D3 Business Update:
We have completed all the financial plan updates for our family office clients. We have a couple of general observations:
- Due to investment performance, most of our clients can reduce risk in their investment portfolio if they choose to.
- Recommendations for tax saving strategies are a major value identified in the plan updates.
- Tax flexibility, allowing clients to manage their taxable income if possible, helps generate after tax wealth.
Don is going on vacation to the North Woods of Wisconsin until July 9th. Additionally D3 will be having a company strategic planning retreat from July 10th through July 14th. Continue to call the office number (630-271-0033) if you need to get in touch a staff member.
During July we will be focused on:
- Reporting to you the performance on your investment portfolios
- Reviewing all of your investments, including your 401k plans and annuities
- Setting up times to meet with you to review your portfolio performance (and plan updates if applicable).
- Conducting our semi-annual review of D3’s asset allocation models.
With the first half of 2014 in the books, the S&P is up over 7%, and has set 22 all-time closing highs. As of today, the S&P 500 has gone 1,002 calendar days without a 10% of greater drop in the index, making this the 5th longest stretch without a 10% correction in the last 50 years. Since market lows in March of 2009, the S&P 500 has rallied over 188%. With valuations exceeding the long term averages, it’s clear that stocks are no longer cheap, but are not unreasonably expensive. As the economy continues to improve, we believe that stocks still have more room to grow (through earnings growth, rather than multiple expansion). Although we believe there is room for growth in the stock market, we think it’s time to invest cautiously, and find investments with good relative value, and downside protection.
In January, when we made our asset allocation model changes, we believed that a growing economy would cause interest rates to increase, and would cause bond underperformance in 2014. Through June 30th, we’ve seen 10 year treasury rates decrease from 3% to 2.58% for a number of reasons, including lower yields overseas, a supply/demand imbalance and the weather-related economic hiccup in the first quarter. This rate decrease has been positive for bonds, as the Barclay’s Aggregate Bond index is up about 4% YTD. Because nothing has changed our view point that interest rates will rise, we continue to believe stocks offer better relative value than fixed income, and believe it’s important to employ strategic fixed income managers that have the flexibility to navigate a bond market that has few bargains to offer.
As we perform our quarterly review or our preferred list of investments, we will focus on how our funds performed during times of market volatility (i.e.2008-2009 and the fall of 2011). We will look to replace funds that have not shown downside protection, and volatility management characteristics, as we believe it’s important for investments to display these characteristics in this market environment.
We have been told by clients and prospects that they think they don’t have enough money to use D3 Financial Counselors services. That may be true for our Affordable Family Office Service, but is not true for our hourly services. We want to remind you that we can serve anyone that wants to plan for the future. Unlike our competitors, we can work on an hourly basis delivering more value than the cost of our fees.
Don did a consultation for a client struggling with high credit card debt. For a $200 hourly fee this client will be $3,000 better off in one year if they follow our recommendations. Our commitment to all our clients is; if we can’t add value, we will not waste your time or money.
As always, thank you for your confidence in D3 Financial Counselors where “We serve our clients by providing Integrity, Trust, Wisdom and Confidence.”
By: Donald Duncan MBA, CFP®, CPA, CFA™ – July 2nd, 2014