Happy Spring, clients and friends!
According to our favorite groundhog, Punxsutawney Phil, it may still be premature to welcome spring, but there’s something about the month of March that brings a sense of hope and renewal, despite often wildly- fluctuating weather conditions. This year, as COVID-19 vaccines are administered in growing numbers throughout the United States, there’s increased hope that we’ll see a gradual, yet steady, return to normalcy in the months ahead. For many, that means an opportunity to gather once again with family and friends in our homes or at our favorite restaurants and watering holes. For others, it may mean a return to in-person learning, or greater freedom to travel for business or leisure. Whatever your definition of normal is, chances are, it’s not anything like what we’ve experienced over the last 12 months.
As a business, we feel very fortunate that we have been able to provide the same high level of service to our clients over the course of the past year that you have come to expect from your trusted team of wealth advisors at Planned Financial Services. We even added a new service—our complimentary Second Opinion Service, which you can read more about below, as well as additional team members to support the growing need among high-net-worth families and business owners for advice that is timely, relevant and actionable.
Of course, none of that happened simply by chance or luck. Our ability to quickly transition during last year’s lockdown, from a predominantly face-to-face and in-office operational model, to a fully virtual environment, was the result of many years of careful, deliberate and ongoing planning. As our business changed and grew over the course of 25 years, so did our business contingency planning. It’s no different when it comes to your own business and personal financial planning. Successful planning requires diligence, flexibility, and sound leadership and advice from trusted sources, on an ongoing basis. We take great pride in our ability to provide that and more to all of our clients, as you pursue your personally defined Return on Life®.
As we begin to emerge as a nation from this unprecedented time in our history, we are grateful for the trust and confidence you continue to place in us. We look forward to continuing to serve your needs and the wealth and investment planning needs of the friends and associates you continue to refer to our talented and growing team.
Be sure to check out the latest news below about our team, upcoming events, and our perspective on the financial markets and economy.
What’s In It for You?
At-a-glance guide to your 1st Quarter 2021 Frank Talk newsletter:
- News & Events
- Team Member News
- Awards & Recognition
- Upcoming Events
- Your 2020-2021 Tax Planning Guide
- Complimentary Second Opinion Service
- Visit our Getting Frank Blog
- Market & Economic Update
News & Events
Team Member News
Frank Fantozzi is Recognized as a Top Wealth Advisor for the Fourth Consecutive Year
We’re pleased to announce that for the fourth consecutive year, Planned Financial Services President and Founder, Frank Fantozzi, CPA, MST, PFS, CDFA, AIF®, was recognized among Ohio’s Best-In-State Wealth Advisors in the annual list published by Forbes.
The Forbes Best-In-State Wealth Advisor ranking, developed by SHOOK Research, is based on in-person and telephone due diligence meetings and a ranking algorithm that includes: client retention, industry experience, review of compliance records, firm nominations; and quantitative criteria, including: assets under management and revenue generated for their firms. Portfolio performance is not a criterion due to varying client objectives and lack of audited data. Neither Forbes nor SHOOK Research receives a fee in exchange for rankings.
Frank Fantozzi Asked to Serve on Board of Trustees of Cleveland Clinic Member Hospital
In February 2021, Frank Fantozzi, CPA, MST, PFS, CDFA, AIF® was elected by the Board of Directors of the Cleveland Clinic Regional Hospitals to serve as a member of the Board of Trustees of Marymount Hospital, Inc., which owns and operates Marymount Hospital. Marymount Hospital is a full-service general hospital within the Cleveland Clinic enterprise. Marymount Hospital is a Catholic hospital, affiliated with the Sisters of St. Joseph, Third Order of St. Francis and helps ensure conformity with the Ethical and Religious Directives for Catholic Health Care Services. The Board of Trustees serves in an advisory role to the Board of Directors and the Hospital President.
Andrew Hardy Joins Planned Financial Services Team as Account Executive
Join us in welcoming Account Executive, Andrew Hardy, to the Planned Financial Services team. Andrew will play an integral role in supporting the team’s wealth advisors and client liaisons in providing relevant, timely and objective financial and investment advice to high-net-worth families and business owners. Andrew began his career as a financial systems analyst in 2017. He later founded a financial technology start-up before joining a Cleveland-based software solutions provider, as a business consultant and sales operations specialist. After graduating from West Virginia University, where he received his Bachelor of Science in Finance with a focus in investments and business valuation in 2016, Andrew obtained a certificate in Data Analytics from Case Western Reserve University in 2019. He recently received his FINRA Series 7 registration and is studying for his Series 66 registration.
