Famed financial advisor Ric Edelman delivered groundbreaking portfolio allocation recommendations that fundamentally challenge the traditional investment approach used by millions of financial advisors at a conference this week in what was his first public presentation of these guidelines.
At the 7th Annual VISION conference, the Digital Assets Council of Financial Professionals and Edelman Financial Engines founder called for advisors to allocate a minimum of 10% in crypto for conservative portfolios and as much as 40% for aggressive accounts, declaring that the traditional 60/40 stock-bond allocation model is obsolete.
The conference, the longest-running digital assets event exclusively for financial advisors, RIA firms and accredited investors, ran June 9-11 in Dallas.
“The allocation model you’re familiar with—stocks and bonds—must now be replaced by one featuring stocks, crypto, and bonds,” Edelman told the audience of 150 independent financial advisors. “The correct allocation now is to place 70% to 100% of the client’s portfolio into stocks and crypto, with no more than 30% in bonds, and potentially zero in debt securities.”
He added that moderate portfolios should have a 25% crypto allocation.
Big shift from prior advocacy
Edelman’s position represents a dramatic shift from his prior advocacy that investors should allocate “low single digits” to crypto, and he cited two fundamental forces as the basis for his shifting viewpoint: unprecedented human longevity and advancements in exponential technologies. He argued that most clients alive today will live to age 100 or beyond, requiring portfolios to last far longer than most investors anticipate, and that the continued growth of blockchain technology will propel its levels 5 or 10 times its current size by 2030.
“We’ve got to update the 60/40 glide path. You need a larger equity exposure, and for far more years, because of extended levels of longevity.”
Ric Edelman
Central to Edelman’s longevity thesis is the array of breakthrough medical technologies in recent years, including cracking the human genome, CRISPR gene editing technology, focused ultrasound, and the emerging human cell atlas. Scientists project that individuals alive in 2030 will likely live past age 100, fundamentally altering today’s retirement planning assumptions.
“We’ve got to update the 60/40 glide path,” Edelman explained. “You need a larger equity exposure, and for far more years, because of extended levels of longevity.”
This unprecedented demographic shift coincides with an equally unprecedented growth in exponential technologies. Edelman detailed how massive new markets will emerge over the next few years, displacing traditional sectors, and showed projections revealing that blockchain technology alone will grow from $176 billion today to $3 trillion by 2030, with tokenization reaching $16 trillion and bitcoin achieving $19 trillion in market value, a nearly 7x increase from today.
Rising institutional crypto adoption
Edelman’s allocation model comes as institutional crypto adoption reaches unprecedented levels. Recent DACFP surveys show a 70% increase in financial advisors planning to recommend crypto, rising from 21% in December 2023 to 35% in March 2024. But among advisors already recommending crypto allocations, 87% suggest allocations of less than 5%, with the most common recommendation being 2%.
A press release trumpeting Edelman’s new guidelines said his significantly higher allocation target reflects “dramatically improved regulatory clarity and institutional engagement in crypto.” The Trump administration and Congress’s pro-crypto stances have reversed the restrictions of the Biden administration, with all the Biden-era prohibitions reversed.
The result is that banks can now trade, custody, and lend against crypto—setting the stage for massive engagement by the banking community. Additionally, more than 1,800 public companies have invested in the bitcoin ETFs holdings since their debut in January 2024, and 90 public companies hold bitcoin in their treasury reserves.
“Bitcoin’s 16-year track record shows that portfolios with bitcoin outperform portfolios that lack it, generating higher returns and lower risk.”
Ric Edelman
“If every investor who owns traditional assets allocates just 1% to bitcoin, bitcoin’s price would be $500,000,” Edelman said. “A 10% allocation would put it at $5 million”—a figure predicted by Strategy’s Michael Saylor.
Financial advisors now have dozens of ways to invest in crypto, Edelman noted, including bitcoin and Ethereum ETFs, VC and hedge funds, crypto equities, bitcoin mining stocks and even IRA and 401(k) plans, as well as Separately Managed Accounts available from major custodians.
“Bitcoin’s 16-year track record shows that portfolios with bitcoin outperform portfolios that lack it, generating higher returns and lower risk,” Edelman said. “All the classic Modern Portfolio Theory statistics improve with bitcoin, including the Sharpe and Sortino ratios, standard deviation, max drawdown.”
Edelman encouraged the advisors attending the conference to continue learning about digital assets so they can make informed recommendations to their clients. He noted that thousands of financial advisors have already obtained the FINRA-listed professional designation, Certified in Blockchain and Digital Assets(CBDA), and enrollments are at an all-time high.
SEE ALSO:
• EBSA Rescinds Guidance Warning Against Cryptocurrency in 401(k)s
• Trump Signs Executive Order Supporting Crypto
• Ric Edelman’s ‘22 Predictions for 2022’ Center on Digital Assets
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.