Letter to Our Clients - July 2004

July 2004


To My Friends and Clients:

Those of you who visit our web site will have noticed two things—a new format, and a new name for our firm:

Advanced Wealth Management

This new web site format provides improved content and better organization. Additional tabs and information will be added over the coming months. If you are accustomed to going to one or two spots only, I recommend every so often you explore the site to see if anything new has been added, and if so, I hope you find it useful. If you do not go to our web site on a regular basis, I encourage you to do so. It is easy to pull up information on your accounts, and there are links to many other useful sites. I hope to be adding more educational sections as time goes by, and I welcome suggestions of links that you believe would be useful.

Whether you are a new, occasional, or frequent user, please send us feedback about what you like about the site, and what you would like added or changed.

If you are working on an Apple computer, the bad news is that there is no current plan to make the site compatible with your system. Only three clients have told me they cannot get into the site because they use an Apple computer, and Commonwealth tells me this ratio is consistent with the rest of the nation. They have decided this is such a small percentage of users that it does not make economic sense to spend the time and dollars, both of which they say would be significant, to make the systems compatible. However, please call us any time you would like current information about your account.

If you experienced difficulty earlier getting into the new site with the old address of www.advancedassetmgmt.com, then please try it again. It took some time, but Commonwealth was able to restore the connection from the old address to the new one. From now on you should be able to connect with either www.advancedassetmgmt.com or www.advancedassetmgmt.com.

The name Advanced Wealth Management has always been my preference. It better reflects what we really do—help you build, enjoy, and maintain total family wealth. However, until we decided to become our own registered investment advisor (RIA), regulations would not permit us to use the word “wealth” in our name. Go figure! Up until now, we had not felt it worthwhile to subject ourselves to the additional layer of audit and regulation that goes with the RIA registration, but we reached a point where it finally seemed the right step to take.

The only impact on our practice is that we are now free to do financial planning with any software, and in whatever manner, we feel best meets the needs of our clients. Prior to this, we were limited to the programs approved by Commonwealth. While those programs were adequate for plain vanilla planning, I felt they were too limiting for the kind of in-depth, complex and complete planning I needed to make available. Please be sure to contact us to see if this might benefit you.

In my last letter I predicted the stock markets would drop between May and the November elections.

While the market was relatively flat in June, you will see that values have dropped since June 30. However, I am impressed that the downturn has been so modest.

The real point of my last letter was not that you should withdraw from the market because there will be a better time to come back in. Rather, I was trying to say that if a drop in your account values would bother or even upset you, then you needed to contact me for adjustments. Any such adjustments would, in my opinion, need to be based on setting your account allocations to a point where you could get the upside growth you wanted while giving you the downside control that allowed you to remain comfortable. I was not advocating that we should reduce your stock or bond holdings now, and then at some magical point we would know when it was time to return to a more fully-invested position. I remain convinced this is a critical responsibility for you—to work with me to help get your accounts into balance for both up and down markets.

My last prediction raised eyebrows—enough so that I am emboldened to make another prediction now. I believe the stock market is basing for a relatively good (not great) 2005, and the bond market should hold up better than it has in past down bond markets. This rash prediction depends upon events unfolding within the normal range of crises. It does not anticipate things such as the fall of Saudi Arabia to extremists or the shut-down of our political or economic systems because of terror or natural disaster. It is also based on my underlying optimism that there is a rising middle class worldwide, and that population growth in our country will continue to fuel demand for goods and services. How’s that for trying to have it both ways!

Many of you have asked if I am a Republican or a Democrat. Implied seems to be the assumption that my political views will somehow color my financial planning and investment advice. While I do have a registration (which I will not share), I will also say that if there was something called The Cynical Party, I would be a proud and active member. I do think this administration’s fiscal policy is dangerous if left unchanged, but I have no confidence the opposing candidates or party will govern more wisely. But I believe—and this is very important—that it is almost always this way.

Much of my pleasure reading consists of financial matters—and history. Some clients have told me that this is the most dangerous period in history and the worst possible time to be alive. As a student of history, I am of the opinion that the turmoil and polarization in our country, and in the world around us, are normal. I have pointed out before the various periods of crisis in our country, such as the Civil War, riots and violence over racial issues and labor conflicts (it was considered socialist or communistic to advocate a 40 hour work week and to propose unions, workers’ rights, and social security), the Great Depression, World Wars I and II, the Cold War and threat of nuclear annihilation, inflation and the oil crises of the '70s and '80s, the Crash of 1987, and on and on and on.

In a letter to those of you who were with me in 1999, I commented that I felt history would judge 1999 as the Most Golden Age of history. It is true that we have retreated some, but compared to anywhere else in the world, compared to any other period of history, I do not think anyone would be happy in earlier times. I recommend the book The Good Old Days – They Were Terrible!

Please continue to work with me to create a financial management plan, put that plan in place, and then stay with it until your situation changes. The plan should be built to withstand the ordinary shocks in the world around us, and it should anticipate the normal progression of our lives.

When change occurs which make those plans obsolete, then call me immediately so that we can develop a new plan, and new strategies, to protect your financial stability. In the meantime, focus on the longer-term and do not get distracted—or dismayed—by headlines and by the inevitable unpredictability of our markets.

Please be certain to contact us to schedule an appointment if you believe your situation needs review and discussion. We also welcome your feedback on this letter, or on any other aspect of our relationship with you.

Thank you again for the opportunity to work with you. I hope to talk with you soon.

Best wishes,

Robert K. Haley, JD, CFP®