Government data is fake! So what data can you trust? We discuss data and more today as we talk also alternative investments, the challenges with alternative mutual funds, and the importance of true diversification. We emphasize both the appeal and pitfalls of alternatives, the exclusivity factor for wealthy investors, and the risks of layered fees in fund-of-funds structures. We also cover issues with 401(k) plans, target date funds, and fund-of-fund structures that stack fees and sometimes funnel money into underperforming products. We also discuss the challenges of finding true diversification in today’s institutionalized markets. Today we discuss...
- Kirk shared that he spent part of his vacation at a hunter’s safety course with his son at the Swift River Club.
- They stressed the ethical responsibility of harvesting game for food and conservation rather than waste.
- Kirk emphasized that even controversial hunts often provide meat to local communities and aid conservation efforts.
- Kirk described his view of alternatives as non-securitized assets, contrasting Wall Street’s broader use of the term.
- They reviewed the high failure rate of alternative mutual funds and why many close or merge within a decade.
- The appeal of alternatives was linked partly to exclusivity and status signaling among wealthy investors.
- Examples of alternatives included managed futures, cash, and niche opportunities like motion picture tax credits.
- They noted that while some alternatives can generate attractive returns, they are usually limited in scale and availability.
- Many advisors mistakenly equate holding multiple mutual funds with true diversification, despite most being tied to the S&P.
- Doug explained that many alternative funds fail because the industry prioritizes marketing and inflows over client outcomes.
- They highlighted how new products are often launched simply to capture investor interest rather than deliver value.
- The conversation criticized 401(k) plans, target date funds, and fund-of-funds structures for layering on fees and underperforming.
- Diversification’s real purpose was described as smoothing volatility, not maximizing upside potential.
- They stressed the psychological challenge of diversification, since investors must tolerate some lagging assets in their portfolios.
- Both agreed that despite its flaws, diversification remains essential to helping investors stay invested through market cycles
"Cash is not trash... Cash is King" - Kirk Chisholm
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Today's Guest: Kirk Chisholm
Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group, an independent Registered Investment Advisor located in Lexington, MA. He has been providing wealth management services to individuals, executives, entrepreneurs, and their families since 1999. He is an outside the box thinker, risk manager, inflation expert, blogger, podcaster, and all-around interesting guy. Kirk is dedicated to developing lasting relationships with all of his clients and their families. One of the benefits of working with Kirk is his patience, empathy, and his ability to provide clear and easy-to-understand explanations to complex financial topics.
Kirk developed a unique philosophy for the wealth management industry called Risk Management First. The medical field has a similar way of thinking of “first do no harm”. This philosophy focuses on risk management for clients in all aspects of their lives in ways the industry does not address. Risk management does not stop with investments. It also requires working closely with other professionals to address areas of their financial lives not currently being met.
In 2008, Kirk co-founded Innovative Advisory Group to address the needs not being addressed by the wealth management industry. It started with specializing in alternative assets held in retirement accounts (i.e. self directed IRAs/401ks). Then the company expanded into the specialization of college funding (i.e. planning, strategy, and paying the least possible for a high quality education), Risk Management First, exit planning for business owners, advanced planning (estate, tax, etc), and providing practice management and leadership training to other financial advisors, accountants and attorneys.
Kirk's Online Presence:
Today's Panelists
- Kirk Chisholm | Innovative Wealth
- Douglas Heagren | Mergent College Advisors