Fourth Quarter 2011
a note from the CEO ::
The 2011 financial markets were anything but dull and predictable, being marked by volatility of historic proportions. What can we expect in 2012? According to most industry experts, more of the same — unsettled markets — but with a slowly improving economic picture in the U.S. The only constant in 2012 may very well be change. In this environment, as always, we will do everything in our power to help you meet your personal financial objectives.
2011 was a year of change for Brinton Eaton as, sadly, we lost two of our founders. We previously told you a lot about “Jerv” Brinton, 87, who passed away in late June. Jerv was just a great person and admired by all, both personally and professionally. Ben Jacoby, 83, another of our original employees, died suddenly in October after an accident. Ben was my close friend and business partner for 23 years. His leadership and insights were integral to the growth of Brinton Eaton throughout the years. Always a consummate professional, Ben put the needs of his clients first and brought his sense of humor and charm to every personal and professional relationship.
We will miss Jerv and Ben. Their unwavering commitment to clients — serving every individual with his or her best interests at heart — continues to inspire us every day.
In December, Brinton Eaton was featured in a white paper issued by Fidelity Institutional Wealth Services on the best practices of investment advisory firms, Finding Freedom to Focus on Strengths: Strategic Hires and Realignment. We are proud to have been chosen for this profile about how strategic improvements within a firm can drive client satisfaction and profitable growth for the firm. Our actions over the past couple of years have led to a more efficient use of resources in order to enhance our clients’ experience. While we appreciate this acknowledgement, we continue to try and improve our services to you. And I want to take a moment to thank those of you who had the time to participate in our client survey in November. We are currently digesting the results and will be taking action on your concerns.
This effort will be ongoing as we are only now beginning our next evolution of improvements based on your most recent feedback. We vow to be as clear and transparent as we can in our actions and our communications, and we seek your candor in return.
As we take this journey together, please don’t hesitate to continue letting us know what we can do to make your Brinton Eaton experience more rewarding.
On behalf of the entire staff at Brinton Eaton, all the best for a happy and healthy New Year.
Bob DiQuollo
CEO, Principal, and Senior Financial Advisor
Market Challenges Likely to Continue in 2012; Our Two-Pronged Response
By Jerry Miccolis, Chief Investment Officer, Principal, and Senior Financial Advisor
The past year was a challenging one for investors. To say that the markets behaved erratically is an understatement. Consider the following 2011 market facts:
U.S. Stocks
- The S&P 500 Stock Index moved +/- 4% or more on four consecutive days in early August. This is only the third time this has happened since the Great Depression. Previously it occurred in 1987 and 2008.
- The Dow Jones Industrial Average moved +/- 100 points or more on over 100 days in 2011; that’s more than 40% of the year’s total trading days. It moved +/- 300 points or more on 14 days; 2008 was the only other year in history that saw that measure reach double figures.
- Virtually all of the unusually high stock market volatility occurred in the last five months of the year.
- Excessive volatility has a cost. In what has been reported as the most difficult year since 1997 for large-cap stock funds to beat their benchmarks, over 84% of such funds lagged the S&P 500, according to Morningstar.
Other Investments
- Emerging market stocks fell 18% in 2011 — the margin by which they underperformed U.S. stocks was exceptionally wide by historical standards.
- The traditionally less volatile of the two major commodity indexes dropped 13% on the year.
Short-term interest rates were at an all-time low in 2011, making typically stable fixed income investments unusually sensitive to even modest upticks in interest rates.
Basically, the only thing you could count on in 2011 was uncertainty. And, frankly, we don’t see a substantial shift in this environment as 2012 unfolds, considering the ongoing Eurozone debt negotiations and politics at home as we embark on a presidential election year.
That said, there are some glimmers of hope for better days ahead. According to recent data, we are seeing some green shoots in terms of economic growth. Housing starts are on the rise (although home prices have not yet turned around) and the hiring picture has been improving slowly. These two positive signs are significant, as housing and employment have been the main drags to recovery to date.
The safest prediction one can make for 2012, though, is that global uncertainty will continue and market volatility will persist. The ultimate direction of the markets over the course of the year is still anyone’s guess — there are as many plausible scenarios for a sharp recovery as there are for a steep decline. It truly is a “binary” situation. In the face of this, we believe the soundest strategy is two-pronged:
Be widely diversified, across many different asset classes. We remain firmly committed to broad diversification within your portfolio. Always the cornerstone of a successful investment strategy, diversification is particularly important in the current environment. We continuously evaluate the relationships among asset classes within your portfolio and make changes where we feel it is necessary, as evidenced by what we have done recently with your allocation to commodities.
Stay fully invested, but explicitly and aggressively manage downside risk. If markets rise, we want you to be poised to take full advantage. If markets decline, we want you to have meaningful downside protection at minimal cost and little or no sacrifice of upside potential.
Another significant investment event in 2011 was the launch of our mutual fund in late July. A separate report on the fund’s fourth quarter performance has been posted on the fund’s website.
We appreciate your forbearance in the midst of difficult market conditions, your focus on the long term, and your continued confidence in Brinton Eaton. These are traits we do not take for granted.
