The Boom Echoes On …

PUBLISHED JULY 2025

You’ve heard the term a thousand times as an investor: Asset allocation is the key to long-term success.

What you don’t hear quite as much about is the changing nature of that wealth-management approach and how it should apply in your own case. There’s a good reason for that: Your circumstances vary by current portfolio size, financial goals, retirement income needs, potential philanthropic legacy, inheritance you might leave for your family, long-term health-care considerations—a lot of factors should dictate your own strategy.

But it doesn’t end there: As new investment tools come to market, as geopolitical factors shape equities and energy markets, as Washington fiddles with interest-rate policies (or drags its feet on them), the goal posts for that allocation strategy are literally moving every month. As investors respond to changing market conditions and their own individual needs, asset allocation strategies are becoming more personalized. The focus, though, remains on achieving long-term financial goals.

“Asset allocation has always been a living, breathing dynamic based on global, economic, financial and market trend lines,” says Jamie Battmer, chief investment officer for Creative Planning. “If you look at it in the public-market arena, instead of trying to find that needle in the haystack to pick winners, you want to own the entire haystack, or part of it.”

As global economic components expand and contract, Battmer says, your overall ownership in equities, for example, should expand or contract accordingly. “You want to participate in the trend lines, but not become beholden to them,” he said. “We should bless Poland for its 50 percent returns, but investing in equities there should only be a small part of an overall portfolio.”

The Boomer Challenge(s)

You can’t talk about retirement planning issues affecting Baby Boomers without doing a little market segmentation. Despite what today’s meme-generators in younger demographics might think, not all Baby Boomers were created equal. Nor did they end up that way. Nearly two in five—38.7 percent—have nothing saved for retirement. That’s not a misprint: They have nothing in reserve, and only Social Security to look forward to if they’re not working past full retirement age, which is approaching 67.

The divide shows up in net-worth figures, as well. The top quintile has an average net worth of $4.4 million, followed by those in a significantly wide range of $742,000 to $4.4 million. In the middle of that generation, the savings pool ranges from $185,000 to $742,000. The fourth quintile below that goes all the way down to $17,000. That means 21 million Boomers in the bottom quintile have a net worth of—not just retirement savings, but net worth—of less than $17,000.

Irrespective of where a retiree—or soon-to-be retiree—falls within that range, wealth managers as a group preach a gospel meant to salvage the prospects of any investor: understand asset allocation and embrace it.

Historically, this has meant limiting exposure to risk for part of the portfolio, taking calculated risks only where prudent, structuring moves that make sense as life expectancy changes, and holding assets that are both liquid and fixed—for starters.

However, while the concept of asset allocation has long been a guiding light, investors and wealth managers continue to face constantly shifting investment headwinds and tailwinds. Your definition of proper asset allocation a year ago may not align with your investment needs today.

One of the most significant changes to the asset-allocation strategy over the past two generations has been a shrinking pool of targets for investing in public markets, such as equities. 

“It’s Finance 101, and the first day of class where you learn about proper diversification and owning as many kinds of things as possible,” said Battmer. “As fewer public-market offerings are available—we had 8,000 stocks 30 years ago, and 4,000 today—and as firms are not going public, that’s what’s forcing a modification in asset allocation. If you want to be as diversified as possible, it can’t all be in the public-market arena.”

But what about private options? Roughly 85 percent of the nation’s companies with at least $100 million in revenue are private; that means equities investors  are reaching only into the remaining 15 percent. 

Battmer says that’s a reflection, in part, of business owners’ grasp of a wealth-building truism: You are rewarded more for being an owner than being a lender in the long run. “The more you can own, that’s what proper asset allocation is, and that’s had to evolve,” he said.

That opens the door to hard assets, like commercial real estate, acquiring residential properties as landlord/owner, public infrastructure and municipal bonds and other tools. For high net-worth investors, that’s essential to the investing strategy; with at least $5 million in investable assets, more of the best long-term investments are at your disposal. All of which, advisers say, should be focused through a tax lens to justify different and changing investment climates.

