Stock Market Alternative Services

Alternative Investments

McKeon Financial has access to alternative investments that many large brokerage firms cannot or do not offer because these choices do not fit their "investment model" which is often heavily or entirely in the stock and bond markets. From the beginning, our goal has been to specialize in investments the average advisor typically does not have access to.

Alternative Approach

Our investment approach at McKeon Financial is much more similar to that of institutional investors, such as pension funds, insurance companies and endowment funds than to that of the traditional equity investor, who typically invests in a passively managed, 60/40 split of stock and bond mutual funds, hoping that the market will only go up.

Our goal is to diversify your portfolio with many of the same types of alternative investments that the most successful endowment funds invest in, with similar allocations, using investment products that are suitable and appropriate through our Broker/Dealer, Independent Financial Group.

Alternative Results

At McKeon Financial, we believe investment results need to be evaluated with respect to the individual goals of each investor. Most of our clients want more predictable returns with as little volatility as possible so they can more effectively prepare for future income needs. Portfolio diversity guards against market risk that may be present in other investments. Our goal is to provide you with alternative investments that have low "correlation" to the market and less exposure to market volatility, either as your primary strategy or as a secondary strategy. 

Distribution Theory vs. Accumulation Theory

Many of our clients at McKeon Financial face the same primary challenge: needing to fund multi-decade obligations without running out of money.

Many planning firms will prepare you for retirement using “Accumulation Theory.” Using this theory, you attempt to accumulate as much value as possible through regular contributions and through market appreciation, with the hope that your accumulated value in your account will be enough to supplement future income needs in retirement. The investments often consist of passively managed stocks, bonds, and/or mutual funds. 

Accumulation Theory assumes you are not overly concerned with market fluctuations while you are still contributing to your accounts and still a long way from retirement. This is because you are able to continue investing at lower share prices during market lows and able to benefit from the appreciation later when the markets recover and share prices increase again (much like “dollar cost averaging”).

The problem with “Accumulation Theory” when nearing or already in retirement is that it does not account for your taking distributions or withdrawals during periods of market losses. The theory assumes markets always come back up and that your portfolio is safe as long as you continue to “hold” until your portfolio recovers the value you have lost. 

However, if you are already taking money out, there is less money-earning interest each month as distributions are taken, so even higher returns are needed in order for you to fully recover from market losses.

On the contrary, “Distribution Theory” concentrates on your need for regular, relatively predictable income with lower volatility, and it tends to be more defensive in nature. The goal is to protect your principle, generate steady, consistent income, and continue to grow your portfolio to account for inflation. Our investment model is similar to that of the endowment funds, where there is a need for predictable returns in order to fund future obligations.

It is crucial for you to understand that all investments involve risk. The most significant risk with many investments we use is that they are not very liquid. While they may be suitable for some investors in appropriate amounts, they are not the best option for everyone. Call us today to learn more about our services. 

Alternative Investments involve substantial risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. These risks include but are not limited to: limited or no liquidity, tax considerations, incentive fee structures, speculative investment strategies, and different regulatory and reporting requirements. There is no assurance that any investment will meet its investment objectives or that substantial losses will be avoided. These investments are for retail accounts.