Challenging 60/40 and hype-driven themes

Rob Howland, CFP ® senior vice president at Howland and Associates, argues that investors rely too heavily on inherited portfolio rules even as the real economy changes around them. That tension, he explains, now frames how investors should think about portfolio construction. 

He questions why the 60/40 portfolio remains treated as default advice when the conditions that once made it effective have shifted. “The 60-40 portfolio they’ve been talking about for most of my career—for longer than my career—that idea has been in existence,” Howland says. Familiarity, in his view, becomes a liability when market structure and policy no longer align with the assumptions behind the ratio. 

In client meetings, Howland does not begin with a preset mix. Allocation starts with the person in front of him—their circumstances, the products available at that moment, and a realistic view of the next five years. Broad formulas, he says, often protect advisers more than clients. 

“If I was on the radio, or if I was trying to give financial advice to the whole world, I could say 60-40 because I can’t get in trouble by saying that,” he explains. In practice, he believes other allocations and asset mixes may better serve as defensive portfolios today. 

That skepticism extends to the idea that the current environment resembles the one that produced classic 60/40 thinking at all. Howland says crypto markets, shifting government priorities, and changes in corporate behavior around obligations and employees now define a landscape that looks markedly different from 30 or 40 years ago. 

Private credit opacity and crowded themes 

That instinct to challenge orthodoxy runs through his view of private markets, particularly private credit. The lack of transparency, he says, makes trust difficult. “As an investor who’s putting somebody else’s money into the market, I have a lot of trouble trusting the numbers that are given to me and the ideas that are presented to me, because there’s no transparency.” 

He extends that skepticism to the push to “open” private equity and private credit to retail investors. The surge of advertising promising everyday investors access to endowment-level returns looks less like democratization and more like a search for liquidity. “When institutional investors are over-allocated and asking for their money back, and the IPO and M&A markets aren’t there to give it to them, the industry has to find a new buyer,” Howland says. 

In his view, retail capital increasingly becomes that exit. He points to AI-linked valuations priced far beyond fundamentals and to the rise of continuation funds as warning signs. “You’re seeing assets move from institutions trying to get out to retail investors just coming in—and the liquidity they advertise is often an illusion,” he explains, noting the use of fund gates. “It’s a familiar pattern: when insiders need someone to sell to, that’s when the pitch for democratization gets loudest.” 

Rather than chase opaque returns, Howland focuses on areas where risk can be debated openly. Commercial real estate falls into that category, even as it faces pressure. “I think commercial real estate is facing headwinds,” he says, while remaining wary of narrow consensus trades within it. 

Data centers, in particular, draw his caution. “Everybody says data centers are the future, and everyone loves that. It sounds like a good idea until it’s overbought and oversold and everybody’s jumped onto it,” Howland says. 

The hype surrounding data centers and artificial intelligence reminds him of earlier investment waves. “There’s always a buzz cycle,” he explains. “In the past, it’s been logistics, Covid-related trades, 3D printing, or robotics. There’s always a buzz that comes from somewhere, and it drives these investment themes—for reality or not.” 

History informs that skepticism. Howland points to the railroad boom of the late 19th century, fueled by European capital that often did not fully understand what it was financing. That lesson lingers as he considers digital infrastructure today. “We may be building out all these data centers, and there’s not enough value to come out of them,” he says. 

Teaching illiquidity and shifting timelines 

If his stance on products is cautious, his approach to clients centers on translation. When explaining illiquidity premiums or lockup periods, he avoids jargon and anchors concepts in a client’s own life. “I feel like a good teacher speaks the language of his student,” Howland says. “I try to find an example in their own career or situation that helps them understand what it means to be illiquid or locked up.” 

Real estate often grounds those conversations. “When it comes to illiquidity, I think a lot of people understand real estate.......They’ve been dealing with it ever since they were little kids.” Explaining that property cannot be sold instantly helps frame the broader issue. Client psychology, he says, always comes first. 

Demographic shifts raise the stakes for that psychology. Howland watches risk tolerance and priorities change sharply when clients become parents. “It’s like a switch flips,” he explains. “The way I present an investment idea to someone who’s about to have a baby versus someone who’s just had one is completely different, because values change.” 

Those life events are also happening later. “There are more women now over the age of 40 having babies than women under the age of 20,” Howland says, calling it a profound cultural shift. “Obviously, our finances—the way we build budgets, the way we save for our families—have to reflect that.” 

Delayed parenthood reshapes long-term planning. “If women aren’t having babies until they’re 40, that’s 20 years of compound interest or retirement assets.....It’s changing the world.”