(An informational note – closing with a call to action for any of you worrying about whether your funds are appropriately located and allocated given your risk tolerance and goals for the funds.)
Another quarter-end in which the most certain lesson we can draw about the future is that it’s anybody’s guess. So let’s talk about you. Helping you effectively navigate the market’s perennial upsand-downs is one of the most important reasons we are so committed to serving as your fiduciary advisor – a legally binding term that means we’ll always recommend what we believe will serve your enduring interests, whether or not it immediately serves our own.
This section briefly discusses market performance in the first quarter of 2015 in light of Lighthouse’s investment approach. It then focuses on what we can do to help you invest wisely and efficiently.
Lighthouse Financial’s approach to investing emphasizes global diversification and tilts to dimensions of enhanced performance (e.g., smaller size and value) on the equity side with the fixed side focusing first on providing stability to the portfolio through short duration and high quality. In the first quarter of
2015, diversification to international developed and emerging equities yielded positive results. Tilts to small capitalization stocks paid off, while value tilts did not. Overall, the quarter’s market returns favored Lighthouse Financial’s approach, unlike some recent past quarters where say US large cap stocks outperformed most of Lighthouse’s diversifiers and tilts. Lighthouse Financial continues to believe in the benefits of its approach for long term investors. If you would like to discuss the market’s performance or Lighthouse Financial’s approach in more detail please feel free to contact us.
Below, compliments of Dimensional Fund Advisors, is a chart depicting performance of the World Stock
Market (as measured by the MSCI All Country World Index) with selected first quarter news headlines superimposed. The headlines are not offered to explain market performance – Instead they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.
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What does all of this mean for Lighthouse Financial and its clients? Because of the non-actionable nature of such things as market, economic or world news, we do not attempt to adjust our client’s portfolios in response to changes in the market, the economy, news headlines or “expert media commentators” recommendations. Yet we seek to ensure that our clients are prepared to weather the next major market drop (or for that matter, avoid irrational action when they see one sector of the market soar relative to most of the diversified sectors of the market to which their portfolios are allocated). One reason we have a mantra of “no money in the market that you will need in the next five plus/minus years” is because of the volatility of the markets. For our retired or near retirement clients we are sensitive to the impact of market performance, especially declines on their portfolio longevity – particularly in the early years of retirement. It is for this reason that we encourage our clients to work with us to monitor the impact of early withdrawals from their portfolio and make needed adjustments as they appear necessary. We also design all of our clients’ portfolios to incorporate a diverse group of asset classes (going well beyond the US large capitalization class). Theory says it is the structure and diversity of the overall portfolio that is the primary determinant of future returns.
Call to action: If you are not comfortable that you could ride out the next market panic or the next “hot asset class” knowing that you have a sound research/evidence based portfolio structure utilizing well designed and implemented funds, please contact us immediately. The worst thing you can do is respond inappropriately because you are not prepared for the storms that life will throw at your portfolio.
(News that may impact you – no action required assuming you are on top of your cybersecurity/fraud protection efforts)
Protecting your retirement: Barry Korb our President was quoted in AARP’s April 2015 Bulletin article
“Ten Steps to Achieve Your Retirement Goals.” Barry’s focus was on the fact that retirees in particular do not have time to recoup any loses to scams.” See page 16 of the April 2015 issue of AARP Bulletin for the full article and resources for additional information.
Cybersecurity: Data breaches and identity theft continue to be in the news and are concerns that will not go away. Some actions Lighthouse is taking to enhance our procedures and practices are noted in the next section. As one expert was quoted as saying “there are two groups of individuals, those who have been scammed and those who will be scammed”. Yet there are things that you as an individual can and should do to help protect your-self. Based on our own experience as well as what people tell us:

Monitor all of your accounts regularly. This is so important that Lighthouse is considering adding such a provision to the list of client responsibilities in its engagement agreements.

Check your credit reports and social security records regularly. This applies to your whole family
 including children.
Do not click on links or respond to e-mails from someone you do not know and do not click on links from someone you know without confirming that they sent it. Sometimes an unknown email address next to a name you know can be a telltale sign of a scam or worse.
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For our clients, Lighthouse Financial would be happy to include this topic in one of your client review meetings if you would like additional ideas for protecting yourself or to better understand our efforts in this arena.
New IRA rules: The government has issued new regulations limiting the number of non-trustee-totrustee transfer an individual can make in any one year. As a result of this Investment Management clients should expect to receive from their custodian (usually TD Ameritrade for Lighthouse Clients) a revised IRA Disclosure Statement. If you have any questions on what the new rules mean to you, please contact us.
(A heads up on: New staff, an Enhanced Data Collection Vehicle, and a New Service -- no action required)
New Staff: Bob Walsh has joined Lighthouse Financial as an intern: now there is an under-statement.
Bob is a mid-career changer (Princeton graduate and former senior Project Manager for IBM) who has passed his Certified Financial Planner® examination and is working with Lighthouse Financial to gain experience in the field. Besides helping behind the scenes with analyzing some client issues, Bob is focusing on institutionalizing Lighthouse Financial’s practices as a first step in helping Lighthouse
Financial develop a succession plan so that we can ensure that our clients will be well and consistently served not only now but well into the future in the face of natural or human disasters or shifts in personnel. Barry Korb (Principal and Investment Advisor Representative), Steve Lingle (Senior Advisor and Investment Advisor Representative) and Irina Gabidullina (Financial Planning Practice Support) are delighted to have Bob Walsh working with us.
Precisefp: Our primary data collection vehicle is upgrading its capabilities. Starting in May Precisefp will provide a way for clients and prospects to securely upload confidential electronic records/data for
Lighthouse’s review, analysis and archiving. Precisefp’s upgrade will offer existing clients and prospects the opportunity to securely transmit electronic copies of confidential information to Lighthouse. We also anticipate asking existing clients to update their data on this new platform as we cycle through major review updates. And do not worry we will pre-fill as much of the required information as we can so you only have to verify its accuracy.
Blueleaf: Blueleaf is an account aggregation and performance reporting system that Lighthouse is rolling out on a pilot basis. We have not emphasized performance reporting because we do not want our clients focusing on short term market moves – this is one of the classic motivators for investor mistakes. But in the hope that we have adequately educated our clients; given the benefits of being able to “view” client/prospect held-away accounts (e.g., those in 401K’s and now for the first time, the
Federal Government’s TSP balances) when it comes time to rebalance; and given the ease of use of the system we are beginning to utilize this service as an additional ‘value-added’ service for our clients.
Please feel free to call us to discuss Blueleaf when you receive an invitation to utilize its services.
Please call or email Lighthouse Financial ( bkorb@lighthousefp.com
) if you would like to discuss this subject further.
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NOTES
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Opt Out -- If you would prefer to opt out of these communications, please reply with the word
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2.
Disclaimers -- All investments involve risk of loss. The above articles are not meant as investment or tax advice. We cannot guarantee the accuracy of the information provided as much of it was drawn from other sources.
3.
Redistribution -- This Newsletter may be forwarded to anyone readers believe might be interested in its contents or discussing Financial Planning and or Investment Management with
Lighthouse Financial Planning, LLC.
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