risk Archives - Innovative Advisory Group

Kirk Chisholm Ranks Top 100 On The Investopedia List of Most Influential Financial Advisors

Wall Street Wisdom / By Kirk Chisholm / 07/15/2022

I was recently notified that I was ranked #7 on the Investopedia list of Most Influential Financial Advisors. I am very grateful to receive this honor. It was somewhat unexpected. I have spent so much time trying to help investors that I have not stopped long enough to reflect on the impact I have made in the lives of my clients and social media connections. This award supports that all my efforts to educate investors and help them navigate the uncertain financial markets has not been in vain.

It means a lot to me to be recognized with such a notable group of financial advisors. Investing has always been a passion of mine. This passion started at a young age with small ventures such as a lemonade stand and lawn mowing services. In college, it continued with investing in the stock market. When I graduated, I got my first job at Paine Webber. Almost 10 years ago I co-founded Innovative Advisory Group. Investing and providing financial advice is in my blood.

As my knowledge of investing has grown, so has my desire to help others understand the mysteries of the financial markets. I hope to impart some of that wisdom to you in this post as well as other articles on this site.

Once again, I would like to thank Investopedia for this acknowledgment of my efforts. I also want to thank my clients and social media connections. I would not be where I am today without you.

Top 10 pieces of financial wisdom that can help you invest better

Investing is challenging, but it doesn’t have to be. It requires some extensive knowledge to become a highly successful investor in the stock market, but there are many ways to invest successfully. I will discuss some different ways to figure out how you can invest successfully below, however you will need to understand these simple concepts if you want to be successful long term.

Career Risk and Herding Behavior

Wall Street Wisdom / By Kirk Chisholm / 10/02/2019

The career risk of trying to be different on Wall Street

The financial service industry has a notorious problem which very few people outside the industry are aware of. This problem is generally referred to as career risk. Now, most of you reading this might think, “Who cares if some overpaid fund manager gets fired for not performing well enough?” While having your fund manager keep his job might not be high on your holiday wish list, you should realize that it is an enormous problem at Wall street firms and that it is causing many funds to underperform their potential.

Worried About Fraud with your Self Directed IRA? SEC says, Ask a Financial Advisor

Self Directed IRA / By Kirk Chisholm / 01/14/2015

In their September 2011 Investor Alert, Self Directed IRAs and the risk of fraud , the SEC outlined typical fraud risks when using a self directed IRA.

If you are worried about the risks of fraud when using a self directed IRA, then do as the SEC recommends in their Fraud Alert, “Ask a professional”.

The top three fraud risks with self directed IRAs that they focus on are:

Misrepresentations regarding custodial responsibilities
Exploitation of tax-deferred account characteristics
Lack of information for alternative investments

While these may be common fraud risks that the SEC sees with their enforcement efforts, the risks attributable to alternative investments inside self directed IRAs expand beyond just fraud risks. There are other risks which are important to consider when using a self directed IRA. Investors should also consider:

My Uncle Samuel’s Solution to the Moral Hazard Problem

Thinking Outside the Box / By Kirk Chisholm / 09/27/2014

What is moral hazard?

Let’s say that you have a gambling problem. You like to bet on football, baseball, basketball, and hockey. Professional, college, or high school — it doesn’t matter. You visit your local casino to bet on cards. You bet on the coin flip at the start of a football game. You will bet on anything.

Now generally people like this will end up in trouble at some point or another if they cannot control their vice. I have seen friends of mine get into this sort of trouble. It isn’t pretty. At some point they hit a losing streak and end up owing a “bookie”, more than they have. At some point after this happens, their debts get called. If the debt is called and you don’t have the money, “something bad” will happen.

However, lucky for you your Uncle Samuel is wealthy. When you get into trouble, you call Uncle Samuel to “bail” you out of this mess. Being a loving uncle, he gives you money to keep you from being the victim of “something bad”. Now maybe this scares you straight and you give up your gambling vice and you never gamble again. More likely than not, this “bail out” will only fuel your appetite for gambling (risk taking). Since you didn’t have to experience the pain of “something bad”, you will feel free to engage in the same destructive behavior as before. This time you might take greater risks with your bets. Why not? Your wealthy Uncle Samuel can come to your aid, and he has a lot more money than you do. So the pattern continues.

As your behavior continues, the pattern repeats itself. As you keep getting bailed out and your appetite for risk increases. This is an example of moral hazard. Moral hazard is a lack of incentive to protect against risks because someone else is bearing the risk for you. The best example of moral hazard is the treatment of large financial institutions in 2008 by the US government and related government entities.

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