Model Portfolio Customization Is Here to Stay. But How Will Providers Scale It?

2 hours ago

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Heidemann, K. (2026, November 9). (Note: This article may have been vendor sponsored). Model portfolio customization is here to stay. But how will providers scale it? WealthManagement.com. https://www.wealthmanagement.com/investing-strategies/model-portfolio-customization-is-here-to-stay-but-how-will-providers-scale-it-

Model portfolio assets managed by third-party providers such as asset managers and investment strategists are approaching $1 trillion, according to Morningstar.
Custom model assets reached $258 billion as of March 31, 2026, a 40% increase from the prior year, according to Morningstar.
Custom models, once largely reserved for large home-office clients, are increasingly accessible to smaller practices with lower investment requirements.
Customization often means tailoring an existing model suite, such as substituting mutual funds with ETFs that follow the same strategies or adding alternatives, rather than building a new allocation from scratch.
Clients of custom models also expect more hands-on support, white-labeled or co-branded reporting, and in some cases white-labeled portals, with some providers exploring AI-drafted commentary to scale content.
Providers that once managed static lineups with spreadsheets and internal tools must now track the lineage between their core models and each custom variation, which has led some to adopt encoded customization rules, drift monitoring, and rebalancing capabilities.
The author argues that as home offices increasingly build models in-house, third-party providers will need to differentiate on the breadth and depth of customization rather than on simply offering it.

Knote: We would also add that rebalancing models with locked equity positions - such as employer stock and low basis positions - cannot be a spreadsheet excercise if you ever want to scale the process.