We will strive to be as transparent as possible with regard to what is happening within your investment portfolio and what we are doing and why. Please call us with any questions you have along the way.
Here’s wishing you a happy and prosperous 2012.
Tax Reminder
January marks the start of tax season and you will soon begin receiving 1099s, W-2s, and other forms to be used for tax return preparation. In addition, your CPA may send you an organizer that outlines the information your preparer needs to complete your 2011 return. It’s never too early to begin collecting data, including your 2011 deductions, such as charitable contributions, property taxes, and state and local income taxes. If you have any questions, please contact your Brinton Eaton advisor.
BE team update ::
at the podium ::
Jerry participated in a panel discussion on October 15, at the inaugural Business Wealth Management Forum in Chicago, IL, where he presented alongside two other industry thought leaders about the changes in portfolio construction that must take place in the wake of the market collapse of 2008/2009. Press coverage of this panel is noted below in “BE in the news.”
On October 25, Jerry conducted a two-part session at the National Association of Personal Financial Advisors (NAPFA) Practice Management and Investments Conference in Brooklyn, NY. In his presentation, “Managing Personal Wealth in Volatile Markets: An ERM Approach,” Jerry discussed how advisors can use corporate enterprise risk management as an organizing framework for managing personal investment risk.
In a presentation before a select group of financial advisors at the S&P Indices Financial Advisor Forum on December 1, in Newport Beach, CA, Jerry spoke on how sophisticated investment risk strategies can be successfully applied using exchange traded funds (ETFs). The session was entitled, “Sector Investment Strategies and Cutting-Edge ETF-Based Portfolio Risk Management.”
Jeremy and Lauren Locker, Founder of Locker Financial Services, spoke at William Paterson University in Wayne, NJ on November 21. The students, participants in the Bachelor of Science in Business Administration/financial planning and certificate program, heard about the challenges and rewards of being a financial advisor. Jeremy and Lauren are President and Chairman, respectively, of NAPFA’s Northeast and Mid-Atlantic Region Board of Directors.
Marla addressed an audience of marketing students at the Fashion Institute of Technology in New York on December 9. Her presentation, Integrated Marketing Communications, covered best practices utilized by today’s marketing professionals.
in attendance ::
Colleen attended an Inside Track Practice Management session sponsored by Fidelity on November 29. The New York meeting covered updates on a variety of topics including the financial markets and mergers and acquisitions.
On November 9, Marla participated in a Morris County Chamber of Commerce Women in Business meeting. The Women in Business committee is a dynamic network whose goal is to further the advancement of women and empower them in their professional and personal lives.
for the community ::
Bob DiQuollo, Jeremy Welther, and Matt DiQuollo participated in a golf outing on September 19 to benefit Circle of Life, a Newark organization that provides individual and family services.
On November 14, Marla Bace and Mary Ellen Hancock attended the Liberty Science Center Women’s Leadership Lunch in Jersey City. The objective of the Women’s Leadership Group is to mentor young women in the local community about future occupations and career paths in the arts and sciences.
Ellen Clawans was appointed to the Millburn Education Foundation and has accepted the position of Treasurer effective September 2012.
noteworthy ::
Congratulations to Abby Rosen who graduated with distinction from Bentley University with an MS degree in Financial Planning on October 14.
BE in the news ::
“Bringing the Science of Investing into the 21st Century” – Wealth Management Insider (a publication of the American Institute of Certified Public Accountants)
This article, authored by Jerry Miccolis, talks about advancements that need to be made to Modern Portfolio Theory in order to bring portfolio risk management in line with today’s markets. read more
“8 Moves Investors Should Make in 2012: Brinton Eaton”– AdvisorOne.com
“Wealth advisory firm says investors urged to “keep the faith” in equities” read more
“Don’t Neglect Your Financial To-Do List”– Morningstar.com
Brinton Eaton’s year-end checklist for investors featuring comments by Dave Hill and Abby Rosen. read more
“Five Things You Should Know About Annuities”– learnvest.com
Authored by Bob DiQuollo, this article discusses the facts—and challenges—associated with purchasing annuities. read more
“Miccolis, Bengen and Evensky on the New Challenges in Portfolio Construction” – Advisor Perspectives
“Conventional wisdom about the best way to construct a portfolio has been discredited, according to three industry thought leaders – Jerry Miccolis, Bill Bengen and Harold Evensky.” read more
“A Study in Diversity” …Estate Planning for Senior Women – Senior Market Advisor
Beneficiary designations take precedence over the client’s will and can thwart estate distribution plans if they’re not handled properly. Mary Ellen Hancock, CFP®, a financial planner at Brinton Eaton, a wealth advisory firm in Madison, N.J., points out that these designations are found with numerous accounts. read more
“Sunday Business Section Three Questions” – The Star-Ledger
“Marla Bace has helped shape marketing plans for firms throughout New York and New Jersey over the past 20 years… Bace spoke to The Star-Ledger about the marketing field…” read more
For more media, click here.
Brinton Eaton helps affluent clients protect, grow, administer and ultimately transfer their wealth. We aim to provide a worry-free state of mind that enables you to continue to lead a financially independent and deeply rewarding life.
If you are not already a Brinton Eaton client, and are interested, contact us for a no-obligation consultation.
