Our investment approach at McKeon Financial is much more similar to that of the Harvard and Yale Endowment Funds than that of the traditional equity investor, who typically would invest in a passively managed 60/40 split of stock and bond mutual funds, hoping that the market will only go up.
A significant difference that separates McKeon Financial from other advisers is that we have access to numerous investment opportunities that many large brokerage firms cannot or do not offer, or which do not fit their “investment model.”
There are few financial planners who have access to some of these non-stock market investments (maybe 2-5%) and far fewer who specialize in these investments (less than 1%). We decided a long time ago to differentiate ourselves from most other financial planners, and also to work in areas that the individual investor is largely unable to duplicate for themselves.
McKeon Financial clients, many of whom are retired or approaching retirement, as well as the charitable organizations who have invested with us, face the same basic problem: needing to fund multi-decade obligations without running out of money.
Retirement income planning, as well as charitable organization asset planning, is all about "distribution theory". As best as they're able to, our clients need to minimize volatility, preserve their principal, generate monthly income and grow their portfolio to protect against inflation. To accomplish these goals, McKeon Financial largely ignores “buy-and-hold” investing in stocks and mutual funds, or “accumulation theory.” Instead, we invest clients' money primarily in two ways.
First, depending on a client's suitability, we might invest some of our client's assets in a portfolio of non-traditional, direct investments that don't trade on the stock market, including real estate, business development companies, equipment leasing and oil and gas drilling and royalties funds, often with the primary objective to generate consistent income.
All investments involve risk. The most important risk with these investments is that they're not very liquid, so while they may be suitable for some investors in appropriate amounts, they aren't the best option for everyone.
Second, for liquidity, we utilize tactical, defensive, actively managed portfolios that tend to be more responsive to ever-changing conditions, with less volatility than the traditional “buy-and-hold” approach. The overall goal is to provide returns over the long term that are largely independent of market movements.