Dear Client,

Happy New Year! As 2008 fades, we reflect on the past and raise our hopes with new goals for 2009: personal improvement, health, financial enhancement, improving the world around us with friendships, and devoting time to the causes we believe in. Life is precious. We hope peace comes to those who are less fortunate than us and are affected by war, poverty, and the recent natural disasters. If we cherish each day we have and value the people whose lives we touch, we will create more happiness for ourselves and for those around us. I know this has been harder to focus on given our past years financial turmoil.

We start the New Year deep in the debris of the economic and market collapse of 2008. News coming in from the last quarter is still very gloomy, as consumers, businesses and government alike work to assess the damage, incorporate the right adjustments to carry on through this recession, and create the plan for clearing the fallout and rebuilding.

Prior to September, the employment declines had been modest, averaging 82,000 a month, but as the financial system collapsed, employment fell 403,000 in September, 423,000 in October, and 584,000 in November. Today we got the employment report for December. It showed a jump in the unemployment rate from 6.8% in November to 7.2% and a decline in payroll employment of 524,000. One possible bit of positive news here is that the latest decline was smaller than November's.

Companies appear to have been very prompt in adjusting to the onset of serious recession. Based on the employment figures, it is my guess that labor productivity rose about 3% in the fourth quarter, with total hours worked down 7.7% (annual rate) versus a consensus forecast of a -4.4% decline in GDP. That would indicate that companies are keeping productivity growth in line with wage growth and holding unit labor costs flat. I have harped on these cost control measures, because I believe they are key factors that will help moderate this still very serious recession. Typically, companies are slow to adjust in recessions and allow labor costs to pile up, making the ensuing employment decline deeper.

Given this cost control, one might expect okay profits despite the downturn, but such profits appear unlikely because of the sharp cuts in the prices of goods and services sold. Without adjusting for this deflation, the holiday sales data look very weak. For example, the retail store sales report shows a decline of 1.7% in sales compared to December 2007. But store prices, which have been falling since September, likely dropped sharply in December. So, in real inflation-adjusted terms, sales likely rose in December compared to 2007. This is good and bad news. It means that stores likely "moved the merchandise" in December and we consumers got some pretty good deals, but it also means that companies did not make much money on those sales.

I do expect further very sharp declines in the Consumer Price Index (CPI) and other price reports stemming from the decline in energy and commodity prices and the impact of the recession. That said, the Federal Reserve (Fed) has made it very clear that they intend to keep any deflation short-lived, and they have embarked on a huge expansion of the money supply to turn both prices and the real economy up again. With these and other major Fed actions aimed at unfreezing the financial system, I am already seeing some recovery in credit markets compared to the post-September collapse environment.

At the same time, I expect we will get prompt action by the incoming Administration on fiscal policy, with soon to be President Obama announcing an $800 billion program of infrastructure and other spending as well as tax cuts. These actions, combined with the recession impacts, will likely produce budget deficits in excess of a trillion dollars per year for several years to come. Meanwhile, I expect the "off-budget" activities of the Troubled Asset Relief Program (TARP) will resume under the leadership of incoming Treasury Secretary Geithner, and will lift more risk out of troubled financial institutions and other companies. And there is the FDIC, now out guaranteeing financial institution debt.

None of this activity leaves the financial planner in me sighing with relief or happy with these policies. All of these programs come with costs. The Fed program aimed at reflation may overshoot and lead to high 2010 inflation rates. All the troubled asset purchase and guarantee programs may yield substantial losses down the road. And, as with all government programs, I expect some misallocation of the fiscal stimulus funds to pork and other poor investment choices. Also, we will be piling up debt again at a time when we should be pulling it down to help deal with the serious actuarial shortfalls in Medicare and Social Security.

I do think we can recover from this near unbelievable mess created by a bunch of irresponsible Wall Street firms, regulators, and politicians and return to growth and healing financial markets. While these are serious losses, all the hard working labor, capital equipment, technology and spirit of innovation are still here. We just have to clean out the stables and move on. And as part of the process, we will likely have a complete rewriting of the rules and regulations governing the U.S. and global financial systems this year. It will be a full agenda to be sure in this hopefully happier New Year. Please call me with any questions or concerns.

