As advice firms look ahead to 2026, many are taking stock of the investment decisions they’ve made over recent years, particularly the role Model Portfolio Services (MPS) now play within their advice models. With Consumer Duty bedding in, FCA scrutiny increasing and client expectations continuing to evolve, advisers are reassessing not just whether MPS belongs in their proposition, but how and where it should be used.

Model Portfolio Services (MPS) are now firmly embedded in the UK advice landscape. What began as an efficiency solution has evolved into a core component of many firms’ central investment propositions, particularly as regulatory expectations have risen and client needs have become more complex. 

That evolution is reflected in the data. Industry research indicates that the number of distinct MPS portfolios has roughly doubled over the past six years, according to Defaqto, highlighting how rapidly choice and complexity have grown both before and alongside the introduction of Consumer Duty. At the same time, assets under discretionary MPS management are projected to surpass £200bn, driven by adviser demand for outsourced investment solutions that support governance, scalability and consistency.

But while MPS adoption continues to grow, the conversation among advisers has shifted. The question is no longer whether to use MPS, but when it genuinely adds value, when it doesn’t, and how it fits alongside other investment solutions.

Why MPS became so central to advice propositions 

For many advisers, the appeal of MPS has been both practical and strategic. 

At a fundamental level, MPS helps advisers balance investment governance, regulatory responsibility and day-to-day capacity. By outsourcing discretionary investment decisions while retaining suitability responsibility, advisers gain access to a documented, repeatable investment process which is closely aligned with Consumer Duty’s emphasis on demonstrable outcomes and fair value.

The core drivers are well understood:

  • Governance and regulatory comfort
  • Structured oversight, disciplined rebalancing and clear audit trails provide confidence under increasing scrutiny.
  • Time efficiency and scalability
  • Removing the burden of constant fund research and tactical changes allows advisers to focus on planning, client relationships and growth.
  • Access to specialist investment expertise
  • Dedicated investment teams and institutional research capabilities are difficult to replicate in-house without scale.
  • Consistency of client outcomes
  • Centrally managed portfolios reduce client-to-client drift and support comparability of outcomes for similar risk profiles.
  • Operational simplicity
  • Streamlined onboarding, reviews and reporting reduce complexity and operational risk. 

In most firms, MPS is not used to replace advice, but to provide a stable investment foundation that supports it.

That strategic positioning is also reflected in how advisers are structuring assets in practice.

Finscape on-platform data at the end of Q3 2025 provides a clear view of how advisers are structuring client assets in reality:

  • MPS AUM stood at £141bn
  • Non-MPS AUM totalled £260bn

In straightforward terms, a significant proportion of adviser assets remain outside model portfolios, despite the continued growth of MPS. Advisers are clearly not relying on a single approach, instead blending MPS and non-MPS solutions to reflect differing client needs, objectives and levels of complexity. 

From portfolio to proposition: how the role of MPS has changed 

One of the most significant (and less explicitly discussed) shifts in recent years is how MPS is now positioned within the advice process.

Historically, MPS was viewed primarily as an investment portfolio solution: a way to outsource fund selection and day-to-day management, optimising adviser time while improving governance and consistency. Standardisation at scale was a feature, not a flaw, with models aligned to broad client risk appetites.

Today, the reality is more nuanced.

For many clients, the MPS they are presented with is the most visible investment proposition within the advice relationship. Clients rarely engage with the underlying fund selection or asset allocation. Instead, the model itself becomes the clearest, most tangible expression of how their money is being invested. 

In that sense, MPS has moved beyond being purely a portfolio and has become an integral part of the advice proposition. 

This shift helps explain why regulatory scrutiny has increased. The FCA’s interest in the MPS market is not simply a function of its size, but of its central role in the consumer experience. Where MPS forms a core part of the advice offering, it must demonstrably deliver good outcomes and fair value at an individual client level, not just for a category of client.  This represents a subtle but important shift: from managing portfolios for groups of clients, to evidencing outcomes for individuals. 

