After years of riding along with shelf-based models, many mid-sized asset managers are experiencing an “aha” moment — a realization that their traditional approach is untenable in the evolving market.
This strategic recognition often begins with frustration: the CIO or partners notice that despite decent investment ideas internally, their firm’s performance and growth remain middling. Why? Because they are essentially outsourcing the expression of those ideas to third-party vehicles.
02·01Clients are asking for something they can’t get elsewhere
A key driver of this awakening is client demand for more bespoke solutions. In recent years, investors — both high-net-worth individuals and institutions — have sought greater customization in their portfolios. They don’t want off-the-shelf, one-size-fits-all portfolios; they want solutions tuned to their specific objectives, constraints, and beliefs.
Data bears this out. According to Cerulli Associates, wealth management platforms are showing a growing preference for custom model portfolios built by asset managers. In 2024, Cerulli found that 30% of all model portfolio assets are now in custom models, and that nearly 60% of asset managers surveyed cited custom model delivery as one of their top three priorities.
Give us something we can’t get elsewhere. Build a strategy just for us that aligns with our unique needs.The client demand driving the shift
Broker-dealers have started asking for exclusive models that are only available to their advisors — a way to keep advisors loyal by offering something unique. An asset manager who can fulfill that request stands to gain a loyal distribution partner; one who cannot is easily substituted.
02·02Personalization, themes, and the pivot to serving the investor
Private markets opportunities, ESG overlays, and personalized values-based investing represent areas where off-the-shelf products fall short — and where managers have sensed opportunity. This has fueled interest in direct indexing and personalized SMAs, where a portfolio can be customized at the security level. In Accenture’s Future of Asset Management survey, fully 80% of asset managers said that “customization for the masses” will be an essential strategy in coming years.
As alpha becomes harder to obtain, personalized products are emerging as an appealing alternative to generic low-cost beta. We are essentially seeing a pivot from trying to beat the market — which is tough — to trying to better serve the investor, by tailoring the product to them. Managed accounts have surged: the use of separately managed accounts has grown 84% since 2010, indicating advisors’ eagerness to implement personalized strategies.
Another impetus is the rising popularity of thematic and niche exposures, where agile product development is a competitive advantage. In the old paradigm, a mid-tier manager who wanted to offer clients exposure to cybersecurity stocks or a basket of pre-IPO fintech companies had to wait for someone else to launch a fund — or accept that they couldn’t deliver it. Now, forward-looking managers see these market trends as chances to innovate.
02·03Assetization enters the conversation
Assetization is emerging in these conversations not as a vendor pitch, but as an industry concept. We define it as the ability to turn any asset — including alternative, illiquid, exotic, or digital assets — or any strategy into a bankable, investible security. The term encapsulates a broad shift from “manager as allocator” to “manager as creator.”
This does not necessarily mean abandoning the use of third-party products, but it means reclaiming the initiative. A firm might still use passive ETFs for core exposures — why recreate an S&P 500 fund? — but for any area where they have expertise or see alpha potential, they pursue Assetization by structuring it into a product they own. Executives increasingly recognize that such a shift can improve margins, enhance branding, give them agility, and enable closer alignment with client needs.
The broader industry is recognizing that traditional barriers to launching products are coming down. Platforms like modular fund hosts or securitization companies handle the heavy lifting of legal structuring, letting managers focus on ideas. The conversation shifts from “Which funds can we select for clients?” to “What can we create for clients?” As many have discovered, however, wanting to change and being able to change are two different things.