Beyond 60/40 Ep. 50: How Advisors Navigate Alts, Tech, & Market Volatility

In Episode 50 of Beyond 60/40, host Sonali Basak, iCapital’s Chief Investment

Strategist, sits down with Anshul Sharma, Chief Investment Officer at Savvy

Wealth, to explore how advisors are navigating today’s market environment.

They discuss the breakdown of the traditional 60/40 portfolio, the

accelerating shift toward alternatives, and how private markets, structured

investments, and defined outcome solutions are reshaping portfolio

construction.

Anshul also breaks down common misconceptions around liquidity, how

semi-liquid structures fit into a modern allocation, and why technology is

becoming essential for advisor efficiency—saving teams 15–20 hours per

week by streamlining compliance, trading, and monitoring.

Finally, they examine the growing role of AI in powering insights and

elevating the client experience.

Watch on YouTube: https://bit.ly/4rJEMGV

Transcript

SPEAKER_02 0:04

Welcome to the latest episode of Beyond 6040. I'm Shanali Basik, the chief investment strategist at iCapital. And today I am joined by Anshul Sharma. He is the CIO of Savvy Wealth, which is a wealth management platform with about$5 billion in assets. Ansul, thanks for joining us today. It's a really amazing moment in the market to talk about how your advisors are navigating this moment. And what I hear from people day in, day out is the market has run up so much. I'm looking to diversify. I'm a little concerned about the bond market. What are the challenges that a 6040 portfolio presents to your advisors and how are they navigating through it?

SPEAKER_01 0:41

Yeah, uh first, thanks for having me on. I think you hit the nail on the head. Uh the market's run up quite a bit uh over the past couple of years. A 60-40 portfolio that worked really, really well, uh, let's call it over the last decade or two, uh, we don't think is going to work as well on a go forward basis. And I think if you look at something as as basic as correlations, right? Wind the clocks back, take a look at stock bond correlations in the 80s and 90s. What you tend to find is during that period of time, they exhibited positive correlations. And then in 2000 to say 2020 or so, that correlation flipped, right? Once that correlation flipped, we got used to this narrative as bonds as a ballast in an overall portfolio, had the effect of bringing down the volatility of 60-40 portfolio. That 60-40 portfolio performed really, really well up until around COVID. Since then, what we have found is that correlations have again reversed. And now the stock bond correlation is positive, and even more so today than it was back in the 80s and 90s. And so what we're finding is that we're in a totally different market regime today. And that 60-40 portfolio of yesterday and the day before, we just don't think is going to be as effective on a go forward basis. So we have to look beyond the world of traditionals into the world of tech.

SPEAKER_02 1:58

So, what does that really mean in terms of how you're reorienting kind of traditional portfolio management? That's what this comes down to at the end of the day.

SPEAKER_01 2:05

Oh, absolutely. And it's it's not like 6040 is dead, right? I I don't think so. I think 6040 simply has to evolve. We have to look beyond the world of traditional stocks and bonds into the world of alts. Alts to me are a toolkit, right? They are utilized, they should be utilized to help our clients meet different goals, to help our clients meet different needs, whether that's diversification away from stocks and bonds, whether that's income generation, whether that's a different type of growth, whether that's downside protection, inflation protection, whatever it might be. The world of alternatives has evolved so much over the last decade or two that I take a step back and I look at it, and there's no shortage of solutions that can be utilized to refine that traditional 60-40 portfolio.

SPEAKER_02 2:52

But at the same time, it's so interesting. You have no shortage of solutions, but that's almost a hard thing for advisors right now. The fact that there's so much choice. So, how do you help people rethink where alternatives actually fit into a portfolio?

SPEAKER_01 3:06

Yeah, absolutely. And again, go back to 10, 15 years ago, and the friction was the philosophical debate around alternatives, right? Why alternatives, what are alternatives, et cetera, et cetera. And then it moved on to the operational elements of alternatives. Uh, they're difficult to use, uh, K1s, uh not as easily accessible. And now you have seen this just explosion in growth in terms of number of solutions. So now the problem isn't necessarily access, it's to your point, navigation. And so for us, what we do is we attempt to take the world of alternatives and to silo the alternatives into different use cases. So for us, it's building a curated list of the entire universe available to our clients, to our advisors, and saying, okay, if you have clients that need income, take a look at these different solutions out there. If you have clients who are concerned about their traditional exposure, maybe insert this other solution that can add diversification to that.

SPEAKER_02 4:08

So what do you think is the biggest reason you would say, if you had to choose one that people are using in terms of turning away from those traditional asset classes into private markets?

SPEAKER_01 4:20

Differentiated return. And I know that's kind of a catch-all uh because it includes not just returns, but a different type of risk and perhaps even a little bit of income here and there. But I think that's important because that's what alternatives provide, sources of return that you cannot get from traditional markets. And so the inbounds that I'm receiving, that we're receiving on the savvy investment management team, are really about stocks have run up so much, I don't feel comfortable with where bonds are today or on a go forward basis. I need something that can generate a different type of return independent of what you can get on the traditional side.

