Business Update:

Don’t Miss the Boat: As a reminder, D3 is sponsoring an architectural boat tour at 5pm on Wednesday, August 19th. The purpose of this event is to provide a fun experience where you can introduce friends and co-workers to D3. Your ticket for the tour is to bring a friend. Please check your email for the registration link.

Staff Changes:  Ryan Pace is contemplating a career change and has the desire to potentially work for a bigger company, so he decided to resign from D3. Ryan was a good employee and we wish him well on his future endeavors. Lucky for D3, we had been interviewing potential staff additions and have hired Brett Spencer MS, CFP® with four years of financial planning experience. Brett joins us as an early stage Level II participant in D3’s Financial Planning Management Development Program. Brett will be calling you in August to introduce himself.

Investment Product Review: We have finished reviewing all of the investments in your Fidelity, 401k, 403b, 457 and annuity accounts. We have identified a handful of investments that do not meet our risk adjusted return criteria and will be making some portfolio changes based on this analysis as we review all of your portfolio’s cash positions in August.

Estimated Tax Review: Later in August we will start to review family office clients estimated taxes to determine if any additional tax payments need to be made prior to September 15th.

D3 Breaking News:

Don and Adam Win Awards:  Don for the 4th year will be listed in Chicago Magazine as a 5 star wealth manager. We are also very proud that Adam was also named as a 5 Star Wealth Manager. We will send you the press release this fall and everyone look for the announcement in the November issue of Chicago Magazine.

Money Magazine Interview: Don was interviewed for an article in Money Magazine on key issues to consider before downsizing. The author expects the article to be published this fall.

Market Insight:

As everyone has noticed, market performance has been nothing to write home about this year.  The market indexes through August 3rd are as follows: U.S. large cap stocks are up 3%, U.S. bonds up 1%, international developed stocks up 7.5% and international emerging stocks down 6%.

The primary reason for the low market returns is the slow or no growth in the world economies. U.S. GDP was 2.3% in the second quarter after a negative first quarter. Europe grew at .4% in the first quarter (second quarter estimate will be available on 8/14) and while China is growing on average at 7%, the central government is trying to stop bear market speculation in their stock market from getting any worse.

Another factor reinforcing slow growth in the U.S. is wage growth (or the lack thereof). Wages and benefits paid by U.S. employers this spring rose at the slowest pace since the second quarter of 1982, the Labor Department said. The employment cost index, which tracks salaries, wages and benefits, gained 0.2% in Q2, compared with a 0.7% gain in Q1

Slow growth and low interest rates are here for the indefinite future until world economic growth averages more than 3% for a year or more. Everyone, regardless of their asset allocation model, should not expect double digit growth, unless they want to take concentrated risks.

This is when the value of financial planning really comes into play.  Managing risk, consistently evaluating investments and making smart tax moves while not always showing up in investment performance will still increase after tax wealth.

Investment Strategy:

Risks in the markets primarily revolve around surprises to the slow growth thesis or a shock to the system (interest rates, oil prices, labor unrest, war, terrorism, etc.).  We continue to focus on balancing portfolios to generate long term consistent (albeit low) expected returns.

We will be making some mutual fund swaps and making sure money market funds are at target levels for all clients. Our challenge will be to minimize the tax impact of realized capital gains.  Please let us know if your time horizon for needing cash flow from your investments changes or if your ability to tolerate risk changes.

Last Thoughts:

Lastly, we thank you all for thinking of us when your friends and neighbors need help organizing, prioritizing and optimizing their financial lives. Feel free to invite them to our boat cruise on August 19th.