June 16, 2017 Letter to Clients

Regarding: Department of Labor Fiduciary Rule and Market Outlook

I hope this letter finds you enjoying the early days of summer.   My wife, Jodie, and I have been quite busy on the weekends with our three children’s various sports.  At times, it seems that we are ships passing in the night, but I wouldn’t trade it for anything.  I know these days are short lived as soon they will be grown up and out of the house.  While they have enjoyed much success on their teams and I’ve enjoyed watching them progress as players, I know we are all ready for the slower pace summer offers.

In this letter I want to discuss two topics.  The first is the Department of Labor (DOL) Fiduciary Ruling that many of you may be aware of and second, my market recap and outlook.

The Department of Labor (DOL) Fiduciary Rule

While many of us enjoy kicking back and submerging ourselves in a long summer novel, I think it’s safe to say the over 1,000 pages of the new DOL Fiduciary Ruling isn’t at the top of your summertime must-read list.  What’s that? Oh, it didn’t even make your list you say? No kidding! Well fortunately I have highlighted what is at the heart of the new ruling as it relates to your relationship with me as your financial advisor.

The financial services industry is one of the most highly regulated industries that exists, and for good reason.  Protecting the retirement savings of American workers is the basis of a new ruling that was created under the Obama administration and took effect June 9, 2017.  Because individuals have more responsibility for their retirement savings today than ever before, more people are seeking the guidance of financial advisors to assist them in achieving their retirement goals. The intention of this new ruling is to better protect the retirement investor. 

This DOL ruling automatically elevates all financial professionals who work with retirement plans or provide retirement planning advice to the level of a fiduciary.  The primary responsibility of a fiduciary is to act in the investing client’s best interests, using skill, care, prudence and diligence when making an investment recommendation and to avoid conflicts of interest.  This new ruling has my full support as I have already been acting as an Investment Advisor Representative.  As your advisor, I will remain focused on providing advice and guidance aligned with your best interests, short- and long-term objectives and goals we have developed together.  Additionally, the DOL is now requiring all fees to be clearly disclosed in dollar form to clients and as a result many companies we work with have sent notices of disclosure or will be sending them in the near future.

In short, although going forward some transactions may require additional paperwork in order to adhere to the new standards, the relationship I have built with you will not change.  This new legislative landscape will, however, find many individuals seeking out a new financial planning firm to work with as their firm may have closed their doors or chosen to be sold to a larger entity as a result of increased operating costs associated with adhering to the new stringent regulations.  My office would welcome the opportunity to meet with your family, friends and work colleagues who may find themselves searching for a new investment firm.  A referral is the highest form of flattery and we will strive to exceed the expectations of those who choose to work with LePage Financial Group.

What Goes Up Must Come Down….At Some Point

Unlike the very wet and cool weather these past few months in New England, there hasn’t been much to lament about related to the market as it continues to remain steady with April being the second longest bull market (a period of several months or years during which asset prices consistently rise) in American history, according to CNN Money.  May, with its well-known adage “sell in May and go away” due to historical underperformance of stocks in the six-month period commencing in May and ending in October, actually found investors with a fully diversified equity portfolio continuing to see gains in performance numbers. 

The stock market has been trending higher due to a number of factors. The expectations that Trump will usher in a more business-friendly era through tax cuts, ramped-up fiscal spending, along with deregulation have aided in fueling these upward trajectories.  The U.S. economic growth has been continuing along at a moderate pace, Europe is experiencing an economic recovery, inflation is under control and corporate profits are rising.  Additionally, the market has been, for the most part, resilient to geopolitical issues and national drama as it appears to have grown accustomed to the endless sources of angst that it hardly seems to care at this point.

The question on everyone’s minds is can this continue or will the market run low on fuel? As I’ve stated in previous letters, this is when I wish I had the infamous crystal ball.  After a great deal of research and conversations with leading market strategists, we anticipate it is most likely that stocks and markets will move sideways this summer.  This is attributed to anticipated lower trading volume as investors have experienced gains in their portfolios during the first half of 2017 which, coupled with lower gas prices, will find many more people traveling and vacationing this summer than in recent years.

The old saying “what goes up must come down” holds true for a reason, and the market will experience a correction of temporary declines of 10 percent or more at some point. It is for this very reason that we employ investment strategies that manage risk, even when in a bull market.  While a market correction can be concerning and uncomfortable for investors, rest assured it is a normal occurrence. It is important to also keep in mind that a correction can be healthy and presents attractive buying opportunities that, as your advisor, I continuously seek out on your behalf.

In closing, on behalf of all of us at LePage Financial Group, I want to thank you for the continued trust you place in us each and every day.  I recognize now more than ever people’s lives are very busy, however, I always welcome the opportunity to meet or have a phone conversation with you.  It is very helpful and important that we do so from time to time as I am responsible for managing all aspects of your financial plan, which is not limited to your investment accounts with LePage Financial Group.  Examples of this would include major life changes and large purchases, both you and your spouse’s employer sponsored retirement plans, insurance and college planning needs and comprehensive estate planning.  Because there are many factors which must be taken into consideration for you and your family’s financial wellness, my office will be sending periodic newsletters in the future discussing items that I think are important and may be of interest to you. 

Until we speak again please enjoy the beginning of summer and while the summer days may be hot, the markets appear cool for the time being so you should feel free to kick back, relax and enjoy yourself.


Warmest Wishes,

Steve LePage