Model portfolios can help advisors with succession

Model portfolios can help advisors with succession

Vanguard Perspective

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October 21, 2024

For advisors looking to retire soon, having a succession plan in place is the best way to get the most value for your book of business while also providing continuity for clients and transferring the trust that’s been built over time.

By entrusting some of the asset management to a trusted name in portfolio construction, you free up time to work with your clients on holistic financial planning. Vanguard models are built to help clients stay committed to their investment plan, which helps enable consistent revenue for your business. They are easily transferable which can alleviate succession planning concerns.

Valuing a practice accurately and fairly is a challenge for 87% of advisors.* A uniform investment process makes it easier to value your practice accurately.

Transition planning requires efficiency. Model portfolios can be the effective tool that provides you with more time to spend business-planning and focusing on your clients to align on financial goals. The estimated time saved with outsourcing is 9.1 hours a week.* Models enable you to maximize your time and set your practice up for future success.

The five greatest challenges for advisors preparing for succession

A series of five bar charts looking at various challenges for advisors preparing for succession, including emotional aspects of transferring clients to a new advisor, finding a qualified buyer, valuing a practice accurately and fairly, transferring clients to the buyer, and taxation considerations.

Source: Vanguard Investment Advisory Research Center using data from the 2023 Fidelity RIA Benchmark Study

Vanguard model portfolios can help you get the most value for your practice with the added benefit of being easily transferable, improving continuity for clients and making it easier when you hand them off to your successor.

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Notes:
For more information about Vanguard funds and ETFs, visit advisors.vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including possible loss of principal.

Vanguard is owned by its funds, which are owned by Vanguard's fund shareholder clients.

Diversification does not ensure a profit or protect against a loss.

Investments in bonds are subject to interest rate, credit, and inflation risk.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Vanguard does not, and will not, make any representations about whether a model portfolio is in the best interest of any investor, is not, and will not be, responsible for the determination of whether a model portfolio is in the best interests of any investor, and is not acting as an investment advisor to any investor. It is the investment advisor’s responsibility to determine the appropriateness of the model portfolios, or any of the securities included therein, for any client.

* Source: Cerulli Associates | Analyst Note: responses are from practice management professionals 2023

Notes: additional time saved attributed to financial planning (2.5hrs), investment research (0.7hrs), professional development (0.3hrs), activities outside of work (1.2hrs), and administrative tasks (0.5hrs). Time savings of 60 hours based on assuming 1.5 hours of business development over 40 work weeks per year.

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