As new financial instruments come and go, have the fundamentals of asset allocation themselves changed?

“I would love to give you a fancy answer but, the fact is that we don’t think that investments have to be complex to be good and we don’t chase the latest investment fads,” says Ken Eaton, co-owner of Stepp & Rothwell. “In our view, asset allocation is about having a sound plan based on your needs and risk tolerance that is designed to withstand the ups and downs of the markets, and to periodically rebalance in accordance with that plan.”

That plan should change, he says, when an investor’s situation and needs change, not when the market switches directions.  

“All the studies indicate that individual investors underperform the markets not because of the investments that they are in, but because they trade too frequently and at the wrong times,” Eaton said. “Leveraged ETFs, 24/7 trading and the like just exacerbate the problem by making people think they need to do something to be effective when the fact is that being well-diversified and staying put during times of volatility is usually the best course of action. As much as I would like to tell you that things have drastically changed, in our view, they really haven’t.”

The Demographic Piece

What makes Boomer investment trends so significant, wealth-management executives note, are the historical advantages they’ve had during their working lives. Those have combined to produce the wealthiest generation in history.

Although they account for just 20 percent of the population, they own slightly more than half of all household wealth in the U.S. They were the youngest generation eligible for a new tool called the 401(k) when it was opened to them in the 1980s. So profound has that positioning been, some advisers believe—with good reason—that no other generation will see real-dollar returns like those in their lifetimes.

Why? They grew up and began their careers with structural advantages that began in childhood and continued through their prime earning years. Among them: the massive post-war expansion, a protracted and massive stock-market bull run, home prices that by today’s standards might make a renter drool, and college costs that were considerably more affordable.

A select few even hit the wealth-building trifecta of defined-benefit pension plans (largely a thing of the past these days), defined-contribution plans—essentially, the 401(k) as we know it—and company profit-sharing or stock-purchasing plans.

The combined effect of all that: portfolios with more than half of all U.S. household wealth as the leading edge of their generation pushed into retirement.

And yet, a considerable number of them are at the threshold of retirement with little to show for a lifetime’s labors.

For those fortunate enough to require the services of professional wealth-management advisers, though, these are times of continuing promise, tempered by the perils of market instability and potentially devastating health-care needs.

The Economic Landscape

The equities markets, in particular, developed  a case of the vapors in April, when President Trump unveiled his “Liberation Day” tariffs, targeting roughly 90 nations for a mix of what he says are unfair trade polices and tariffs of their own, failure to restrict supplies of deadly drugs into the U.S., and their roles in steering millions of immigrants to the U.S. without authorization.

The Dow, flirting with record highs through the late winter and early spring, immediately responded with a fit. Within two days, it was off 16.4 percent from its record close in early December. It was a classic example of how investors hurt themselves by giving in to short-term emotion rather than clinging to long-term patience: May 12, all of the loss had been recovered, with the index closing above 44,000 daily since the end of June.

While the markets were gyrating in April, talking heads suggested there was a 50 percent chance of recession before the end of this year. Just 90 days later, that talk has disappeared. With inflation through June slightly below the 2.9 percent of 2024—itself the lowest since the pandemic spike began in 2021—and with unemployment hovering at around 4.1 percent in June, Trump is increasingly vocal that it’s past time for the Fed to relax interest rates running between 4.25-4.5 percent in mid-July.

Speaking in Commerce Bank’s Mid-year Economic and Market Outlook podcast, Chief Investment Officer KC Mathews suggested that, for equity investors, the rest of 2025 should be positive.

“With tariffs and administration changes, what we do know is, you’re going to have an increase in volatility,” Mathews said. “Just like in President Trump 1.0, companies find a way to navigate these tariffs, manage their margins and profits. And we still see corporate earnings growing in the 6-9 percent range this calendar year, which, in turn, should support stock prices and give us positive returns in the S&P 500 domestic stocks for 2025.”