Custom models continue to lead model portfolio product development initiatives. According to The Cerulli Report—U.S. Asset Allocation Model Portfolios 2025, 65% of model provider firms indicate that focusing on custom models is a top-three priority this year.

Custom models hold a sizeable lead in perceived level of opportunity, with 71% of asset managers viewing custom models as a large opportunity, and 18% as a medium opportunity.

While these offerings originally started as a way to deliver custom-made solutions for broker/dealers (B/Ds) to host on their platforms and make available to their captive advisor audiences, the focus of custom model distribution is increasingly pivoting toward independent registered investment advisor (RIA) practices. One-third of industry model assets are in custom model arrangements, primarily between asset managers and B/D platforms, but increasingly with RIA clients.

“B/D demand for custom models has been well publicized, as the wirehouses and large national/regional B/Ds have the scale to demand their model provider partners align with their architecture, active/passive, vehicle, and capital market guidelines, among other potential expectations,” says Brendan Powers, director. “However, another emerging area of opportunity for custom models has been the independent channels, where RIA aggregators and large individual advisor practices have sought out models tailored to their needs. While these opportunities are likely to require more effort and resources up front, there may be more scalable growth if they receive favorable positioning among the firms’ financial advisors,” he adds.

“Customization—enabling enterprise home office or large advisor practices to incorporate their preferences into a model while maintaining the outsourced asset allocation framework—is a top initiative for many model providers,” says Kevin Lyons, senior analyst. Working with distribution platforms to enable custom models and providing client support and portfolio construction consultants who can assist advisors with transitioning their book and meeting client needs are key requirements, according to the research. “It is this level of client experience that can help differentiate model solutions beyond just performance, price, and investment philosophy,” notes Lyons.

Cerulli maintains model providers not already offering custom models, offering them only to a subset of the industry, or offering them only at high minimums should carefully assess the opportunity to expand their offering. Significant tailwinds supporting the growth of models through the changing role of advisors present an opportunity for growth that could accelerate, awarding those positioned to enter custom engagements.