Understanding Strategic Asset Allocation for Retirement Planning

As an investment advisor, you have a client who is 40 years old, has a moderate risk tolerance, and plans to retire at age 65. The client currently has a diversified portfolio consisting of 60% equities, 30% fixed income, and 10% cash. Your client wishes to understand how the principles of strategic asset allocation can help in achieving their retirement goals.

Discuss the concept of strategic asset allocation and how it applies to your client's current investment strategy. Additionally, consider factors such as the client's risk tolerance, investment horizon, and any potential changes in their financial situation that could impact their asset allocation strategy. Provide recommendations on how your client might adjust their strategic asset allocation to better align with their retirement objectives.