The world of investing is undergoing a quiet revolution, and it's all about model portfolios. According to the fintech giant Broadridge Financial Solutions, these carefully crafted investment strategies are set to dominate the market, reaching a staggering $18.6 trillion by 2030. This isn't just a trend; it's a fundamental shift in how advisors and investors approach their portfolios. But what's driving this explosion in popularity? And what does it mean for the future of investing? Let's dive in and explore the fascinating world of model portfolios.
The Rise of the Model Portfolio
Model portfolios have been around for a while, but they've recently experienced a surge in popularity. In the first quarter of 2026, they accounted for a third of all assets held by retail intermediary channels, according to Broadridge's report. This isn't a coincidence. The industry's growing reliance on models is evident in forecasts from Cerulli Associates and Morningstar, which mirror Broadridge's findings. The past year has seen a surge in third-party partnerships, with TAMPs collaborating with asset managers and wealthtech firms to create custom models and hybrid strategies that blend public and private assets.
Broker/Dealers Dominate, But Online Channels GROW
Currently, broker/dealers hold the lion's share of model assets, at 45%. RIAs follow closely behind at 28%. Wirehouses hold 18%, and the discount channel, represented by online trading platforms, holds 9%. However, when we zoom in on the top 10 most popular models, broker/dealers still dominate with 83.1% market share. Wirehouses hold 8.8%, RIAs 5%, and online players 3.1%.
But here's the interesting twist: online channels are the only retail channel experiencing growth in model asset AUM from Q4 2025 to Q1 2026, rising 3.6% to $321 billion. RIAs saw a decline of 2.4%, wirehouses 1.7%, and broker/dealers 1%. This suggests that while broker/dealers may dominate, online platforms are gaining traction and offering a compelling alternative.
ETFs Take Center Stage
Model providers are increasingly favoring ETFs. In the first quarter of 2026, 58% of model assets were held in ETFs, up from 54% in Q1 2025. ETF-only models accounted for 38% of the marketplace, while hybrid models held 37.4%. Mutual fund-only models, once dominant, have steadily declined to 24.7%.
Passive ETFs lead the way, accounting for 48.9% of model assets. Active mutual funds follow at 37%, active ETFs at 8.7%, and passive mutual funds at 5.4%. This shift towards ETFs reflects a growing preference for passive management and a desire for diversification.
Equity and Fixed-Income Strategies
Equities dominated model allocations in Q1 2026, making up 67% of the total. Bonds followed with 28%, while "mixed assets" and other categories made up the remaining 5%. However, only 5.5% of equity assets were pure equity core plays. Growth-focused strategies accounted for 20.7%, with a mix of growth and income (14.7%) and pure growth (13.3%).
On the fixed-income side, 4% of assets were "balanced", 3.5% focused on conservative income, and 2.6% sought "moderate balanced" strategies. This highlights a balanced approach to investing, with a mix of growth and income strategies.
The Future of Investing?
The rise of model portfolios is a reflection of a changing investment landscape. Advisors are increasingly relying on models to streamline their processes and offer clients a diverse range of investment options. The use of ETFs and the shift towards passive management are key trends that will shape the future of investing.
However, this trend also raises questions about the role of human advisors. As models become more sophisticated, will they replace human expertise? Or will they augment it, providing advisors with powerful tools to enhance their services? The answer lies in finding a balance between automation and human insight.
In conclusion, model portfolios are not just a passing trend. They represent a significant shift in the investment landscape, driven by the need for efficiency, diversification, and a more personalized approach to investing. As the industry continues to evolve, advisors who embrace these changes will be well-positioned to succeed in the future.
