The 60/40 portfolio has served many investors well for decades, but the challenges facing today’s high-net-worth clients, including the need for diversified return sources beyond public markets and protection against inflation that can erode substantial wealth, require sophistication beyond what the traditional model allows.
Today's economic reality compounds these challenges. Persistent inflation, elevated interest rates, and increased market volatility have disrupted the historical negative correlation between stocks and bonds. The traditional diversification benefit of low or negative correlations between stocks and bonds has eroded in recent years, as correlations have moved closer to 1.0 during periods of market stress. In 2022, the typical 60/40 portfolio decline roughly 18%1, underscoring that both asset classes can fall in tandem under certain macroeconomic conditions.
During the past three and a half years, 60/40 portfolios have returned just 2% annually, underscoring the need for a different approach to portfolio construction. In particular, high-net-worth investors increasingly require a model that enables access to the same private market opportunities that institutional investors have long utilized to generate alpha.
Forward-thinking wealth managers are increasingly adopting a new model: 50% stocks, 30% bonds, and 20% alternatives. According to BlackRock CEO Larry Fink, the future standard portfolio may move toward 50/30/20 with stocks, bonds and private assets like real estate, infrastructure and private credit, an evolution that recognizes private markets - a substantial value in the global economy - deserve a meaningful place in modern portfolios.
BlackRock has already partnered with iCapital and GeoWealth to offer custom model portfolios that invest in private equity and private credit semiliquid funds, making previously institutional-only strategies accessible to high-net-worth clients. Goldman Sachs Asset Management has also entered this space, offering total portfolios of public and private investments in a single account for RIAs in partnership with GeoWealth and iCapital.
As noted in Morningstar's 2025 US Model Portfolio Landscape Report, model portfolio assets have reached a new high. Providers are continuing to innovate, with new assets in third-party model portfolios totaling more than $645 billion at the end of March 2025, a 62% increase since Morningstar's last survey of assets in June 2023.
Model providers overwhelmingly expect to incorporate actively managed stock and bond ETFs into their models over the next few years; one-third of Morningstar's survey respondents indicated they expect to add interval funds to their model offerings.
And demand from advisors is increasing. According to a Natixis survey, almost half (49%) of advisor respondents said private assets are more attractive given high correlations in public markets, while 56% indicated private assets have improved outcomes for clients. Fifty-six percent also plan to increase their use of private assets over the next five years.
RIAs now have several options for incorporating private markets into client portfolios, including ETFs that provide exposure to private market strategies, interval funds that offer periodic liquidity, exchange-traded products with alternative underlying assets, and sophisticated model portfolios. Among these options, UMAs and SMAs provide the greatest flexibility for customization and client-specific tailoring.
Financial technology platforms are paving the way for advisors to evolve from the 60/40 to the 50/30/20 framework. iCapital launched model portfolios with private markets in May 2024, while BlackRock's and Goldman Sachs’ models with private equity and private credit semiliquid funds debuted on GeoWealth in early 2025. An entire ecosystem of private markets technology vendors has emerged to support RIAs looking to access these investments, from sub-doc solutions, to due diligence providers, to data rooms and specialized reporting platforms.
GeoWealth's TAMP-enabled UMA capabilities provide the infrastructure necessary for sophisticated portfolio customization, comprehensive reporting, automated billing, systematic trading, intelligent rebalancing, and tax optimization overlays. To manage evergreen alternatives in custom models, GeoWealth has developed integrated workflows and a flexible rebalancing approach to facilitate liquidity needs and streamlined access across public and private market portfolios.
RIAs can now allocate to and implement evergreen accredited investor alternatives alongside mutual funds, ETFs, and equity SMAs within their own models or via asset manager-designed custom models. The operational benefits are equally compelling, as these integrated solutions deliver meaningful reductions in operational burden and increased time savings.
The transition from 60/40 to 50/30/20 portfolio construction reflects a broader understanding that the way we handle diversification has to evolve with changing market and economic dynamics. Smart RIAs recognize that traditional public market portfolios may no longer provide adequate diversification and risk-adjusted returns for high-net-worth clients.
GeoWealth's proprietary technology already makes public-private market integration possible with select partners, while continuously working on additional capabilities. As long-held industry standards like the 60/40 portfolio continue shifting to accommodate market, economic, and investor behavior changes, future-focused advisors should consider whether their partners are helping them outpace the ongoing evolution, or keeping them stuck in the past.
To get a closer look at GeoWealth, schedule a demo with our team today.
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