Happy Religious Holidays (Easter and Passover) if you celebrate them.


We cover two topics in this letter; Taxes and Knowledge Building



We are in crunch time for taxes.  For most of the returns we are preparing, D3 has completed our part and we are working with our contracted CPA to make sure all the “I”s are dotted and the “T”s are crossed.  Almost all client returns are going to be efiled with the IRS, so we ask all clients to quickly sign and return the efile authorizations once we let you know your return is completed.  In many cases we will be able to handle this through the client portal or through email.


Knowledge Building:

Operations: On March 8th & 9th, Adam attended the FPA business solutions conference, which is designed to promote best business practices in the financial planning industry.  The conference focused on leveraging technology, and utilizing procedures to help grow a business.  After speaking with many advisors at the conference, Adam concluded that D3 is ahead of the curve as far as implementing many of these technologies and procedures.  This is one of the reasons we are able to deliver such a high quality product at a very reasonable cost to our clients.  Utilizing client portals, managing our client’s 401k accounts, and our unique, affordable family office service are just a few of the ways we have separated ourselves from many other advisors.  Although we embrace many of the best business practices in the industry, we are constantly striving to utilize new practices and procedures to improve the D3 client experience.


Identity Theft: On March 12th, Don attended an identity theft seminar put on by Fidelity.  They see the biggest threat to client accounts currently being wire fraud (wire instructions issued by someone that stole a client’s identity).  Our procedure has always been that D3 will not accept any email wire instructions without first talking directly to clients. Client protections against this type of theft are the same that Ryan shared with everyone last Summer (his memo is at the bottom of this communication).


Investments :

On March 5th, Don attended the CFA Society of Chicago conference on “Rethinking Financial Theories and Models. Numerous, famous economic and investment professional thought leaders presented. We summarize their presentations below:


Laksham Achuthan, Co-Founder of ECRI, Business Cycle Forecasting: Because GDP growth is so subdued (1.6% per year since 2000), the likelihood of more frequent but less severe recessions is higher. Until the velocity of money expands from historically low levels, economic expansion could stall in the U.S.


David Hale, formerly chief economist of Kemper and Zurich Financial Services: The world economies have entered a phase of unprecedented global interdependence. Because of Japan’s recent policies, he is excited about Japan for the first time in 20 years. The U.S. will face fiscal policy drag, Italy will be an uncertainty driver in Europe and China will continue to grow at 7-8% as their middle class increases in size; although this will be tempered by decreasing real estate values.


Thomas Coleman, Executive Director of Research in Economics at the University of Chicago: Risk management is a people process and should be focused on compensation and incentives.  You control risk by measuring volatility, value at risk and a particular investment’s contribution to risk. Risk cannot be eliminated, only managed.


David Rosenberg, formerly chief economist at Bank of America-Merrill Lynch: The U.S. output gap is currently at -5.7%, indicating significant spare capacity for economic expansion. The bubbles over the past decade are all debt related with the current bubble in government debt as it relates to GDP.  The S&P 500 stock index has a .87 correlation to the Federal Reserve Balance Sheet.


Joseph Scoby, formerly Chief Risk Officer for UBS and Managing Director with O’Connor and Associates:  The risk paradigm is simply stated as the possibility of actual economic or opportunity loss. The possibility of loss is directly related to the complexity of the transaction or investment. There are 12 risk factors to consider, not the least of which is an individual’s behavioral bias.


Investments and Competitive Analysis:

For the fourth year in a row D3 Financial Counselors has been invited to attend the annual Barron’s Top Independent Advisors Summit.  This is a best practice sharing event sponsored by Barron’s where leaders in the advisory community present. We summarize their presentations below:


Liz Ann Sonders, Chief Investment Strategist for Charles Schwab: Slow growth, being not to hot and not too cold is just the right temperature for U.S. economy. This is necessary to manage our way out of the structural imbalances we face (deleveraging).


Jeffrey Gundlach, Chief Investment Officer of DoubleLine Capital: Japan is winning the currency debasement race. Do not worry about inflation in the U.S. until we see wage growth and a significant increase in the labor participation rate.


David Kelly, Chief Global Strategist for JP Morgan Funds: Fundamentally the economy is improving and the improvement in the housing market will give the economy a boost because of housing’s multiplier effect.  Energy renaissance in the U.S. means energy independence by 2025.


Bob Doll, currently chief equity strategist at Nuveen and formerly chief equity strategist at BlackRock: Long term investing in U.S. equities has tail winds. Deleveraging is nearly over for every sector except the government.  The U.S. will become a low cost energy provider; thereby attracting global business and boosting the economy.


