D3 Process Improvements: As we shared with you last month we are migrating all clients to the new and improved D3 client portal. We will be contacting you individually over the next three months to set up a time to personally introduce you to the enhanced features.
We are about a third of the way done generating financial plan update, data confirmations for all of our Affordable Family Office clients. We are using our new probabilistic financial planning software. If any Advanced Portfolio Management clients are considering a financial plan update, please call Don or Adam.
May was another ho-hum month. The U.S. stock market ended the month up about 1.5% and bond markets were essentially flat. Both the international developed and international emerging stock markets were down 1% and 4% respectively. Global economic growth indicators continue to be good, but not great. As a result volatility has diminished. We are concerned that anything creating future uncertainty will increase volatility in the markets.
There are two potential storylines that we believe could contribute to market volatility in June:
1. If the U.S. Federal Reserve decides to raise interest rates at their June 15th meeting, this would surprise markets (the futures markets are pricing in only a 23% chance of this occurring in June).
2. On June 23rd British voters will vote to remain, or exit the European Union. If there is a decision to exit, this could leave businesses and investors with less clarity to make informed decisions, leading to market volatility overseas.
Unfortunately, in a low return market environment, volatility can have a significant negative impact on total returns. We continue to emphasize that the cash flow needs identified in your financial plan should be the driving factor in structuring the asset allocation and risk characteristics of your investment portfolio.
We continue to expect lower than historic average rates of returns on stocks and bonds as a byproduct of slower than average economic growth, and the current low interest rate environment. The 10 year projected rates of return on our asset allocation models reflect this viewpoint.
Later this summer we will confirm that all of our Affordable Family Office clients (when we update your financial plan) and all of our Advanced Portfolio Management clients (when we review your portfolio performance in August) have updated risk profiles. Please call Don or Adam if you would like us to send you a new risk profile questionnaire, or need assistance filling one out. This will help ensure that your portfolio reflects your risk tolerance and your updated financial plan (if you have one).
Please click here to view the June Money Magazine article that Don was featured in. Feel free to share this with your neighbors, friends and relatives.
As always, thank you for your confidence in D3 and please keep us in mind when your neighbors, friends and relatives ask you if you know a trusted advisor that focuses on helping people achieve their goals.