Business Update

D3 Featured in Crain’s Chicago Business Executive Wealth Management Guide: D3 was a participating sponsor in this year’s guide published on June 18, 2018. We were proud that one of D3’s clients was interviewed for this insightful piece. Click on this link to review the articles featuring D3 in Crain’s Executive Wealth Management Guide.

D3 Helps Client Avoid Identity Theft and Loss of Funds: Just last week D3 helped a client avoid a fraudulent IRS imposter scam. The client was very close to giving the scam artist $7,000. We recommend reading this summary to learn how sophisticated the scam was. If any client ever encounters someone asking for or demanding money or threatening legal action, please call D3 before taking any action. These scam artists prey on fear and when people are afraid, they are more susceptible to making bad decisions. We are here to help you make smart decisions, so please don’t hesitate to call us.

Financial Plan Update Season: We are in the process of completing all of our Affordable Family Office (AFO) clients financial plan updates. The bullet points below summarize the general findings from the plans we have completed.

  1. Because of the positive market performance in 2017, we are able to recommend reducing portfolio risk
  2. We are helping clients maximize the tax benefit of their charitable contributions now that itemized deductions have changed
  3. We are able to better estimate the impact of the tax law change if we have updated tax withholding information for our working clients

If any other D3 client wants a financial plan update, please contact Adam or Don.

Client Review Meetings:  During the latter half of July, Sharon and Patty will be calling you to set up your plan update and/or your portfolio performance review meetings. Remember, our goal in this process is to use our financial planning skills to help maximize the probability that you can achieve all of your financial goals.

D3 Website Update: As a reminder, the new website is up and running. Here is a link to a new video that describes some of unique attributes D3 brings to the table when serving clients. We would like your feedback regarding this video and if you think it describes the value D3 provides you, please forward this link to you friends and neighbors.

Market Insight

The first half of 2018 has ended with subdued market performance. Through June 29th:

  • The S&P 500 index (U.S. large cap stocks) returned about 2.6%
  • The Barclays Aggregate index (U.S. Fixed Income) returned -1.6%
  • U.S. small cap stocks were contributors to performance, returning 7.6% for the first half
  • Both developed international and emerging international stocks served as a detractor to performance, down 3.4% and 6.5% respectively

Due to the poor performance of bonds, our clients with lower risk portfolios have had flat to modestly negative returns for the year, while the clients with higher risk portfolio have had flat to modestly positive returns for the year.

The subdued market performance can be attributable to 1) increasing uncertainty pertaining to the future of tariffs imposed by the United States and any subsequent retaliation by other countries; and 2) the severity and impact of future interest rate hikes by the Federal Reserve. Currently, the steady global economic expansion and tax cuts have provided a tailwind to stock returns, while rising interest rates and political uncertainty are providing headwinds.

Investment Strategy

We want to emphasize what we said in last month’s client update:

“Because 2017 was an abnormally good year for stocks, and because 2018 is a year of uncertainty (higher interest rates, questions about equity valuations, potential trade wars, political uncertainty, etc.), we have low expectations for portfolio returns for calendar year 2018. We continue to have confidence in our 10-year average projected annual rates of returns for our asset allocation models, but due to the uncertainty in 2018, we anticipate that this year may be one year that will generate returns below our average projection.”

We still remain confident in our long-term asset allocation model projected returns. The bottom line for 2018 is that for all of our asset allocation models, we expect returns to be below these long-term average projections. As long-term investors, we continue to believe there’s a strong case for holding long-term assets.

Final Thoughts

Your financial plan should always dictate the level of risk that you need to take with your investments. Your investments should be structured to maximize the probability of achieving 100% of your financial goals.  We highly recommend that if clients can reduce portfolio risk while retaining a high probability of achieving their financial goals, they should do so. As your life changes and markets change, you should make sure that your financial plan and the resulting portfolio structure continues to reflect your current goals.