This letter covers 4 topics: 1.D3 Business Update 2.Financial Plan Updates 3. Investment Outlook 4.Financial Planning SOS
D3 Business Update:
- Ryan passed the CFP exam. Within a month he should be able to put the CFP® credential behind his name. Please congratulate him the next time you see him or talk to him.
- Patty is embarking on earning a Registered Paraplanner designation. She is taking classes and is looking to earn her designation before the end of 2013.
- Adam has completed his fifth year in D3’s Financial Planning Management Development program. Along with his CFP® and CIMA™ credentials, he is now a Senior Planner and Assistant Portfolio Manager at D3.
- Abby Van Der Heyden Will be interning with us this summer. She is a junior at the University of Illinois, majoring in financial planning. She will be starting May 15th, so don’t be surprised if she answers the phone.
- Annually we are required to update our “ADV” that we file with the SEC and the State of Illinois. Our updated ADV is available to be mailed to you or you can review it on our website by clicking on the link on the bottom of our website home page.
- Next week, Don will be starting to pick up part of the 60 hours of continuing education credits he needs every year to maintain his credentials. Even though Don will not be in the office, with D3’s technology platform, he will have access to all of our systems.
- Don and retired Senior Economist at Northern Trust Company (a D3 client) will be presenting at the American Association of Individual Investors, Chicago Chapter, on May 18th. Don’s presentation will focus on the intersection of financial planning and investments.
Financial Plan Updates:
Our Family Office clients should have already received via the U.S. post office your financial plan update questionnaire. We sent these via “snail” mail because we included a customized report detailing a listing of your assets and a budget/cash flow report. Please review the reports and fill out this questionnaire so we can be as accurate as possible when we update your financial plan projections.
- For our Active Asset Management clients, we can update your financial plan using our retirement GPS (goal planning service). This service specifically focuses on identifying goals and assigning a success factor using monte carlo simulation on how likely it is to attain these goals (i.e. will assets fund retirement expenses to age 80, 90 or 100 etc.). Give Don a call if you are interested in this service.
- Asset allocation model review summary: Twice a year, we formally review our asset allocation models, making changes based on current valuations and our long term economic outlook. This is one of the ways we attempt to add value to our clients’ portfolios (the other being fund selection). We recently completed a study to quantify the value added by making changes to our asset allocation models since 2009, using our asset class benchmarks. We measured performance each year relative to the prior year’s performance for each of our asset allocation models. You should be pleased to know that the annual changes to our asset allocation models have contributed over 2.9% return to our growth oriented models, over 2.2% to our income with growth models, and over .4% to our income oriented models since 2009. Adam will be writing a white paper that will be available to you detailing the findings of this study.
- Pimco presentation summary: Don and Adam recently had the pleasure of seeing PIMCO’s Mark Kiesel speak (Morningstar 2012 fixed income fund manager of the year). Mark’s presentation was focused on generating value in fixed income investments in this challenging interest rate environment. PIMCO believes that, in this environment, value in fixed income can be generated from outstanding credit research (doing a better job researching than the ratings agencies). They focus on finding companies that will exceed growth expectations, increasing their ability to pay down debt, and reward bond holders more than equity holders (unlike Apple). In the United States, companies with exposure to the housing market, and energy sector demonstrate these qualities. Home inventories are near 13 year lows, and more buyers will be entering the market due to historically low interest rates and more access to credit. This should provide growth to both home builders, and companies with ancillary exposure to the housing market. In the U.S. energy sector, we are seeing a boom in oil and natural gas production. The most attractive companies to own in the energy sector are companies involved in the transportation and storage of energy. Because these companies essentially charge a “toll” for use of their infrastructure, they are relatively isolated from big changes in energy prices, and will benefit as long as energy production in the U.S. continues to grow. We agree that in this interest rate environment, generating value in fixed income will require extensive credit research capabilities.
- Quarterly fund review: On the equity side, we continue to focus on funds generating cash flow. On the fixed income side we are lowering exposure to funds with passive bond index exposure, and will focus on funds that utilize active management for all of our fixed income and blended asset allocation investments. We are also finalizing our review of fund products that should benefit in the recovery of the housing market.
Financial Planning SOS:
We continue to hear positive feedback about our hourly financial planning SOS (Second Opinion Service). As a reminder, this service is very unique in the financial services industry (we do not charge our hourly fees if the client doesn’t think we have earned them). We are finding that the concept is a challenge to market; primarily because people don’t understand it..
We need your help. Can you ask friends or relatives, whether or not they would use a service like this. If not, we want to know why. Do they not believe this is true, do they think this is a disguised sales pitch or do they think that they would not benefit? We are trying to refine the marketing of what we feel is a “no risk only reward” service and your feedback would help us greatly. As always, thank you for your business.
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.