Don also compared notes with some of the other leading advisors around the country confirmed that D3 Financial Counselors, is still a low cost provider of high quality asset management and family office services.   Additionally, no other firm has the D3 value proposition for financial planning SOS (Second Opinion Service).


Upcoming Events:

Don will presenting  “What is your financial backup plan” at the Downers Grove Public Library on April 23rd at 7:00pm.  We have helped you establish a backup plan, but if your friends and relatives have not made a backup plan, please encourage them to attend.


Don will be presenting with Paul Kasriel, former Chief Economist at Northern Trust (and current client), at the AAII Chicago Chapter meeting on May 18th.  This presentation is intended to help do-it-yourselfers understand what they should know about economics, financial planning and investments.


As always, thank you for your business and as soon as we provide you with your Efile documents, please sign and return them quickly, so that we can get tax season behind us.


Don Duncan MBA CPA CFA™ CFP®                  Michael Meyers MBA CFP®

Adam Glassberg CFP® CIMA®                            Patty Shipinski, Office Manager

Ryan Pace, Financial Planner


We serve our clients by providing Integrity, Trust, Wisdom and Confidence.


Essential Steps to Protect Yourself from Identity Theft

Federal law enforcement agencies around the world continue to coordinate their efforts to combat the evolving threat of identity theft. Despite the extensive amount of resources devoted towards reducing this threat, more than 11.6 million Americans suffered from identity theft in 2011 according to the research firm Javelin Strategy & Research. This 13 percent increase from the preceding year has been attributed to the escalating use of smartphones, social networks, security breaches and complexity of methods these criminals use to obtain confidential information.


The markets continue to be flooded with different types of identity theft insurance and credit monitoring services, many of which focus on explaining the risk of not taking adequate precautions. Although these services can notify you of suspicious activity and help clean up the mess if it happens to you, they cannot guarantee that you will not become a victim of identity theft. The former CEO of LifeLock, Todd Davis, publically posted his Social Security number on billboards and TV commercials to promote his company’s credit monitoring service.  Since the advertisement, Todd has had his identity stolen 13 times. The Federal Trade Agency provides a list of features to consider before purchasing identity theft insurance or a credit monitoring service.


The first step in protecting your identity is to be cognizant of what personal information these criminals are trying to acquire. Some items are more apparent than others, such as; your Social Security number, debit card number, bank account numbers, financial statements, ATM cards, credit card numbers and your account passwords. It is important not to overlook other items that contain personal information like your driver’s license, birthday, medical statements, insurance forms, charge receipts and credit applications.


The second step is to understand how these criminals acquire your information. Physical theft, such as dumpster diving or physically stealing items like your purse or wallet is not the only way they obtain your information. As technology continues to advance, there are fewer identity theft cases caused by physical theft and more incidents of the following:

  1. Criminals use malicious computer code (spyware/malware) to obtain and transmit personal information from your computer or mobile device. These codes are also capable of changing security configurations on the device to ensure you are not notified about the security breach.
  2. They use phishing scams to deceive you into voluntarily disclosing personal information.  One common scam these phishers utilize is sending out fraudulent emails using the target company’s actual logo or make telephone calls identifying themselves as employees (e.g. pretending to be an IRS agent). According to the IRS, there have been more malware and phishing scams in 2011 compared to the previous six years combined.
  3. They purchase used electronic devices from you and recover data that you thought was completely erased from the device.
  4. They figure out your passwords to online accounts. One method these hackers use to obtain your username and password is using “keystroke logging” software. In order for them to record what you are typing they need to be on the same network as you; they often take advantage of unsecured wireless internet offered at public locations.
  5. They steal credit/debit card numbers (aka card-skimming) by using a special storage device that steals your information when swiping your card to process transactions
  6. Less technical techniques are also used such as looking over your shoulder as you enter your pin number at an ATM machine or diverting your billing statements to another location by completing a “change of address” form.


The third step is to protect yourself from the techniques these criminals use and take the necessary precautions to safeguard your personal information.

