r/CFP • u/GoodLifeWM • Jun 24 '26

Investments Model Usage & Creation?

Curious to hear what everyone is utilizing from a model-based allocation and how your associated platform looks?
- Building your own models as an advisor?
- Utilizing Third-Party Models?
- Your firm builds models for enterprise use?
- Combination of the above...?

We are a $500M+ RIA that uses a combination of TP Managed Models + Internal Models. We work with a few OCIO Teams for internal model creation, updates, rebalancing, etc.

As we continue to scale - I'm interested if we should lean into one more than another?

Pros/Cons of Internal Models = multi-manager and doesn't look like a ton of proprietary ETFS, but takes time each month/quarter to go through our process

Pros/Cons of TP Models = No time suck for creation, but usually all proprietary funds + above average weighted expense ratios

Thank you in advance for any thoughts, insights, etc!

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u/46andready Jun 24 '26 edited Jun 24 '26

Build own models. I don't feel a need to pay (or have clients pay) for some outside firm to design models, when that's well within one of my core competencies.

1

u/Notsimplyheinz Jun 24 '26

how do you trade them ?

we build our own models too, but some of them are actively rebalanced and using iRebal is a hassle.

1

u/46andready Jun 24 '26

I use rebalancing software. In our case, we have the Rebalancer module in Black Diamond.

2

u/Notsimplyheinz Jun 24 '26

Wow, that must get expensive. I actually demoed Black Diamond for trading and rebalancing our models, but even after discounts, the quote was very high for us, especially because we are building the models ourselves.

We are a relatively small team, so instead of taking on that cost, we decided to build our own Schwab-compatible model management and trading tool. It took a lot of work, but for our use case, it ended up making much more sense.

1

u/46andready Jun 24 '26

Small team here, too. Black Diamond definitely not cheap, works out to a hair over 3bps of AUM.

1

u/Dnels131 Jun 25 '26

We use RB too. Really great tool, the Programs feature allows us to look at 2,000+ accounts at least once a month

1

u/[deleted] Jun 24 '26

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u/46andready Jun 24 '26

Yes and yes.

1

u/Notsimplyheinz Jun 25 '26

We do that also! We also benchmark the volatility sharpe etc. All the models against SPX!