Awards & Recognition
PFS is Featured in Crain’s Cleveland Business 2021 Book of Lists
Planned Financial Services is listed among the largest “Investment Advisers” in Cleveland in Crain’s Cleveland Business 2021 Book of Lists.
The Book of Lists is a one-stop resource containing exclusive data and contacts for companies and organizations in Northeast Ohio.
What’s the Secret to Keeping Clients for Life? Join us on March 25th to Find Out!
You and your guests are invited to attend an exclusive Zoom Event hosted by PFS, featuring internationally recognized sales expert and best-selling author, Hal Becker. The event will take place on March 25, 2021 at 11:00 am - 12:00 pm ET.
Hal will share strategies today’s business owners and leaders can employ to retain clients for life, including:
- The 3 rules of incredible customer service
- What is a ‘creative opportunity’ and why do you want it?
- The mistakes most companies make
- Why you lose customers and how to get them back
Don’t miss the chance to get your questions answered during the live Q&A session following Hal’s remarks, at 11:45 am.
To register, email Michelle@PlannedFinancial.com to receive your Zoom conference invitation.
Watch for News About Our 13th Annual Economic Summit
We are looking forward to the possibility of hosting our 13th Annual Cleveland Economic Summit as an in-person event this fall. As you may recall, last year’s event was held virtually due to COVID-19 restrictions. While it’s too early to commit to hosting in-person at this time, we will continue to monitor all appropriate local, state, and federal guidance and recommendations, and provide more information about the event, speakers and venue in the coming months, including a “Save the Date” reminder.
It’s Not Too Late to Get Your 2020-2021 PFS Tax Planning Guide!
Whether you’re still working on your 2020 returns, or have already submitted them, having a plan in place to manage your tax exposure is an integral part of financial planning and can be especially important during times of change or uncertainty. To help gain the clarity you seek throughout the year, use the link below to access your Planned Financial Services 2020 – 2021 Tax Planning Guide.
View or download your PFS 2020 - 2021 Tax Planning Guide now.
Reminder…Our Complimentary Second Opinion Service is Available to Your Family, Friends and Colleagues
Last year, we introduced a new service that has been very well-received among the friends, family members and colleagues of many of our clients and associates. Our complimentary Second Opinion Service provides the people you care about with an opportunity to benefit from the same expertise and guidance that you have come to expect as a valued client of Planned Financial Services.
In many cases, a second opinion will simply provide confirmation, and the confidence that those you care about are on track to fulfill their values and achieve their goals with their current financial provider or strategy. However, if needed, we are happy to suggest ways in which we can help, including recommending another provider if we are not a good fit for their needs. Either way, following a Discovery Meeting and Investment Plan Meeting with our experienced team, they will receive a Total Client Profile and a Personalized Financial Assessment of their current situation. To learn more about the Planned Financial Services Second Opinion Service, click here to access or download a full description of this service and the benefits it offers to the people you care about most.
Looking for Additional Insights on Personal and Business Planning? Visit our Getting Frank Blog
For timely information on the financial planning, business growth and investment topics that are meaningful to you, visit our Getting Frank Blog at PlannedFinancial.com. Plan to visit us weekly as we post new articles and opinions.
Market & Economic Update
*The 10-year Treasury yield continues to climb higher, but remains low by historical standards. Still, the size of the move since July 2020—and the more recent acceleration—has some market participants worried about the potential impact on stock markets if rates continue to rise. Historically, the S&P 500 Index has endured extended periods of rising rates well. If an improving growth outlook is part of what’s driving rates higher, it should also support corporate profits, creating a positive fundamental backdrop for stocks.
Rising Rates are Usually Bullish For Stocks
Bond yields have been on the move lately, but stock prices have also been rising. And while some market participants are expressing increased concern that rising bond yields may begin to weigh on stock returns, stocks have usually been resilient in rising rate environments.
We looked at major extended periods of rising rates dating back to the early 1960s. We found 13 periods in which the 10-year Treasury yield rose by at least 1.5%, a move the current increase hasn’t even reached yet. These rising-rate periods lasted between six months and almost five years, with the average a little over two years. In nearly 80% (10 of 13) of the prior periods, the S&P 500 Index posted gains as rates rose, as it has so far in the current rising-rate period. In fact, the average yearly gain for the index during the previous rising-rate periods, at 6.4%, is just a little lower than the historical average over the entire period of 7.1%, while rising rates have been particularly bullish for stocks since the mid-1990s. Not all rising-rate periods are the same, though, and we believe stocks may tolerate the current rising-rate period well.
