July 2019 Letter to Clients
“Oh when I look back now / That summer seemed to last forever / And if I had the choice / Yeah, I’d always wanna be there / Those were the best days of my life…”
“Summer Of ’69,” single by Bryan Adams, from his 1984 album Reckless
As we write this, it’s sunny and breezy in Asheville. We’re loving summer so far and we hope you are, too. Enclosed please find your most recent investment report.
In what may be the most significant changes to investment advice standards in more than two decades, last month the Securities and Exchange Commission voted to adopt the “Regulation Best Interest” and related rules. When the new regulations become effective in June 2020, they will:
- establish a heightened standard of conduct for financial advisors that service commission-based accounts;
- enhance the standard of conduct for financial advisors that service fee-based accounts;
- require disclosure of certain information about the nature of a client’s relationship with their financial advisor;
- clarify the role of a financial advisor when servicing commission-based accounts versus fee-based accounts.
We are still digesting what impact this may have, if any, with our clients. The new regulations span some 771 pages, approaching the length of Gone With the Wind or The Lord of the Rings. One of the reasons we like being affiliated with a large financial institution like Raymond James is that we can let their team of legal experts pore through those 771 pages and then provide us with a more comprehensible version for practical implementation.
Consistent with our core value of “client first,” Raymond James supports a best interest standard for all account types with the oversight of a regulator with broad authority. We like to think that we have always put our clients’ best interest ahead of our own, that we’re transparent in fees, and that the investment consulting and financial planning services we offer add real value to those we serve. Of course, there is always room for improvement, and we obsess about what we can be doing better. Please don’t hesitate to let us know what we can be doing better for you. We won’t take it personally. In fact, your feedback helps us tremendously.
Some financial professionals offer the moon. All the upside, with none of the downside. We do not make such offers. We believe it is more prudent to build a globally diversified investment portfolio that matches your risk tolerance and financial goals so that you can remain committed in both good times and bad times. Diversification can also mitigate risk in times of heightened volatility. As an example, the recent downside volatility in the equity market in May was alleviated by exposure to Treasury bonds, which rallied.
We’ll be the first to acknowledge that diversification is boring. It’s never going to be the stuff of daily discussion or cocktail chatter. Thoughtful asset allocation, diversification and risk management are essential dynamics to consider as volatility moves higher. There is likely to be quite a bit of “noise” over the summer, between US- China trade negotiations, saber-rattling in the Middle East, not to mention plenty of economic data for the Federal Reserve to digest back home. Our advice remains steadfast: stay your course. Make sure that your risk allocations match your risk tolerance, goals and objectives.
There are always reasons to be both pessimistic and optimistic. We acknowledge this reality but believe that investors should trust in the ingenuity of humans over time. Long-term investment themes we’re watching are: climate change and resource scarcity; technological breakthroughs (“data is the new oil”); autonomous and electric vehicles; artificial intelligence and machine learning; biotechnology; medical devices; renewable energy; 3D printing; and cybersecurity.
In an effort to stay on top of new trends, strategies and solutions — as well as the outlook for the markets — we continue our education and due diligence on your behalf. In May, Bray attended the Morningstar Investment Conference in Chicago, where some of the best minds in investing covered the state of the bond market, opportunities in equities, as well as financial planning issues. In August, Joel and Bray are headed to Atlanta for a Raymond James conference to share tools, resources and best practices to enhance our value to you as advisors.
It is our greatest pleasure to serve you. Thank you for the privilege and the opportunity. We look forward to connecting with you soon. Have a great summer.
Joel Adams, CPWA Bray Creech MBA, CPA, CFP®
Financial Advisor Financial Advisor
The opinions expressed here are those of Joel Adams and Bray Creech and not necessarily Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only and is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. All investing involves risks and no investment strategy, including diversification, can ensure a profit or guarantee against a loss.