For generations, the 60/40 portfolio has stood as the gold standard in investment allocation—an almost sacred formula passed down from financial adviser to client as the bedrock of prudent wealth management. This time-tested approach, allocating 60% to stocks and 40% to bonds, has guided countless investors through market cycles, providing a balance of growth and stability that served many well for decades.
But as financial markets evolve, so too must the strategies that navigate them. In a significant shift that has captured the attention of the investment community, Larry Fink, the influential chief executive of BlackRock—the world’s largest asset manager—has proposed a new model that challenges this longstanding orthodoxy.
The New Model: 50/30/20
Fink’s proposed alternative restructures the traditional allocation into three components: 50% stocks, 30% bonds, and 20% private assets (also known as alternative investments). This revision represents more than a minor tweak; it signals a fundamental reimagining of how individual investors should structure their portfolios in today’s complex financial landscape.
The addition of private assets—investments that don’t trade on public exchanges—introduces a category that was once largely inaccessible to all but the most affluent or institutional investors. This broad category encompasses diverse investment vehicles including hedge funds, real estate, private equity, private credit, and infrastructure investments.
According to Fink, these private assets offer dual benefits that are particularly valuable in the current economic environment: protection against inflation and the potential for steady, stable returns over extended time horizons. This perspective is finding resonance among financial advisers who have already been incorporating alternatives into client portfolios.
The Case for Alternatives: Diversification in Uncertain Times
Paul Winter, a certified financial planner based in Salt Lake City, Utah, has been allocating a portion of his clients’ investments to alternative assets for more than 15 years. His approach has focused specifically on two types of alternatives: commodities and non-dollar-denominated bonds.
“Alternative assets always make sense in portfolios,” Winter explains. “There’s always a need for diversification in a prudently managed portfolio regardless of what’s going on in the economy, political scene and geopolitical landscape.”
This rationale becomes even more compelling in the current environment. With tariff-related uncertainties, global instability, persistent inflation concerns, and fears of economic slowdown, many investors are prioritizing capital preservation alongside growth potential.
Winter points to the historical performance of specific alternative categories as evidence of their value: “Commodities have historically served as an effective inflation hedge,” he notes. “And non-dollar-denominated bonds should perform well during periods of dollar weakness, whether or not that’s caused by inflation and/or slow growth.”
The Democratization of Alternative Assets
Fink’s proposed 50/30/20 model reflects a significant shift in the accessibility of alternative investments that has been unfolding over the past fifteen years. Through the 1990s and most of the 2000s, private assets remained largely the domain of institutional and accredited investors—essentially, the ultra-wealthy and large institutional players like endowments and pension funds.
A pivotal change occurred in 2008 when the Securities and Exchange Commission (SEC) issued new rulings that expanded access to certain alternative investments for a broader range of investors. Scooter Thomas, a certified financial planner practicing in Birmingham, Alabama, describes this regulatory shift as having “changed the game” for financial advisers and their clients.
Like Winter, Thomas has long advocated for the inclusion of private assets in client portfolios. The recent market volatility has only strengthened the case for holding alternatives as a non-correlated asset class that can provide protection when traditional investments falter.
“Alternatives have improved risk-adjusted returns historically,” Thomas observes. “They can give you the same market returns as 60/40 with less volatility.”
Strategic Approaches to Alternative Allocation
Financial advisers who have embraced alternatives are not simply adding a single category of private assets to client portfolios. Instead, they’re employing sophisticated strategies that spread investments across various types of alternatives, each with distinct characteristics and risk profiles.
Thomas’s firm, for example, directs client investments toward real assets such as farmland, timber, and reinsurance. This diversified approach to alternative investing provides an additional layer of risk mitigation, as each type of alternative asset is not only non-correlated to major stock indices like the S&P 500 but also non-correlated to other alternative categories.