Inflation Makes a Difference
How markets have performed during a rising-rate period has depended heavily on what’s going on in the economy, with inflation a leading consideration. Rising rates during periods of high inflation have generally resulted in lower stock returns, although the level at which inflation has become a headwind is well above what even most inflation hawks expect now.
From 1968 to 1990, the Consumer Price Index (CPI) rose an average of 6.2% per year and was above 3.5% every year except three. Five of the rising rate periods took place at least partially during those inflationary years. The average annual return during those rising-rate periods was -0.4%. During all other rising-rate periods, the average annual return was 13.0%, well above the average for all returns since 1962. While inflation expectations are rising right now, CPI growth of even 2.5% at the end of the year would be an upside surprise based on the median estimate of Bloomberg-surveyed economists. For all the concerns about inflation, we are a long way from the ‘70s and ‘80s.
A Steepening Yield Curve Has Been a Good Sign
The yield curve is the difference between long-term and short-term interest rates. A steepening yield curve usually tells us two things: economic growth expectations are picking up, pushing long-term rates higher; and the Federal Reserve (Fed) probably is not yet pumping the brakes, helping to keep short-term rates relatively low, which usually also means inflation is under control.
During the four rising-rate periods that saw the least yield curve steepening, as measured by the difference between 10-year and 3-month Treasury yields, S&P 500 Index returns were weaker than for a typical period, averaging an annualized 3.5%. In the four periods when the yield curve steepened the most, the S&P 500 averaged an annualized 14.5%.
While yield curve steepening has not yet been dramatic enough to make its way into the top four periods historically, we have seen considerable steepening already. With the Fed likely on hold for some time, anchoring the short end of the curve, we expect that if rates continue to rise, it will come with further steepening. Some of that may be because of rising inflation expectations, but the main driver is likely to be an improved growth outlook.
The Starting Point Matters
Rates have been rising but they are still historically low, with the 10-year Treasury yield at the end of February falling into the bottom 2% of all values dating back to 1962. While it’s true that rates become a bigger burden for business, consumers, and governments as they rise, even at current and higher levels rates are still attractive and can continue to support a robust economic rebound.
Looking back again at the different rising rate periods, during the four periods with the highest initial 10-year Treasury yield, the S&P 500 averaged a 2.5% annualized return, while those with the four lowest initial yields averaged 15.4%. A lower initial yield likely reflects manageable inflation and a Fed that isn’t tightening, but it also represents the added economic support of a still low cost of borrowing even as rates rise.
The Current Rising Rate Environment Looks Positive For Stocks
Rising interest rates have clearly been one of the reasons the S&P 500 has consolidated since hitting its last all-time high on February 12, but it’s important to look at the bigger picture. Rising rates in general have not prevented stocks from advancing and the current environment improves the odds that stocks will be able to continue to press higher. Rising rates are being driven in part by an improving growth outlook; inflation, while normalizing, is still well below levels that have historically disrupted markets; the Fed remains supportive; and borrowing costs are still historically quite low. Every market environment is unique, but taking our cues from history, the economic fundamentals continue to look strong and the current rising rate picture looks most similar to those periods of above-average stock performance.
As conditions evolve in the weeks and months ahead, you can rely on your PFS team to continue to monitor and adjust our portfolios and keep you up to date on these and other developments. We also want to remind you that our office is open for clients who would like to meet in person. For those who prefer to meet virtually, we continue to use Zoom for virtual meetings, and are always available via phone. Just let us know how you prefer to meet, and we’ll make it happen!
We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide. If you, or someone you know, has questions or concerns about your personal investment strategy or business finances, please don’t hesitate to share information about our complimentary Second Opinion Service and reach out to your experienced team of wealth advisors at 440.740.0130.
Don’t forget to join or follow PFS on Twitter, LinkedIn, Facebook and YouTube.
Real People. Real Answers.
Health, Happiness, and Good Fortune,
CPA, MST, PFS, CDFA, AIF®
President & Founder
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
S&P Energy Index: A market capitalization weighted index that tracks the performance of energy companies.
*Some research was provided by LPL Financial, LLC, March 2021. PFS nor LPL make no representation as to its completeness or accuracy.
Planned Financial Services, LPL Financial, Forbes, SHOOK Research, The Cleveland Clinic, Marymount Hospital, Inc., Crain’s Cleveland and Hal Becker are all separate, unaffiliated entities.
Investment advice offered through Planned Financial Services, a Registered Investment Advisor.
Securities offered through LPL Financial, Member FINRA/SIPC; a separate entity from Planned Financial Services.