. Worth it.

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I use modern portfolio theory. I have large and small deposit models for qualified and non qualified. Within these are five risk tolerances, and give me a total of 20 options. Most people fall into conservative growth or growth. I use a Morningstar filter using American Funds, Trowe Price, Pimco, and MFS. These are all I'm allowed to use by the propriety BD that I'm at. I like having some input into the models. I used to take what was given to me by 3rd party but it started to show biases. Thusly I took over the controls.

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Solid answer for what you have to work with Waddell and Reed

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I manage my own models. A mix of ETF’s and individual equities. Clients are happier bc I spend more time on their accounts and my fees are less bc there are fewer hands in the pot. It also allows me to consider tax implications before placing trades. I’ll never use a tpam again

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I use portfolio strategists via SEI portfolios MF & ETFs. Or thru Envestnet and inside is Efficient Markets, Russell, Vanguard ETFs, Beaumont Capital models, etc....frees up time to do other things.

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My team runs their own model which I utilize. No third party managers or etfs

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LPL Model Wealth Portfolio. Less work for me, constant oversight by the third party. Good for the client

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There are dozens of different models to choose from, you can use up to three for a client. Some are ETF, some are MF, some are a blend. You can weigh how much goes into each model. I love MWP

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You have stock funds but you don't buy individual holdings

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My team has our own analysts and managers.

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My issue using a third party is they have a bias to follow a benchmark. No fault of there own, but if your graded relative to your benchmark (S&P 500 for example) wouldn't you follow the benchmark as close as possible?

So in situations like 2008, the manager will follow the market like a proverbial lemming and losses compound. Is that prudent for your clients? Who job is it to be defensive in those situations, the manager says its up to advisor and the advisor leaves it to the money manager.

So unless the manager actually has a plan and process to deal with market corrections, I feel that leaving it to the money manager is not the best course of action.

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Full disclosure, I am a money manager not a FA. I think it simply comes down to what money manager your using and there corporate mandate to follow the market.

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Axa- are there many MF & ETFs in there ?

No stocks on any of these?

I meant individual holdings.

Tpmms too expensive

Check out Envestnet. Four custodians, plenty of service from staff, for large cases you can request a CFA to build a model or review your model portfolios

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