D3 Financial Counselors Update:

We are including our annual client opinion survey with this newsletter.  Please fill this out honestly so that you can help us improve our service to you.  Just as important, we have begun planning our annual Client Appreciation Dinner, and we need to hear from you which of the two potential dates work best for the majority of our clients.

For your information, in 2006, we averaged 9.1 out of 10 for each question on last year’s quality survey.  We were happy with the results but we want to try to do better.

According to the latest information, our move to new office space in downtown Downers Grove has been postponed until January, 2008.   The delay is due to the challenges of getting 4 different local government entities to approve the plans.

Peter just got back from the National Financial Planning Association annual conference in Seattle.   He was surprised that the recent volatility in the stock and bond markets didn’t get as much attention as he expected. Don’s explanation is that a good financial plan is designed to withstand market volatility.  Both the panel discussions and training sessions focused, instead, on last year’s new laws on Retirement planning, using Estate Planning tools to reduce taxes for beneficiaries and the importance thinking globally as an investment manager.


Things You Should Know:

The Federal Reserve lowered short-term interest rates by 50 basis points (1/2 of 1%), to 4.75%, on Tuesday.  This was 25 basis points more than the markets had expected.   The Fed implicitly acknowledged that the sub-prime mortgage panic has reduced liquidity in the debt markets and will probably prolong the housing market’s downturn.  By lowering interest rates, The Fed is increasing liquidity in the financial markets and attempting to take out some insurance against a recession.

In response to the Federal Reserve’s move, stocks staged an impressive rally, but longer term interest rates barely moved. This is because the bond market had already been expecting a 50 basis point reduction.  The Fed’s action is intended to lower interest rates for most types of borrowers.   Commercial lending rates and rates tied to the Prime Rate, like those for credit card and home equity lines of credit, did fall immediately in response to the Fed’s actions.   We will see if mortgage lenders remain reluctant to lend. Most lenders are currently focused on home buyers with good credit scores and with low mortgages balances that can easily be sold on the secondary market.

Consequently, we’re skeptical that this rate cut gives the U.S. economy a strong boost or dramatically affects inflation expectations.  At this time, we think the economy will slow down but not enter a recession.  As a result, we are starting to look for opportunities to move balances out of money market funds.

As always, thank you for your business, and please continue to think of us when someone you know needs 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™                                       Michael Meyers MBA CFP®