A new report from market research firm Cerulli Associates finds that a majority of financial advisors expect to prioritize the use of model portfolios over funds of funds going forward because of the higher level of customization model portfolios offer. According to the report, 61% of surveyed advisors expect to give preference to model portfolios over funds of funds.

A survey of approximately 2,000 advisors conducted on a rolling basis over the past year found that 44% of respondents were using fund of fund structures and only 8% expect to increase their use of these vehicles going forward. At the same time, almost every wealth manager today is using model portfolios, according to Matt Apkarian, associate director of product development with Cerulli.

Related: Cerulli: Demand Grows for Custom Model Portfolios

Cerulli’s survey shows that 23% of advisors primarily create custom portfolios for each of their clients. That means the remaining 77% are either using model portfolios provided by third parties or creating models within their own practice, Apkarian noted. “But I bet you the number is even higher because even advisors who are primarily creating custom portfolios, I can almost guarantee they’ve got some clients who are allocated to a model,” he said.

While advisors already use funds of funds sparingly because they are most closely associated with retirement plans, they also have concerns about whether funds of funds’ fees are justified by the value they provide, Cerulli found. Apkarian said the average allocation fund expense ratio ranges between 36 and 45 basis points. However, some underlying funds in funds of funds charge their own fees, creating a multi-layer fund structure. That’s less common in the model portfolio space because most asset managers have eliminated their strategist fees, he noted.

Related: Advisors Favor SMAs Over Model Portfolios, Citing High Fees, Limited Customization

More importantly, however, using model portfolios allows financial advisors to appeal to clients’ desire for customization.

“I would expect that now you are able to pitch the value proposition of your firm as an advisor when you use something like a model a lot because there is the ability to see the individual building blocks, there is the ability to add customization, there is the ability to add various tilts and say to your client ‘You are not getting the same thing that everyone else is getting by buying shares of this fund of funds because we are able to add customization.’”