How to personalize high-net-worth portfolios consistently at scale

Key takeaways

• According to recent Cerulli research, nearly 80% of high-net-worth clients (HNW) expect personalized investment solutions¹
• Personalization at scale is easier when using consistent asset allocation strategies, with unique investment combinations 
• BlackRock Model Portfolios and Custom Models help advisors access high-net-worth investment strategies to scale their business and help clients grow their wealth

Model portfolios, and custom models which are tailored to fit a practice, have transformed how financial advisors deliver investment solutions. Today, our BlackRock Advisor Trends survey states that 89% of advisors are using models in some capacity². Model portfolios aspire to unlock institutional quality portfolio management for the masses.

At the same time, client expectations are rising. Greater tax sensitivity and increased access to private markets are pushing advisors to deliver more personalization, especially to their high-net-worth clients. 

Today, according to BlackRock Advisor Trends survey, 51% of advisors are using separately managed accounts, 28% include private markets, and 24% include liquid alternatives in their model portfolios.

The challenge: Personalized portfolios are creating unintended complexity

For many advisory firms, model portfolios have been easy to implement for smaller or qualified accounts. But HNW and ultra-high-net-worth (UHNW) households often remain outside these frameworks. Concentrated stock positions, tax considerations, liquidity needs, estate planning, and legacy exposures all require personalization.

However, in practice, personalization can easily become unscalable and create the potential for sub-optimal asset allocation decisions and inconsistent client outcomes. When clients with similar objectives—income, growth, or total return—are managed with materially different asset allocations, portfolio dispersion can increase. Over time, that dispersion can lead to more complex portfolio oversight, difficulty articulating a clear investment philosophy, and increased business and compliance risk.

Why consistent asset allocation still matters

At its core, a foundational asset allocation framework represents an advisor’s best thinking. Maintaining that framework across clients with similar goals helps reinforce a clear and repeatable investment narrative, deliver a consistent client experience, and improve scalability across the practice.

As advisory firms grow, consolidate and standardize their processes, the challenge is not choosing between consistency and personalization, it’s delivering both.

The solution: Personalize the implementation of the investment, not the asset allocation

Unified managed accounts (UMAs) and custom model solutions allow advisors to deliver the same asset allocation framework across client portfolios while tailoring the underlying implementation. For example, a U.S. large-cap allocation can be expressed in multiple ways: ETFs for low-cost, efficient exposure, separately managed accounts (SMAs) for individual securities and potential alpha, or direct indexing for enhanced tax management.

While the asset allocation remains consistent, the outcomes can differ meaningfully, particularly after taxes. Direct indexing strategies, for example, have the potential to generate tax alpha³ in more volatile markets, depending on client profile and implementation.

Putting personalization into practice within a whole portfolio solution approach

Personalization should be accomplished via two direct means:

1. Upgrading the traditional fund model to include HNW strategies like active equity SMAs, active fixed income SMAs, direct indexing, private markets, and options-based strategies.
2. Leveraging sleeves to personalize alongside a core asset allocation framework. An advisor’s view on how much U.S. large-cap exposure to hold may not vary client by client, but gaining exposure that is benchmarked to the S&P 500 via a low-cost ETF, through a large-cap equity SMA, or a direct indexing strategy can personalize and elevate the client experience and/or after-tax outcome.

Putting it into practice: Client Case Study Example

The situation: a high-net-worth client was initially invested in a diversified, moderate risk public-markets portfolio. Ahead of a planned business sale, their investment strategy shifted toward realizing capital losses to offset expected gains. Longer term, they hoped to increase return potential through customized and private investments.

To accomplish these goals, the portfolio was personalized through several strategic changes:

• Invested the proceeds from the business sale in a Long/Short tax-managed SMA to maximize loss harvesting opportunities and offset capital gains
• Added a municipal bond ladder SMA to provide predictable, tax-efficient income
• Longer term, increased exposure to private investments, creating additional opportunities for enhanced returns beyond traditional public markets

After personalizing this client’s portfolio, see how the asset allocation remains consistent.  Maintaining a disciplined asset allocation framework helped preserve the client's desired risk profile while introducing tax-aware and customized investment solutions tailored to their evolving financial situation. 

How to scale your business while personalizing for HNW and UHNW portfolios:

As you think about continuing to grow your business and serving your clients, start with the following:

1. Adopt a consistent asset allocation framework to create scale. Model portfolios and custom model solutions can help advisors efficiently implement investment views, access institutional asset allocation research, and incorporate innovative investment strategies and products. A common framework also promotes greater consistency in client outcomes and advisor messaging, ensuring portfolios are aligned to a shared market outlook and investment philosophy. Given the resource demands of running an institutional quality model program, more advisors are partnering with third party asset managers.
2. Define clear client segments and establish the thresholds for model-based, customized, and fully personalized portfolio solutions. Effective segmentation ensures clients receive the right level of personalization without unnecessarily complicating portfolio design, creating a more scalable and consistent investment experience across the practice.

Turn personalized portfolio implementation at scale into a competitive advantage

As client expectations evolve, particularly among HNW investors, the ability to deliver both precision and scale is on the rise.

Advisors, looking to scale portfolio personalization for their HNW clients, can evaluate where direct indexing, SMAs, private markets, and tax-aware option overlay strategies fit within their existing asset allocation framework. BlackRock Model Portfolios and Custom Models help advisors implement these capabilities while maintaining consistent asset allocation across client portfolios.

In today’s environment, personalization isn’t just a feature, it’s an expectation.  Starting with a strong core asset allocation framework and layering personalization on top can enable you to scale portfolio construction into a true competitive advantage.