Why this explains what we are seeing in the market 

Viewed through this lens, recent market developments look far from random.

As advice propositions become more personalised, MPS solutions have evolved beyond broad risk bands. The growth in thematic, outcome-focused, income-targeted or volatility-aware models reflects advisers’ need to address a wider range of individual client circumstances, particularly where complexity is the norm. 

Consumer Duty has raised expectations around suitability, value and outcomes, while the FCA is responding to a market offering far more solutions than before. Greater choice increases the need for robust governance, and regulatory scrutiny has risen accordingly. 

Why advisers are increasingly selective 

This selectivity is not a rejection of MPS, but a reflection of how advice is increasingly tailored at an individual level.

Client circumstances are rarely uniform. Objectives, tax positions, time horizons and behavioural considerations vary widely, and advisers increasingly reflect that diversity through a combination of MPS and non-MPS solutions rather than a single default approach. 

Viewed in this way, MPS remains a core component of many advice propositions, while non-MPS solutions continue to play an important role where suitability demands a more tailored response. 

That balance sits squarely within the spirit of Consumer Duty: appropriateness over uniformity.

When MPS may not be the right solution

Most advisers who use MPS effectively would agree it works best as a default, not a universal answer. 

There are clear situations where choosing not to use MPS can deliver a better client outcome, including:

  • Highly bespoke or complex client requirements
  • Concentrated holdings, complex tax positions, non-standard ethical exclusions or phased exit strategies.
  • Significant tax planning considerations
  • Model-level management can limit individual tax optimisation, particularly for higher-value portfolios with large, unrealised gains.
  • Smaller portfolios where cost sensitivity matters
  • The combined cost of advice, platform and MPS may struggle to demonstrate fair value.
  • Short-term or transitional investments
  • Capital earmarked for near-term use may be better suited to simpler or more defensive solutions.
  • Firms with genuine in-house investment capability
  • Where robust governance, oversight and discipline already exist, an external MPS layer may add cost without improving outcomes.

The unifying principle is clear: the decision to use MPS should itself be a suitability decision, capable of being evidenced and reviewed over time. 

So where do asset managers fit now?

As MPS has grown, some have assumed that asset managers no longer need to engage directly with advisers, and that inclusion within a model portfolio is enough. 

The evidence suggests otherwise. 

Advisers continue to control suitability, recommendation and client explanation. MPS inclusion is not permanent; models are reviewed, refined and replaced regularly as value and outcomes come under sharper scrutiny.

As advice propositions become more personalised, advisers increasingly need a deeper understanding of the full investment toolkit available to them, particularly when MPS is not the right answer. That understanding comes from staying connected to asset managers who can provide clarity on different approaches, structures and behaviours beyond model portfolios.

The strongest position today is MPS-aware but adviser-centric:

  • Supporting discretionary managers and MPS providers
  • While continuing to help advisers understand, explain and evidence investment behaviour to clients

Far from making asset-manager engagement redundant, the evolution of MPS makes it more strategically important.

In summary

MPS has reshaped how advice firms deliver investment solutions, but it has not removed the need for judgement, suitability or professional relationships.

The evidence points to a more mature phase of adoption:

  • MPS as a foundation within advice propositions
  • Continued use of non-MPS solutions where client needs demand it
  • Adviser discretion firmly embedded in investment decision-making 

What this makes increasingly clear is that advisers cannot rely on MPS alone to meet every client need. When MPS is not the right solution, advisers still need insight into the wider investment universe, insight that comes from informed, ongoing relationships with asset managers.

Ultimately, the strongest advice propositions are not built on choosing MPS or not MPS in isolation. They are built on having the flexibility, understanding and evidence to choose the right solution for each client and to demonstrate why that choice delivers good outcomes over time.

As firms refine their propositions for 2026 and beyond, the challenge is not to default to MPS or avoid it, but to use it deliberately, supported by the insight, governance and relationships needed to deliver good outcomes for every client.

Sarah Paul

Chief Operating Officer

Panacea Adviser