SPEAKER_02 4:56

How do people feel about the liquidity profile, the fact that money is locked up for longer?

SPEAKER_01 5:00

You know, liquidity is an interesting thing that we need to speak to our clients and advisors about. It's often a source of risk that is overstated because in reality, even a 60-40 portfolio that encompasses some elements of alternatives, there's not more than say 10, 20% that's allocated to illiquid investments. And when we look at the average turnover in our portfolio or the liquidity needs, that hardly breaches where we would consider a client necessarily needs to have that much capital available at all points in time. And so for us, it's explaining what liquidity looks like. Just over the course of the last five to 10 years or so, you've seen this explosion in growth of the semi-liquid types of solutions that are available on the private markets. And for us, this solved a very large need. Now, it didn't change the physics of private investing, but rather what it did was it changed the overall experience for clients, for advisors, because now you have access to different private market strategies, but in a vehicle that offers at least some level of periodic liquidity. Now, that said, big word of caution, these aren't liquid private equity solutions, right? We still tell our clients and our advisors, you should be prepared to have this capital not available for at least a market cycle.

SPEAKER_02 6:24

I feel that way too. I've definitely been stopping using the word semi-liquid because I find it's too confusing for people. When you say liquid or semi-liquid, all they hear is liquid. Yeah. And so how do you navigate that? So instead, let's talk about the growth of evergreens. Yeah. The evergreen structure is one of the ways that the private markets is reflecting this ability to be more flexible, let's say, and attract new types of investors. Where do you see the market going?

SPEAKER_01 6:50

The growth in the in that space, I'll use the word semi-liquid again, uh, but the growth in that space has been uh just extraordinary in the last five, 10 years, right? And to me, it's partly a product of industry ingenuity with demand coming from the marketplace. Now, I do think that there are certain strategies that lend themselves to be implemented via one of those vehicles better than others. And so my view is that strategies that kick off predictable yield, that have maybe self-liquidating mechanisms like private credit, those are better suited for those types of structures. And in fact, that's tend to be what you see over in those structures as well. Core real estate offerings, uh, where yield is a major component of the return, is also one of those strategies that fits nicely within that wrapper itself. If we have clients, for instance, who are looking to gain exposure to some strategy where timing matters more, venture capital, uh buyout growth-oriented type of strategies fit nicely within a semi-liquid wrapper, but you know, there are no shortages of traditional drawdown vehicles where I think that's even better implemented.

SPEAKER_02 8:04

Yeah, it's interesting. What this all comes down to is underwriting, right? And looking for managers that can have the patience to deploy capital or at least access to deploying capital in the best opportunities. You know, um, this is not just about the market itself and the private markets. When we think about alternatives, another thing that you and I have talked about is structured investments. Where do they play a role? I think that it's so interesting to watch our clients really flock not just towards the index level and look for downside protection at the index level, but the single stock rally is alive and well in the structured investment space.

SPEAKER_01 8:38

Yeah. And I think these are uh what we would consider to be defined outcome type solutions. And our clients and our advisors are utilizing these in a number of different ways. You hit the nail on the head. Certainly downside protection is one of them at the index level. But even at the single stock level, being able to participate uh, you know, in the upside capped at a certain amount, uh, you know, with available downside protection is something that resonates really, really well. Uh, I also do think if you look at some of these stocks that have run up so much, many of our clients are utilizing options to help protect on the downside, but also uh help generate yield on the upside. So structured products, an area that was utilized quite heavily up until let's call it like 2008. Not utilized as much, but again, over the course of the last couple of years, really been leveraged quite a bit.

SPEAKER_02 9:28

Yeah, it's definitely ticking up. And what do you think about kind of the future of that part of the market? I mean, where where do things go from here and how will advisors be using them?

SPEAKER_01 9:36

I think they're gonna continue to use them the way that they have the last few years. With the run-up in the market that we have seen, uh particularly on the tech side, uh, downside protection seems to be on the mind of so many clients right now. They they want to protect the wealth that has been generated over the course of the last part of the market cycle. I foresee that these types of solutions continue to be utilized in the same way over the course of the next couple of years.

SPEAKER_02 9:58

So we've talked a lot about the way people invest, different types of structures, but there's also kind of the regular way of doing business that needs to be approached as well. And I know you spent a lot of time thinking about this. How can we make advisors' lives easier? How could we get through all the nitty-gritty so that they can do their job and invest their clients' money and manage their clients' money appropriately?

SPEAKER_01 10:21

Yeah.

SPEAKER_02 10:21

What's the biggest challenge you see?

SPEAKER_01 10:23

One word technology. Advisors want technology you hit the nail on the head to make their lives easier, right? And this can take the form uh of a number of different shapes. And so, you know, at Savvy, we look at it through the lens of anything that we can do to shoulder some of the operational burden, you know, away from the advisor. And that can be anything from compliance to marketing to trading to even investments. Uh, if we can shoulder that burden for our advisors, this is going to free up their time. On average, 15 to 20 hours a week. And that gives them that time back to go out and perform higher ROI activities, activities such as growing the practice, activities such as deepening relationships with their clients, um, activities such as meeting new clients. So engagement goes up, satisfaction goes up, and it's a win-win for everyone.

