Advisors want more control over clients' managed accounts, and such accounts increasingly tilt towards mutual funds. Judging from recent results, though, the combination of these trends might not be good news for clients.

"We view these fee-based accounts as long-term solutions," Sean Daly, an analyst at Boston-based research firm Cerulli Associates, told Financial Planning. "Our findings indicate that advisor-directed accounts may miss rallies, reducing long-term returns."

Cerulli looked at the performance of mutual fund advisory programs in 2010 and 2011. Controlling for flows, packaged home-office-run programs grew an average of 9.9% while open advisor-managed programs grew just 4.

"Advisors did better in down quarters," Daly said. "When markets go down, they can cut equity positions and move to cash. Clients might be happy because they avoided some losses but ultimately they probably will have lower returns." Some advisors outperformed the packaged programs, Daly noted, indicating they had a good sense of when to return to stocks, but others were unable to move nimbly.

Packaged programs, on the other hand, tend to stay invested. If allocations to equities drop in down markets, these programs may rebalance and thus profit more when the cycle swings up.

That said, advisors often have good reasons for preferring the increased freedom offered by rep-driven programs. "During down markets," Daly said, "clients might call their advisors to ask what's being done. Advisors don't like to say they can't do anything because the home office controls the investment program. That's a tough conversation.

Daly suggested that advisors may consider a hybrid program, if one is available. "These are packaged programs," he said, "so investors stay invested and allocations are rebalanced. But advisors can make tweaks, within bands." Thus, advisors might dial down the equity allocation a bit, if that will make clients more comfortable.

"Perhaps most important," Daly said, "advisors should recognize their strengths and stick with them. Some advisors have good research capabilities and a record of success in investment advice while other advisors are stronger in building client relationships. Advisors who choose not to manage portfolios may be freeing up more time for client meetings and business development." Self-assessment might lead advisors to choosing the appropriate type of managed account.