Dear Client:

The week of October 6th was the worst week in market history - bad enough to push governments around the world into action against the underlying drivers of the financial panic that caused global financial markets to just plain crash. And today we're seeing the markets around the world respond to these government efforts with sizable rebounds.

The Dow and the S&P 500 were down 18.2 % during that week. It is cold comfort that international markets fared worse, with the EAFE international stock price index falling 21.7%. The carnage was everywhere. No sector was spared. While the week of October 6th was not the worst percentage decline (the five days ending October 19, 2002 hold that dubious distinction in the post World War II period), it is close to the largest movement from the height of the market to the low point. At the close that Friday, the S&P 500 was down 43% in a little over a year, not far from the largest post-war decline of 49%, the drop from March 24, 2000 to October 9, 2002.

Thankfully, we are finally getting concerted global government and central bank interventions aimed at stopping the panic. The UK government has intervened, injecting government money directly into two of its largest banks, and over the weekend Germany, France, Germany Spain and other EU nations committed $1.8 trillion dollars to guarantee inter-bank lending and take equity stakes in their countries' banks. Also over the weekend, the Federal Reserve committed unlimited funds to the European Central Bank, the Bank of England and the Swiss National Bank to meet any demands for short-term dollar loan demand. Today, the U.S. Treasury announced that it will also purchase equity in financial firms along with an accelerated program to buy or insure troubled assets at financial institutions and other measures aimed at stabilizing the financial markets. The U.S. Treasury has heavier compliance and oversight conditions that are slowing it down a bit compared to its counterparts overseas, but is committed to getting these programs underway quickly.

Following the October 6th freefall, equity markets around the world are higher. The UK ended up 8.3% measured by the FTSE 100 Index; France, Germany and Spain were up about 11% as measured by CAC 40 Index, DAX Index and IBEX 35 Index, respectively; and Hong Kong was up about 10% measured by the Hang Seng Index. Japan's markets were closed today. Here in the United States, the Dow and the S&P 500 are up about 11% on Monday, October13th. Hopefully we are seeing the bottom, but there is really no way to say. In panics like this one, fundamentals get tossed out, so we could move higher or move lower near-term. In times like this, when everybody else seems to be throwing out any consideration of fundamentals, it becomes especially important to keep them in sight.

On Friday's close on October 10th, the S&P 500 index price was 899. That is not that far above the bottom of 777 it hit on October 9, 2002. But, despite all the difficulties we are in, S&P 500 reported earnings over the last four quarters were $51.68 per share, compared to $27.59 in 2002. And dividends per share are $28.71, compared to $16.08 in 2002. So we had a dividend yield of 3.2% as of the close on October 10th, compared to a 2.1% dividend yield in 2002. And, as we have said before, in aggregate, U.S. non-financial companies are in good financial shape and generally well positioned to weather the recession we believe we are in without the severe dislocations we are seeing in the large financial firms.

So where do we go from here? Stopping this credit crisis is imperative; otherwise we will have a spreading credit crisis that would deepen the global recession. I do think the massive global fiscal and monetary policy stimulus will work to end the panic and preserve financial markets. Stock market bottoms usually follow major anti-recession policy actions, not the end of the recession itself. I, along with most folks I am sure, would love a "do-over" on this astonishingly large hit our financial markets have taken, but that is not the way the world works. We have to make do with what we have in hand. I think we are going to find a bottom somewhere not far from here at some time not far from here and then begin the process of recovery. I expect we will have to endure more extreme volatility due to the continued lack of clarity concerning financial market stability and the depth of the recession. There are some bright spots; gasoline prices are back under $3 a gallon, and home heating oil prices are down sharply. However, generally speaking it is not likely to be a pretty picture for some time. Companies could still fail. We clearly have our work cut out for us to rebuild a financial system that has been sorely tried and found wanting. I know that the well balanced, well diversified* portfolio that I advocate has not provided much shelter from this financial storm, but while also sorely tried, I do not think it is broken. I think it is still the best investment option going forward. Please call me with questions and concerns.

At home, Planned Financial Services continues to grow prudently. Our tag line "Your Life. Your Money. Your Way^SM" is resonating well with current and prospective clients. It embraces our clients' passion for life. They do not want to be part of a cookie cutter methodology many of the large financial institutions create. Our clients desire a firm that can recognize their individuality and customize a flexible approach that meets with their specific wishes.

Planned Financial Services receives multiple awards from the business community
Earlier in the year we received the NEO Success Award, our second in three years. Since 1994, the NEO Success Awards have recognized Northeast Ohio's most successful companies. The NEO program began as a way for the business community to showcase the breadth and depth of business success in the region, which encompasses 17 counties.

Planned Financial Services continues to build on our culture of advising our clients to better control their financial futures on their terms. We were recently informed of our second consecutive Weatherhead 100 Award which, since its inception in 1987, showcases the fastest growing companies in Northeast Ohio. As a qualifying company, we must show consistent and high growth over the last five years.

Additionally, we were just acknowledged by COSE with their COSE Ten Under 10 Award. Small business plays a vital role in the economic development landscape of Northeast Ohio. COSE is committed to celebrating those entrepreneurs who are making an impact in the region and recognizing the many success stories within the small business community. Each year, COSE's Ten Under 10 Award honors companies for their best practices in innovation, growth/success, value to the community and the environment, diversity promotion and customer service excellence.

These awards are highly regarded throughout Northeast Ohio. It is a testament to the hard work, commitment and innovation exhibited by our team. We consistently strive to succeed and I am proud of our team's contributions.

The Planned Financial Services (PFS) Experience is for visionary leaders -- individuals, families and business owners -- who have carefully formed ideas about how they want to manage their money and legacy and to prepare for future generations. In turning to PFS for guidance, they are not handing over control of their assets and future. They are making sure their unique voice is heard and their vision reflected through every engagement.

We're proud of the number of unique services we have developed over the years to meet specific needs, including:

• Personal CFO^SM -- advisors provide careful coordination and supervision through our family office formula of retirement planning, investment management, children's education, insurance portfolios, tax planning, business succession, philanthropy and cash management.
  
  
• WealthPlan™ is a cutting-edge reporting and fully integrated "live" financial system developed for high net worth clients. It can help you consolidate and integrate all areas of your financial life in real time through aggregation of assets, vaulting of critical information and analysis on critical financial planning areas.
  
  
• Divorce Right^SM -- Certified Divorce Financial Analysts advise on how to avoid the many financial pitfalls in a divorce and help safeguard long-term financial security while also offering referrals to attorneys and family counselors.
  
  
• Balancing Act^SM Bill Management -- reduces stress and time by receiving, organizing, reviewing and paying client bills.

We will continue to invest in technology to better advise our clients as well as safeguard their information. We recently upgraded our computer server as well as the firewalls and backup systems.

While the markets have created concerns in the short-term, we always believe there is opportunity when fear presents itself. We will continue to be the steady hand that leads you through these challenging times with prudent and proactive advice based on your goals.

As always, but especially now, please call Jeremy, Walt, Patty or me with any questions or concerns. We respect and value your input. Most importantly, however, we value our relationship as your wealth advisor.

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