Business Update:

Portfolio Review:  We are completing our formal portfolio review and cash clean-up process (reducing money market fund balances to individual account cash targets) this week. Many of you will see trades in your accounts reflecting this process.  We have also completed our review of all client holdings and will be swapping out a few funds for better products.

D3 Process Improvements:  We are making two changes this summer to improve the services we provide to all of our clients.

  1. We have identified a better client portal and we will be migrating all clients to this new portal during June, July, and August.  The benefit to you will be a more intuitive, easier to use, portal that you can also use to aggregate all of your accounts (even ones that D3 does not manage) and capture spending and budgeting information if you choose to.  More details about our new client portal are at the end of this client update email.
  2. We will be changing to better financial planning software using probabilistic analysis versus static rate of return analysis. We have been using this software for the past year and will update all of our Affordable Family Office clients’ financial plans using this new software.  The benefit to you will be a more dynamic financial plan update that will incorporate the variability of future market returns.  More details about our improved financial planning process are at the end of this client update email.

SEC Custody Audit:  Because we manage many of our clients’ employee retirement plans (401k, 403b, 457 etc.), according to SEC rules, we are subject to a surprise custody audit. We anticipate this audit to occur later this year.  The firm scheduled to perform this audit for D3 is called Ashland Partners and some of our clients that we manage retirement plans for will likely be contacted by them.

Market Insight:

April was a ho-hum month (except for taxes).  Both the U.S. stock and bond markets were essentially flat.  International developed markets performed the best of the asset classes we monitor.  Economic growth throughout the world continues to be nothing to write home about.  Preliminary 1st quarter GDP growth in the U.S. was 0.5%. Surprisingly, the preliminary European Monetary Union 1st quarter GDP growth was slightly higher than the U.S at 0.6%. China’s official first quarter GDP growth came in at 6.7%.

This steady slow worldwide growth continues to indicate to us that interest rates will not rise soon or fast.  Additionally, corporate profits will not likely rise soon or fast.  As a result, our expectations are for more of the same.  We continue to expect lower than historic average rates of returns on stocks and bonds.  Our current portfolio models reflect this viewpoint.

Investment Strategy:

As a reminder the formal quarterly review of the funds on our preferred list is designed to identify the most appropriate investment products in each of the asset classes in our asset allocation models.  We replace products that do not meet the risk/reward characteristics for their respective asset classes. This quarter we will be replacing a bond fund that does not meet our criteria.

Although volatility was subdued in April, we anticipate it will pick up again with the U.S. presidential election, the continued instability in the Middle East, and the uncertainty with China. We are comfortable that the diversification in your portfolios will help to reduce this volatility over your investment time horizon.

Later this summer we will confirm that all of our Affordable Family Office clients (when we update your financial plan) and Advanced Portfolio Management clients (when we review your portfolio performance in August) have updated risk profiles.  Please call Don or Adam if you would like us to send you a new risk profile questionnaire, or need assistance filling one out.  This will help ensure that you are in a portfolio that reflects your risk tolerance for the expected market volatility going forward.

New Client Portal & Planning Software:

We are in the process of moving to a new client portal and utilizing new financial planning software for our financial plans and plan updates.

New Portal:

We have decided to utilize a new client portal that will further improve organization, education, and collaboration with D3.  The new portal will have many of the same features as your current portal, but will have three major improvements:

  • We are now giving YOU the ability to add, remove, or change account balances that D3 does not manage. You will be able to do this manually, or enter your online credentials to have these values automatically updated every day.
  • If you decide to add your checking accounts, and credit cards, you have the option to use your portal as a budgeting tool.  You also have the option of sharing all, none, or limited spending information with D3 as a point of discussion for our reviews.
  • Your new portal will be optimized for mobile use, giving you a consolidated view of your financial life at your fingertips.

Don, Adam, or Michael will be reaching out with instructions on how to access your new portal, when we start the migration process in June.

New Planning Software:

We will be moving all of our Affordable Family Office clients to the new financial planning software.  If you became a client within the last 9 months, we have used this new software to complete your plan.  We believe this is an improvement over our old software due to:

  • Real Time Planning- we will be able to model new scenarios on the fly in real time, which will help you easily compare multiple scenarios at one.
  • Monte Carlo Analysis – A more thorough analysis of whether you’re on track to meet your lifetime spending goals.

We will be sending out an updated “data confirmation” letter and reports over the next couple of months to confirm that the goals from your last plan or plan update,  are still relevant.

Final Thoughts:

It is confirmed, Don will be the featured financial planner in Money Magazine’s June edition in an article dealing with career makeovers.

Thank you for letting us serve your financial planning and investment management needs.  We are always honored if you refer your friends or relatives who could benefit from our services.