The reinsurance market exemplifies the potential for alternatives to provide stability in turbulent markets. “With reinsurance, your 20-year return will be high and your volatility will be low because people will always have to have it,” Thomas explains. “It creates a metronome to keep you afloat” when markets become volatile.
Tangible Assets in an Uncertain World
Jonathan Dane, a certified financial planner based in Pittsburgh, highlights how recent economic conditions have emphasized the value of certain types of alternative investments, particularly those tied to physical assets.
“What has changed in the last few months is the impact of real assets on an overall portfolio,” Dane notes. “It’s having these tangible assets—like cell phone towers, tugboats, private real estate and farmland—that can provide sustainable income and consistent returns over time.”
This focus on securing predictable income streams through infrastructure and other real assets has influenced corporate strategy at the highest levels of asset management. BlackRock’s acquisition of Global Infrastructure Partners in 2024 reflects this priority. GIP manages a portfolio of infrastructure assets including pipelines, data centers, airports, and other facilities that promise reliable returns across various economic scenarios.
Further demonstrating this strategic direction, Fink recently led a consortium attempting to acquire more than 40 ports worldwide, including two key Panama Canal ports, from Hong Kong-based CK Hutchison Holdings for $22.8 billion. While this complex transaction has encountered obstacles, it underscores Fink’s commitment to securing long-term, stable returns through ownership and operation of essential infrastructure.
Educating Clients on the New Paradigm
As interest in alternative assets grows, financial advisers are taking proactive steps to help clients understand how these investments might fit into their overall financial strategy.
Monish Verma, an adviser practicing in Farmington Hills, Michigan, notes that his firm hosted a dinner in March specifically focused on “new ideas in the alternative space.” The event provided an opportunity to discuss how shifting portions of clients’ portfolios from traditional equities to private markets—including private credit, private equity, structured notes, and real estate—might help preserve wealth amid uncertainty.
“We’ve been using private markets for more than a decade,” Verma shares. “A lot of our clients are already wealthy when they come to us. Our goal is to keep them wealthy.”
The Liquidity Trade-Off
The inclusion of alternative investments in portfolios does come with important considerations, chief among them being liquidity constraints. Unlike publicly traded stocks and many types of bonds that can be bought and sold with ease, private assets typically require longer commitment periods and cannot be quickly converted to cash.
Financial advisers emphasize the importance of educating clients about these liquidity limitations. Investors must approach alternative allocations with a long-term perspective, understanding that they’re trading immediate access to funds for the potential benefits of stability and non-correlated returns.
This liquidity consideration underscores why the 50/30/20 model maintains significant allocations to traditional stocks and bonds. These more liquid investments provide flexibility for shorter-term needs and opportunities, while the alternative component is positioned for long-duration investment horizons.
A Personalized Approach
While Fink’s proposed 50/30/20 model provides a useful framework, financial advisers continue to emphasize that portfolio construction should reflect individual circumstances. Factors including age, risk tolerance, time horizon, liquidity needs, and overall financial goals all influence the appropriate allocation for a specific investor.
The growth in alternative investment options has expanded the toolkit available to advisers and clients, enabling more nuanced portfolio construction that can be tailored to specific objectives and market conditions. Rather than replacing the traditional 60/40 approach entirely, the 50/30/20 model represents an evolution that incorporates new investment categories while maintaining core principles of diversification.
As markets continue to evolve amid technological change, geopolitical shifts, and macroeconomic uncertainties, portfolio construction will likely continue to adapt. The increasing accessibility of alternative investments represents an important development in this ongoing evolution, providing individual investors with options once reserved for institutions and the ultra-wealthy.
For investors navigating today’s complex financial landscape, the key lies in understanding the full range of available options and working with knowledgeable advisers to construct portfolios aligned with their specific goals and circumstances—whether that means adhering to the traditional 60/40 model, adopting Fink’s 50/30/20 approach, or developing a completely customized allocation strategy.
Acknowledgment: This article was written with the help of AI, which also assisted in research, drafting, editing, and formatting this current version.
