Morningstar’s Model Marketplace is now available on Morningstar Office Cloud at no extra charge to advisors on the platform, with 13 asset managers participating, including American Funds, BlackRock and Vanguard. The company, of course, has its own models, but this marketplace is open, and participants don’t pay to be on the platform.
CEO Kunal Kapoor first announced the marketplace’s development in April 2017. He touted the model as a way for advisors to give up discretion over accounts or to use the models in guiding investment strategies. Other asset management firms that have signed on include Fidelity, Franklin Templeton, Invesco, J.P. Morgan Asset Management, Northern Trust Asset Management, OppenheimerFunds, PIMCO, Redwood Investment Management, Russell Investments and VanEck.
“Models offer a blueprint for asset allocation and funds selection, allowing financial advisors to outsource all or part of a client’s asset allocation and underlying fund selection,” Jason Kephart, alternative strategies senior analyst for manager research at Morningstar, said about the marketplace. “Many advisors use it as an opportunity to focus on financial planning and business development without sacrificing the quality of the portfolio.”
In the past few years, model marketplaces have proliferated as investment management is increasingly automated, ubiquitous and not at all the financial advisor’s job. Such platforms free advisors up to do more holistic wealth management and “goal-based” planning. Most advisors already utilize model portfolios in some form, whether they’re with a wirehouse, an independent broker/dealer or a registered investment advisor. At least 74% of advisors use models, whether they’re created in-house, or outsourced to asset managers and strategists, according to research from Cerulli Associates.
Dermot O’Mahony, the head of software products at Morningstar, likened the new marketplace to an "app store of investment models" in describing its benefits.
