For decades, financial advisors have steered Americans approaching retirement toward a familiar comfort: diversification. Spread your assets across stocks, bonds, and mutual funds, and you’ll be protected from market turbulence. But in 2025’s economic climate—rattled by inflation, geopolitical uncertainty, and increasingly unpredictable monetary policy—some experts say that advice is no longer enough.
“Most people rely on modern portfolio theory to guide their investments, but there’s nothing modern about it,” says Michael A. Scarpati, CEO of RetireUS, a fintech platform that connects everyday Americans with fiduciary financial advisors. “The framework was created in the 1950s and doesn’t account for the tools now available to protect against downside risk.”
Scarpati is part of a growing group of fiduciary-focused professionals urging pre-retirees and federal employees to reexamine their assumptions about what it means to be “diversified.” In particular, he challenges the notion that a well-balanced mix of index funds and ETFs automatically protects investors against economic shocks.
It’s a timely message. After a decade of relative stability, recent disruptions—from the credit rating downgrade of U.S. sovereign debt to rising mortgage rates and uncertainty over Social Security’s long-term funding—have many Americans wondering whether their retirement plans are still on track. The traditional 60/40 portfolio has come under renewed scrutiny, with some analysts calling it “dead” in the current interest rate environment.
“Investing isn’t just about chasing returns; it’s about managing risk in a way that aligns with your goals,” Scarpati says. “If your portfolio doesn’t include positions that offer protection—like structured notes, buffered ETFs, or protected growth indexes—you’re playing an outdated game.”
Those lesser-known products, once reserved for high-net-worth individuals, are slowly gaining traction among everyday investors thanks to digital advisory platforms and broader access to fiduciary guidance. Buffered ETFs, for example, offer a way to participate in market upside while capping losses in downturns. Structured notes can provide fixed income with built-in protections. Protected growth indexes can lock in gains over time, even if the market dips later.
Still, many retirees are unaware these tools exist—or how they differ from the typical fare offered by large brokerages. That, Scarpati says, is a structural problem in the financial advice industry.
“Today’s market demands more than diversification,” he says. “It demands strategy, structure, and smarter tools that actually keep you in control.”
That message is resonating especially with federal employees and public-sector workers, who often depend on Thrift Savings Plans and pensions as key components of their retirement income. These workers face unique challenges—including the risk of reductions in force (RIFs), limited early withdrawal options, and rising healthcare costs—that can quickly derail retirement plans if not accounted for in advance.
To address these vulnerabilities, Scarpati launched Government Transition Decision HQ, a free financial support hub aimed at helping federal families update their plans. The program offers one-on-one sessions, educational webinars, and tax-efficient planning tools designed to reduce exposure to risk and increase long-term financial control.
“Retirees don’t need to panic—they need a better map,” Scarpati says. “The tools are out there. But if we keep using frameworks built for the economy of the 1950s, we’re going to leave a lot of good people behind.”
As retirement grows more complex, the definition of safety is evolving. In 2025, it may no longer be enough to own a little bit of everything. True protection, Scarpati argues, comes from knowing exactly what you own—and why.