Planned Financial Services Growth
Our firm continues to grow. We have added both closely held businesses under 401(K) Plus^SM and Personal CFO^SM clients. Both new and old clients tell us that their ability to focus on family and business and delegate money issues to us allows them more time to be successful in what they want to do. Great! That is our goal in helping financially successful people become significant. We help them focus on what they desire to spend their time on while we provide timely and critical advice so they can make informed decisions.

Our efforts in advising clients was rewarded with our firm being recognized by the Weatherhead 100 for 2008 with growth of 210% in firms under 15 employees from 2003-2007. This is a great acknowledgement of our team approach, as well as a reflection of our clients' confidence as they introduce new clients to us who can benefit from our firm's advice.

Other accolades were received as well. In October we received the COSE Best 10 under 10 award. Each year, as a salute to the small business community, COSE honors 10 companies having 10 or fewer employees having been in business for one year or more for their best practices in innovation, growth, success, value to the community and the environment, diversity promotion and customer service excellence. These winning companies all share a unique passion for their craft - they are entrepreneurs with a commitment to excellence.

And earlier in the year for being one of the area's most successful and fastest-growing financial wealth management companies, we were recognized as an NEO Success Award Winner for 2008.

We are actively seeking other wealth management firm's to acquire through an outright sale or as part of their succession plan to slowly divest themselves out of the business. We have an outstanding team with a great infrastructure to support this type of action.

We continue to invest in technology and infrastructure
In the second quarter of 2009, we will be adding enhancements to Wealth Plan^SM. Clients who signed on personally and companies who used Wealth Plan^SM as an executive benefit express their excitement that they have a 24/7 live virtual wealth plan. Clients said that its comprehensive nature to aggregate financial information, storage of critical documents and its interactive nature to provide customized feedback from our firm allows them to make confident and informed decisions so their wealth works the way they choose.

Please click here to view a 3 minute video on the system, a short video on its security features and lastly a demonstration tour as a "Luke and Jen Smith".

The Community
All of our staff gives back to the community with significant commitments to charities and activities. Frank remains involved in The Diabetes Association of Greater Cleveland and United Way Services, as well as the Brecksville Soccer Organization. In addition, Frank obtained a grant to have an Italian Language and Culture class at the Brecksville Broadview Heights Middle School. Jeremy is the Vice President of the Board of Trustees of The Cleveland Christian Home; while Walt serves as Director of a private foundation which directs funds to local charities – one being Adult Guardianship Services.

My (Our) Commitment Remains
Planned Financial Services will begin its 15th year in business and each year we continue to set new standards for client advice and service. This has translated into our continued growth as one of the most respected independent wealth and investment advisory firms.

I want to personally thank all of you who have helped our growth throughout the years. None of this would be possible if clients did not trust our advice. The value of our firm may be measured by the collective net worth of our clients—our family—but without this trust, there would be no family. Your personal introductions to new clients and from other professional advisors who also refer us, built our firm. We value these relationships.

This has been even more important this past year given the deep recession we entered into later in 2008 and the failures in the credit markets setting unprecedented changes to the back bone of America's financial institution. While there will always be challenges, we have learned and will continue to learn a great deal from our most recent challenges. Most importantly, we did not run and hide. We stood tall with our clients even when the news was not good and shared with them what we needed to do to get through this time and help our clients get focused again on their goals.

Planned Financial Services has a vested interest in your success. When you win, we win too. We take pride in what our clients accomplish. Whether we help you directly with our specific services and advice or introduce you to others who can help, our goal is always to be there for you, to listen, and to advice.

I renew our commitment to all our clients and professional partners: We want to continue as your trusted advisor for qualified financial, investment, insurance, and benefits advice. We will keep providing ideas to help you address personal, financial, and social goals with our individual meetings, letters, and electronic communications. We have set and will keep our high standards:

• Continue to grow the business at a reasonable rate without compromising advice and service
• Maintain excellent relationships with all our clients by meeting regularly
• Develop innovative new services to address the needs of our clients as they fit into our core business
• Provide the same high levels of service and advice while keeping a healthy balance with family and community involvement

We wish everyone a prosperous and healthy 2009. Be prosperous by enjoying your family. It is the best investment around. The friendships we have developed…priceless. In the end, our personal net worth reflects the friendships and memories we created in our lifetime.

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