The investment landscape has shifted dramatically over the past few years. For decades, passive investing dominated financial advice—buy index funds, hold forever, and trust the market to deliver returns. But as we move through 2025, pre-retirees face a different and changing environment.
If you’re within ten to fifteen years of retirement, the investing style you choose today will determine whether you retire comfortably on schedule or work several years longer than planned. The stakes are higher than ever, and the old “set it and forget it” playbook may not be able to get you there.
The Passive Investing Promise—And Its Limitations
Passive investing rose in popularity when ultra-low interest rates made nearly all assets go up from 2010 to 2021. It felt like simply tracking the market made sense—why bother with active management when every index fund was climbing?
But 2022 exposed some major problems in this approach, where stocks and bonds fell sharply at the same time and investors who relied solely on passive funds saw big losses. There was nowhere to hide. The hands-off, set-and-forget nature of passive investing became its downfall—portfolios had no ability to adapt, no defense, and no way to avoid steep declines.
This situation is risky for pre-retirees. If you’re close to retirement and hit a major downturn, you can’t just “wait it out” like a younger investor, because your timeline is too short.
The Case for Active Management in Pre-Retirement
Not all active management is created equal. The average mutual fund manager working within rigid constraints is very different from a skilled portfolio manager at an RIA firm making concentrated bets based on deep research and active position sizing.
For professionals approaching retirement, active management offers some major advantages:
Downside Protection: The right active management can reduce equity exposure during overheated markets, shift to defensive strategies in high risk market cycles, and adjust positioning based on changing conditions.
Opportunity Capture: Markets frequently misprice stocks due to temporary news, sentiment shifts, or sector rotations. Active management can exploit these inefficiencies, buying quality companies when they’re temporarily out of favor and selling those positions where the company’s growth story has changed. Compare this to passive funds that have to be fully invested and hold everything, all the time.
Tax Optimization: Active managers can harvest tax losses strategically, manage holding periods for favorable capital gains treatment, and coordinate trading across account types to minimize tax drag. For high-earning professionals, tax-aware active management can add massive value that raw returns don’t capture.
Customization: Your financial situation is unique. Your RSU compensation, international tax considerations, estate planning needs, and withdrawal timeline means you should have customized strategies that passive index funds can’t deliver.
The Concentrated Portfolio Approach
At Paraiba Wealth, we practice active management through concentrated stock portfolios—typically 20 to 30 carefully researched positions rather than hundreds. This approach reflects our conviction about what we own.
Concentration requires conviction. We can’t hide behind diversification, so every position must earn its place through deep analysis and strategic intent. At Paraiba Wealth, we target companies that don’t just compete—they innovate, disrupt, and reshape their industries.
Each investment reflects our belief in exponential growth and lasting impact. We focus on businesses with sustainable competitive advantages, exceptional leadership, and solid financial foundations, but we go further: we seek out visionaries and market pioneers whose solutions can transform entire sectors.
And with fewer positions, we can know each business deeply. When our thesis no longer holds, we exit decisively. This level of expertise is impossible when you own a portfolio of 500 or more stocks through funds.
Concentration enables meaningful outperformance when we’re right. If you own a few hundred stocks and ten become real winners, your portfolio barely notices. If you own 25 stocks and three become real winners—these can change your retirement trajectory. Concentrated portfolios let your best ideas drive results while disciplined position sizing manages risk.
What to Look for in Active Management
If you think active management makes sense for your pre-retirement strategy, here’s what to look for:
Fiduciary Structure with CFP Leadership: Your advisor should be legally and ethically obligated to put your interests first. Registered Investment Advisors (RIAs) operate under fiduciary standards—whereas broker-dealers generally do not.
But look further: the ideal is a team led by a Certified Financial Planner™ (CFP®), who not only upholds fiduciary duty but also brings rigorous, up-to-date expertise across all areas of your financial life.
Relevant Expertise: Many advisors specialize in retirees who need income strategies and estate planning. Pre-retirees need different expertise—active portfolio management, RSU optimization, tax efficiency, and growth strategies.
Transparent Process: Your advisor should clearly articulate their investment philosophy, research process, risk management approach, and how they make buy/sell decisions.
The Bottom Line for Pre-Retirees
Today’s market demands flexibility, active risk management and clear decision-making—especially for pre-retirees whose timeline is compressed and you don’t have much margin for error.
At Paraiba Wealth, we specialize in active portfolio management for professionals within ten to fifteen years of retirement who want to retire on their terms, not their employer’s timeline. We use concentrated stock portfolios with customized advice. If you’re still holding passive index funds as your main retirement strategy, maybe it’s time to rethink whether that approach is truly serving you best.
Ready to move beyond the standard advisor playbook?
At Paraiba Wealth, our focus is on building actively managed portfolios—a strategy designed for greater control, tax efficiency, and tailored to you. If you’re ready to see what this looks like, book a no-obligation strategy call today.