D3 Financial Counselors Update:
We wanted to describe to you one of the major factors that makes our comprehensive service different from other financial planning/investment management firms. We believe that one of the most important parts of our job is to tell you how much risk you do not have to take. We do this by customizing your investment portfolio to achieve the long term rate of return necessary to meet the goals identified in your plan. We do this through asset allocation,-to diversify risk; asset dedication,-to diversify cash flow; and tax efficient asset management,-to generate current and/or future income streams. Specifically, the process is as follows:
- In order to have a logical investment program, you must have to have a logical financial plan that models your financial future. This plan defines the personal rate of return, necessary to achieve your goals. Because this return is customized to your goals, you do not need to earn a higher rate than this over your plan horizon unless you want to take more risk. We will have updated your personal plan rate of return by June 30th.
- Then based upon your customized risk profile, we invest your assets using our proprietary asset allocation models. We help you define how much risk you need to take. We changed these models in January to reflect our current forecast for the markets.
- We then provide you with performance reports that tell you whether or not your customized portfolio is achieving your customized personal rate of return. If your portfolio outperforms your customized rate of return, you have the option of taking gains and reducing risk. We will provide your performance reports by August 30th.
To strengthen our skills in managing portfolio risk, Peter Marchese, previously a Senior Vice President at Northern Trust, specializing in fixed income management, will be joining D3 on May 29th, 2007. Peter is a CFA™ and has an MBA from the University of Wisconsin-Madison. He is also studying to become a Certified Financial Planner®. You will all get to meet Peter when we do portfolio performance reviews in August.
Things You Should Know (Our Two Cents):
Expect volatility in the stock market. There is a lot of money looking for return and the bond market with 10 year treasuries at 4.7% doesn’t cut it. We moved our models to a more conservative bias at the beginning of the year and we continue to take gains and reposition portfolios. We have been using the high interest rates on your money market funds as a substitute for fixed income exposure.
We have included an article from the Financial Planning Association which reinforces the concept that a good financial plan should be able to weather any storm. Please feel free to pass this on to friends or neighbors.
Please note, we now have a dedicated fax line. That number is 866-385-8998.
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® May 17th, 2007
Dennis Gravitt & Michael Meyers Nancy Lencioni & Becky Connery