  1. Use a firewall along with anti-spyware and anti-malware software to protect your computers and your network. It also helps to keep your computer up to date by installing updates for your computer and internet browser as they become available. If you have files containing confidential information on your mobile device or computer’s hard drive, it is recommended that you also encrypt these individual files to prevent criminals from opening the file even happen to get their hands on it.
  2. It is imperative to safeguard all personal information located on smartphones and tablets.  Treat your mobile device like you would your home computer; password-protect the home screen, download updates as they become available and install security software. The majority of mobile users do not take these precautions; which explains why smartphone users are about one-third more likely to fall prey to identity fraud than the general public.
  3. Protect yourself from the advancements in phishing scams.  Be extremely cautious when giving out personal information until you are positive who you are dealing with. Remember the IRS will never initiate contact with you via email to request personal information. Also, as a general rule, avoid using email to communicate sensitive information unless you’re using adequate encryption.
  4. Be conscious of the personal information you expose on social networking sites. ID thieves love social media because it is an easy way for them to obtain information about you (e.g. birthdays). Assume scammers will have access to all information that is posted on social networking sites regardless of your profile’s security settings.
  5. Never resell electronic devices that previously had personal information stored on it. No matter how confident you are that the information is erased, these criminals have found ways to recover “deleted” information. There have been numerous identity theft reports related to Android devices; the built-in factory reset option does not completely remove personal data that was stored on the device and there have been apps containing malware.
  6. Protect your social security number. Keep your social security card locked in a safe at home and only provide your number when absolutely necessary. Avoid putting it on checks when possible. If you have an electronic copy of your social security number, make sure to thoroughly encrypt the file.
  7. When entering login credentials on websites we are reminded that it is important to create strong passwords, routinely change them, and avoid using the same password for multiple accounts.  The majority of people do not follow these guidelines because they access numerous websites making it unrealistic to memorize a different password for each one (unless they use a password manager). At a minimum, separate your websites that contain confidential information and follow the guidelines for these accounts. Dedicating a separate email address to these confidential websites also increases your protection.
  8. Also, avoid using unsecured wireless internet connections to access confidential websites, these are common at public locations such as coffee shops. When using a smartphone, switch to your 3g or 4g service while accessing your accounts. When you are connected to wireless internet that is not password-protected, be aware that criminals have the capability of recording what you type on your keyboard using keylogging software.
  9. Shred expired credit cards and all documents containing personal information before discarding them. There are many different types of shredders out on the market; the micro cut shredders have proven to be the most secure.
  10. Credit cards are not only more convenient than writing checks; they are more secure as well. When writing a check you are giving up a vast amount of personal information that multiple people will have access to; your bank account number, routing number, driver’s license number, signature, address, phone number and sometimes more. Also, it is easier to have the credit card company make corrections to the account versus waiting to get your personal checking account refunded.
  11. Do not use your mailbox at home to send any mail containing sensitive information. Although incidents are more common during tax season, ID thieves have been caught stealing outgoing mail throughout the year.


The fourth step is to monitor your finances to detect suspicious activity. Check your financial accounts and credit reports regularly. Most banks allow you to set up alert notifications based on a custom set of rules (e.g. transactions exceeding a certain dollar amount). If you don’t have time to monitor your financial accounts and credit reports, you should consider paying for a credit monitoring service or identity theft insurance that will help notify you when suspicious activity occurs. Note that these criminals often target elderly individuals who are not required to file tax returns because their crimes go undetected for longer periods of time. Help spread the word to your elders and assist them in checking their credit reports.


The fifth and final step is to take immediate action when you detect suspicious activity. Some signs to look for are unauthorized transactions on financial statements, receiving calls or letters about purchases you did not make, the IRS contacting you about reported income that you did not earn, tax returns being rejected due to your social security number already being used on a different return, denials of credit for no apparent reason, bills not arriving as expected and inaccurate information on your credit reports.

  1. Contact your financial institutions and ask to speak to the fraud department. Make sure to close or lock all accounts that have been tampered with. Also send notification in writing while keeping the original documentation of your conversations. Request verification that the disputed account has been closed and the fraudulent debts discharged.
  2. Contact the Identity Protection Specialized Unit (IPSU) and explain your situation. You can take proactive steps to prevent your identity from being stolen by calling IPSU when you lose your wallet or purse. You will be speaking to an IRS employee that is trained to obtain your information and will help point you in the right direction. The toll-free number is (800) 908-4490 and their office is open Monday – Friday, 7 am – 7 pm.
  3. Contact the three credit bureaus (Experian, Equifax, and TransUnion) and ask them to place a fraud alert on your credit reports. Also request free copies of your credit reports and keep them for your records.
  4. Complete and submit the IRS Identity Theft Affidavit (Form 14039), the Federal Trade Commissions’ ID Theft Complaint Form, and file a local police report.
  5. Continue to check your credit reports and financial statements regularly.
  6. If the IRS issues you an Identity Protection PIN (IP PIN) make sure to provide your tax preparer with this number because it must be included on your tax return the following year.