SPEAKER_02 11:13

15 to 20 hours a week.

SPEAKER_01 11:15

15 to 20 hours a week. A week. A week.

SPEAKER_02 11:18

How do you save 15 to 20 hours a week?

SPEAKER_01 11:20

So if it's compliance, is all the back end, we call it middle office as well as back office activities having to do with compliance. If you think about it, an advisor practice is going to have how many relationships and how many accounts? Maybe 100 relationships plus, each with five plus accounts that need to be serviced on an ongoing basis, that need to have either IPSs attached to every single one, need to ensure that they're in line with that IPS on a go forward basis, need to be traded, need to be rebalanced, need to be monitored. That's a really that's a really large burden on that advisor. And if the advisor is trying to go out and grow their practice in the same way, and they're doing that on the daily basis, you're never going to be able to go out there and do so.

SPEAKER_02 12:04

So, in practice, what does that look like? And where does that 15 to 20 hours go? Do you get to 30 to 40 hours a week reduced? I mean, what do you really free up an advisor to do? That's their whole job. Well, it's you can kind of take away a lot of things that were taking up a lot of time.

SPEAKER_01 12:21

Absolutely. And I think it's giving advisors the freedom to choose which activities they still wish to pursue and which ones they would like to delegate to, say, a centralized function like us at Savvy. We absolutely have advisors who continue to be their own CIOs, and that's wonderful. It's fantastic. So they want to continue to manage the investments on behalf of their clients, but they'll leverage our in-house capabilities for, say, the trading element of it. So they'll maintain the discretion over the accounts, but rather than having to go and trade every single one of the accounts, they simply send us the trades on their behalf and we will perform the trades. Same thing with compliance, same thing with monitoring and also marketing, right? Marketing is such an in is such an integral part of an advisor's practice to help them grow that practice. If we can help with that, that saves them time as well.

SPEAKER_02 13:09

Yeah, the advisor space has been competitive of late.

SPEAKER_01 13:12

It has. It absolutely has. And I think it's only getting more and more competitive. So for an advisor to have that edge, to not have to worry about all of the work as it relates to the middle office or the back office, or at least part of it. Again, that allows that advisor to now say, okay, now I can actually go out and grow my business. Now I can actually go out and try to bring in new clients or deepen the relationships that I have with the existing clients.

SPEAKER_02 13:38

You've been in the wealth space a long time, right? Where do you think technology takes it next? You know, you think about 15 to 20 hours a week being, you know, cut off of an advisor judge. Great if you're an experienced advisor, that might have been work that a younger person was doing entering the industry. How do you think about the tools people need to succeed off the bat?

SPEAKER_01 13:57

So one of the areas where we're focused, um uh focused quite a bit is on creating these seamless workflows. There are tools that advisors use today that serve one purpose. Each tool serves a you know a particular purpose, but they're not connected to each other. So whereas that advisor might be efficient in that one area, when it comes time to move on from, say, CRM to a different part of the practice, there's no real connectivity there. So, in terms of where I see technology going next, it's really establishing those connections. And establishing those connections not just from uh client onboarding, but all the way through the lifecycle, from onboarding a client to maintaining those relationships to monitoring those to training those, everything is connected so that an advisor doesn't have to spend time moving from one to the next to the next. It's really creating that one-stop kind of seamless workflow. For us, it's the technology stack that we've built.

SPEAKER_02 14:51

You know, we've talked about technology without the elephant in the room, the AI of it all. Yeah. So what role is AI playing in all of this?

SPEAKER_01 14:57

Um in the background for now. And so uh it is for us, it's helping the advisor self-serve in a way. So if an advisor has a question, if an advisor has a query, it's being able to look up information perhaps on their book of business uh and get the answer like that. So AI uh at its at a very fundamental level, it's fantastic for aggregating and structuring unstructured data. And that's actually where we spend a lot of our time, if you think about it. It's trying to make sense of lots and lots of piles of data. And if you can have an AI companion help you do that, that right off the bat is going to save you time and it's going to help you generate probably more meaningful insights too, coming out of the data uh in a in a much more timely manner.

SPEAKER_02 15:47

So would you advise that people buy or build when it comes to technology?

SPEAKER_01 15:51

Ooh. Buy or build. I think there's no shortage of players out there in the market today who are doing wonderful things uh with artificial intelligence. Um I think absolutely there are companies who have the resources to build it in-house. Uh I don't want to answer that one way or another. I think it remains to be seen. And candidly, I think that there are cases to be made for buying it in certain areas, and perhaps uh if you have the resources, building it in other areas.

SPEAKER_02 16:19

Right, the vibe coding vibe coding, absolutely. The vibe coding initiatives coming to wealth management uh offices near you soon. Anshul, thank you so much for joining us. That was Anshuel Sharma. He's the CIO of Savvy Wealth, and you've been listening to Beyond 6040.

SPEAKER_00 16:38

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