D3 Financial Counselors Update:
For clients who utilize our Comprehensive Service, we recently completed extensive updates of your financial plans with data from your 2006 Federal Tax returns. We would like your feedback on this effort to help us evaluate additional services we are considering. Data from what really happened in our clients’ financial lives last year is an invaluable tool to help us, help you, plan for the future. If you haven’t received a copy of your updated plan, one should be forthcoming in the next two weeks.
We attended a conference earlier this month sponsored by the Illinois Chapter of the Financial Planning Association, of which Don is the current Chairman. One presenter discussed the growing realization that most investors’ personal goals are heavily intertwined with their financial goals, and that financial planners should try to integrate their clients’ personal goals into their financial plans. We plan to ask your thoughts on this when we meet to discuss investment performance later this summer. We will be calling to set up appointments.
Two additional items:
The recent risk profile you filled out for us replaces any old portfolio guidelines you have.
Second, because of our growth, Fidelity has lowered the commissions on equity trades.
Things You Should Know:
The big news in the financial markets, since our last update, was the rise in interest rates of more than ½ of 1 %, a big move when rates have traded in a range of 4.70% to 5.25% for most of 2007. The market had previously been forecasting that the Federal Reserve could lower interest rates later this year, expecting that the slowing housing market could drag the U.S. economy into a recession. However, economic growth outside of the U.S remains very strong, unemployment here is low, and consumers continue to spend. The Federal Reserve remains concerned that inflation will permeate the U.S. economy, as higher energy and food prices could lead to higher prices in other segments of the economy. A strategy we wrote about last month, using the high interest rates on your money market funds as a substitute for fixed income exposure, was extremely beneficial to our clients, since bond mutual funds earned slightly negative returns last month. Additionally, because the sub-prime mortgage market crisis is starting to spread to other sectors of the bond market, we are reducing clients’ exposures to corporate bonds.
Rising interest rates have contributed to the volatility in the stock market that we’ve witnessed over the past few weeks. Historically, rising interest rates have slowed or halted most rallies in the stock market, and many forecasters are concerned that history could repeat itself if 2nd quarter corporate earnings are weaker than expected. We, too, are concerned that the combination of slowing growth in the U.S economy and rising rates could hurt stock prices, but we can’t deny that investors continue to buy stocks.
As always, thank you for your business and think of us when your friends or relatives need to
“understand the economic consequences of their financial decisions”.
Donald D. Duncan MBA CPA/PFS CFA™ CFP® Nancy Lencioni & Becky Connery
Peter Marchese MBA CFA™ Dennis Gravitt & Michael Meyers MBA CFP®