It's regarded as conventional wisdom that young people's retirement plans should be mostly in stocks when they first start investing.
But some advisors say that's too risky.
Many millennials will have to rely almost exclusively on what they have in their 401(k) and other workplace retirement plans, so where they invest and what they invest in becomes extremely important, said Rob Arnott, chairman and CEO of Research Affiliates. "If they start out with a balanced portfolio of 30 or 40 percent in equities, 30 or 40 percent in bonds and 30 or 40 percent in liquid alternatives ... it will give them broad diversification," Arnott told CNBC's "Closing Bell" on Tuesday.
Instead, young investors have been loading up on stocks in their 401(k) plans in recent years. Eighty-five percent of the portfolio of the average 25-year-old is in equities, according to Vanguard, a leading provider of 401(k) plans. A decade ago, stocks only made up a little over half of the portfolios of that age group.