Ric Edelman just overhauled the 60/40… with crypto.
Massive influences in the wealth management industry are shaking things up.
Last week, Ric Edelman dropped his new outline for asset allocation that included a staggering minimum of 10% being allocated to digital assets.
For those of you who don’t know, Ric founded one of, if not the largest, RIA (Registered Investment Advisor) by AUM (Assets Under Management).
Side note: I met Ric about 2 months ago at a conference, and he was incredibly nice to me. He took 15 minutes to speak with me one-on-one regarding this very topic covered in the newsletter today. I am sure he had much more important things to do relating to the $300,000,000,000 RIA he has built than talk to me, but I was so appreciative of his time and insights.
His new allocation structure revamped the traditional 60% stock to 40% bond allocation entirely. He stated that he believes “crypto” (in quotes as his definition of crypto is seemingly very wide; from actual tokens, to tokenized assets, to publicly traded crypto companies) should be making up 10% of a very conservative investor’s portfolio and up to 40% of a very risk-on investor’s portfolio.
Ric fully believes that owning crypto was previously a very speculative investment, but in its current form, it is more risky not to own it at all. With much of his framework built around the longevity of an average citizen, he makes some very solid points on the idea of asset allocation being more risky in general, even outside of crypto assets, to sustain growth to fund longer periods of retirement.
I’m not here to give my personal opinions on how cryptocurrency, bitcoin, or other digital assets should play into people’s portfolios. However, Ric’s recent whitepaper, which can be found here, serves as massive credibility to the cryptocurrency industry as a whole.
I do resonate with something Ric said, and it is a core component of being a Certified Financial Planner® Professional and working at a fee-only RIA. We are held to fiduciary duties, and fiduciaries must recommend what a client needs.
I look forward to watching the innovation and growth of the digital space, seeing the integration of digital assets and blockchains into everyday life, and seeing how crypto continues to work its way into the traditional financial world.
I have seen it with clients. I have seen it with friends. I have seen it with family. People are curious about how these assets play a role in their financial lives.
I’d encourage all advisors to, at the bare minimum, educate themselves on the topic. If not, another advisor will have, and the next generation of clients will be headed their way.
That being said, if I were a young potential client, I would want my advisor to be aware of digital assets so they could fully assist me in understanding how they play a role in my financial life, if at all.
We’re watching massive asset managers and financial services firms build out tokenized money market mutual funds, the US now has a strategic crypto reserve, and there are even public equities trading on the blockchain at this point.
For all the bad actors, all the crypto winters, all the memecoins, and all of the garbage, this stuff will just not die.
At some point, you have to start asking some questions and learning a little more.