Dear Clients and Friends:
The recent string of better than expected economic data is consistent with the rapid pace of healing in the credit markets—the key driver of the recession. In fact, last week marked the 12th week that the financial indicators LPL Financial Research use to evaluate the overall health of the economy have shown steady improvement. The data increasingly paints a picture of a still weak, but rapidly improving U.S. economy. However, this news isn’t being interpreted as all good by the markets.
Market participants’ concerns are shifting from a potential lengthening and deepening of the recession to inflation that might be stoked by a rapid recovery. In the past, high and rising inflation has proven to be a far harder problem to solve than a weakening economy in recession. Now that the economy is beginning to gain traction, the issue is becoming how quickly and effectively policymakers will rein in stimulus to avoid inflation. The uncertainty of the timing and effectiveness of the Fed’s response—and concerns that action pulling back the stimulus too soon could tip the global economy back in to a second downturn—are weighing on investors’ confidence.
We believe there will be substantial inflation in raw material prices. However, we expect only a modest rebound in prices for finished goods, measured by the traditional gauge of inflation—the Consumer Price Index, given abundant labor and factory capacity around the world that will take years to absorb. We do not believe the Fed will move aggressively due to the lack of significant inflation in finished goods prices and the risk of undermining the improvement in the banks, credit markets, and the economy.
Good news still is good news—after all, the economy is improving and the stock and corporate bond markets have rebounded sharply from off the lows of early March. It is increasingly likely that the worst of the financial crisis is behind us. However, the better performance has resulted in some risks. For instance, the combination of higher mortgage rates and higher gasoline prices could pose a threat to the recovery if these trends continue unabated. As a result, volatility may return to the markets over the coming months. We stress the importance of a commitment to your long-term investment strategy.
At Planned Financial Services:
While many financial institutions and financial advisory companies laid people off, we made changes to our budgets so we could keep the same great team in place providing top level advice and service to our clients, especially in these uncertain times. Despite the struggling economy, at PFS we still committed resources to enhance services and solutions for our clients.
At Planned Financial Services, we are excited with a few 2009 initiatives:
- We have added fifteen new clients to Wealth PlanSM. Wealth Plan is a fully integrated, comprehensive, and “live” Wealth Plan created for our clients with the help of Your Personal CFOSM, our personal wealth management system. Wealth Plan system uses cutting edge reporting and organizational software developed for clients which enables us to help consolidate and integrate various areas of our clients’ financial lives. It pulls ALL financial information together into one cohesive and active financial management system that is readily available to the client. This system allows us to fulfill our greatest expectations for clients, helping them feel in control of their financial life and their goals while giving them the peace of mind they are searching for.
- Jeremy added enhancements to Scorecard - our investment review system which supports the 401(k) PlusSM process. This system allows us to better evaluate investment offerings on 401(k) platforms. Objective advice is what corporate clients are looking for. It uses eight quantities and four qualitative measures to help flag investments for further review. Jeremy is leading an initiative to use this tool with our individual investors.
- We added Divorce RightSM services to create a better, easier, and less costly (financially and emotionally) process to dissolve a marriage and allow both parties to move on more easily with their lives.
- Acquisition of another financial planning firm: We are actively looking for a similar practice to acquire locally and in Florida. We will keep you posted.
- Focusing on strengthening our brand: “Your Life, Your Money, Your Way”. Our goal is always to allow clients to live life on their terms.
We hope everyone is looking forward to an exciting summer with friends and family. As always, if you have any questions, please call me. In our competitive marketplace with all companies having access to the same financial strategies, Integrity, Service and Advice separate the highest quality firms from the average. Thank you for your trust and confidence.
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Respectfully,
Frank Fantozzi, CPA, MT, PFS, CDFA, AIF
President, Planned Financial Services
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Planned Financial Services
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