In a rapidly changing industry, it's easy for yesterday's innovation to become tomorrow's inertia. Today, I believe that observation applies to many financial advisors who have built businesses around "asset allocation."

In 1995 and 1996, asset allocation was a cutting-edge concept. Many advisors who advocated it gained competitive advantage, while enhancing their investment discipline and client services. Now, a major bull and bear market later, some of those allocation programs haven't changed much. In many cases, the client profiling process, asset classes, model portfolios, client presentations, and reporting formats have become ingrained.

Some allocations programs still optimize model portfolios based on performance data stretching back to the Eisenhower era, at a time when investors are more concerned about the remarkable market dynamics of 1996-2002. Many "plain-vanilla" asset allocation programs look alike, which has led to "commodization" and pricing pressure.