Goldman Sachs Asset Management (GSAM), the asset management arm of the venerable Wall Street bank, may appear to operate in more glamorous realms than retirement planning and related strategies – it indeed does – but the firm offers registered investment advisors a treasure trove retirement-related insights and more.
GSAM touches a variety of advisor-relevant bases, including business, market and portfolio strategy. Advisors can access relevant solutions for bolstering their practices while tapping into insights from GSAM professionals as well as important perspectives on geopolitical events, retirement planning and more.
“Portfolios are intended to grow or preserve wealth for the future. Our philosophy for building better long-term portfolios incorporates Goldman Sachs Asset Management's institutional expertise across asset classes and investing techniques,” notes GSAM.
One where GSAM can help advisors shore up strategy is the 60/40 portfolio – a one beloved strategy that fell on unusually hard times in 2022 as stocks and bonds declined in unison.
Rethinking Old Retirement Strategies
As advisors know, 60/40 means 60% allocated to equities and 40% directed to fixed income. While that portfolio construction can include a variety of market capitalization segments, credit qualities and durations, it still boils down to just two asset classes.
As proven last year, there are good reasons for portfolios, including those geared toward retirees, to include more than just two asset classes. Plus, another retirement-pertinent issue for advisors to address is geographic and market capitalization concentration risk.
“Over time, a reliance on one or two asset classes can mean that investors miss out on a number of potential standout investment opportunities,” notes GSAM. “Some commonly owned investments have accounted for outsized proportions of portfolio risk. For instance, core equities – US equities and large cap equities in international developed countries – have historically accounted for as much as 99% of overall portfolio risk.”
When it comes to resources, GSAM has robust suite. Regarding the efficacy of diversifying client portfolios, including those for retirees, away from just two asset classes, GSAM has some compelling illustrations, which can be accessed here.
Evolved Retirement Thinking
For advisors, there’s no shame in admitting they might need some inspiration or a helping hand when it comes to rethinking retirement strategies. In fact, the current market environment could prove to be the ideal time in which to introduce fresh thinking to retirement planning.
“All together, we think investors have many reasons to be concerned that the 60/40 might be dead. And although most investors typically don’t hold such a simplistic portfolio, we see shades of the classic 60/40 present in many portfolios due to an overconcentration in the most familiar asset classes,” observes Wendy Lin, GSAM senior market strategist. “We believe investors should consider the following: recalibrate their return expectations, increase the component of performance coming from income, and diversify into less familiar return-enhancing asset classes.”
The point: Retirement planning is evolving and advisors need to be ahead or, at the very least, keep pace with that evolution. Harnessing the right partnerships can help with that objective and GSAM checks that box.
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