Q4 Updates from IEM

4th Quarter Updates and Commentary from IEM

With the holiday season now coming to a close, the IEM team hopes everyone enjoyed time with their families and friends. In this edition, Daniel Schoenecker provides insight on Q4 markets along with reflecting on 2019 as a whole, Danica Goshert discusses the value of adding a Trusted Contact Person to your account(s), and the IEM team support’s the Armful of Love program. Lastly, as new law has arisen starting in January 2020, keep an eye out for our next communication outlining the impacts of the SECURE Act.

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Q4 Market Commentary

Calendar year 2019 delivered excellent stock and bond returns to investors. The S&P 500 returned approximately 31%, the MSCI ACWI (representative of a global stock portfolio) returned approximately 27%, and the Barclay’s Aggregate Bond index returned approximately 9%.

Meanwhile, 2019 has likely solidified the past eleven-year bull market as the ‘Most Hated Bull Market in History.’ That nickname is appropriate because it has coincided with significant investor angst about when the next big correction is coming (which, in hindsight, may be mental residue from the 2008 crash), along with many investors who went to cash, missing much of the higher returns. It has been said that the market has climbed a ‘wall of worry’ in recent years.

Our belief is that this past decade further exemplifies the value of a well-diversified portfolio. An underrated aspect of investment management is the construction of portfolios that help investors ‘stay the course’ in order to achieve their long-term goals. Notwithstanding the above preamble regarding long-term investing, it is also true that in the short-run the stock market can be viewed as a risk/reward pendulum swinging back and forth. We believe the pendulum has swung less favorably over the last twelve months, as bond yields have fallen and stock valuations have risen. Higher realized returns lead to lower expected returns [and vice versa].

We are rebalancing the portfolios to start the year with the primary purpose of bringing stock-to-bond ratios in line with the objectives of the portfolio (i.e. minimizing drift). Concurrently, there will be a small tactical positioning towards higher credit quality bonds and more defensive value stocks in congruence with our view on the short-term risk/reward. It is a delicate balancing act between staying the course with long-term strategic allocations while using smaller tactical adjustments that reflect changing market conditions.

As always, we finish with the reminder that the most important aspect of investment management is an asset allocation that is aligned with an investor’s financial plan (including need, ability, and willingness to take risk). This allows the navigation through short-term volatility in favor of long-term returns. We encourage you to call, email, or use our online portal at any time if you want to check-in on your journey or have questions about your IEM portfolio.

Best,

Daniel Schoenecker, CFA, MBA

Vice President of Wealth Management

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The MSCI ACWI is a free-float adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities.

Trusted Contact Person

You might already be familiar with a Power of Attorney document, which gives the individual(s) you name the ability to make financial decisions on your behalf if you are unable to do so.

However, you may not be aware of a Trusted Contact Person (TCP), which is a newer option for your accounts. Essentially, this is one or more people you name that we can reach out to in the following situations:

• We are unable to reach you for a period of time and need to confirm your current contact information or inquire about your health status.

• We may need to identify a power of attorney, successor trustee, or guardian.

• We have concerns you may be suffering from diminished capacity.

• We have suspicions you may be the victim of financial exploitation.

While your trusted contact person (TCP) can’t withdraw money or request any transactions on your behalf, this is another way to help protect your accounts, regardless of your age and circumstances. And while we will always make an attempt to speak with you first, your trusted contact person can serve as an “emergency contact” since privacy laws limit our ability to share your information with anyone other than you (or the persons named in your Power of Attorney document, if that’s already on file with us).

Adding a TCP is simple: just provide their name and contact info – including address and phone number – and we’ll update your account profile accordingly.

And while we’re on the topic of estate planning, 2020 is an excellent year to make sure your estate plan is up to date and reflects your wishes! We’re glad to discuss further and/or provide you with a referral to an estate planning attorney who can work with you to complete this important aspect of your overall financial plan.

Warmly,

Danica Goshert, CFP, AIF, MBA

Vice President / Private Wealth Manager

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered through CES Insurance Agency or Integrated Equity Management

Happy Holidays to All

The holidays this year were full of giving back and nourishing our family values. The IEM team participated in the Armful of Love program where holiday gifts were donated to a local family who needed a little help with having presents to unwrap. Among the donations were Target gift cards, socks, coats, and toys to a family of 5.

Armful of Love is part of 360 Communities and has been around for over 30 years supporting local families around the holidays, this year serving 1,000 families with over 4,000 gifts. If you wish to learn more about the program, you can visit https://360communities.org/resources/armful-of-love/ for more information.

Thank you to all who sent holiday cards and gifts to our office this year, it was wonderful to see your families, read your kind words, and partake in your delicious desserts! We are proud to serve and are thankful to have you all in our lives. We wish you a very happy and fruitful 2020!