Another instalment in a series of articles detailing how to design a secure, income-producing portfolio

In my previous article, I mentioned the reality that investment advisors, especially those affiliated with a large financial institution, operate with a very particular mandate, and that is to help their clients invest in a specific set of financial instruments within a portfolio that is supposed to be tailor-made to their risk tolerance. We now know that, thanks to the success of Modern Portfolio Theory and the exponential popularity of copycat investing, everyone holding these types of portfolios is exposed to more risk than they bargained for.

But if you were to walk into your advisor’s office today and ask for something different, they wouldn’t be able to accommodate your request. For them, merely suggesting a non-traditional investment would endanger their employment status, because they cannot suggest alternatives without bringing liability to their employer. That is, if your advisor helped you diversify in a completely new way, he could get fired. Genuine diversification, in this case, would be people doing things they’re not supposed to be doing.

For now, the established landscape of investment advisory does not have access to novel products for you to add to your portfolio – although this may be changing, as financial institutions are identifying a big gap in their product line.